Dec 3, 2020 - Energy & Environment

Why some Asian countries keep building coal plants

Coal-fired power's persistence in Asia is a big climate problem, but the reasons some countries can't quit coal — even as other parts of the world are gradually breaking up with the fuel — aren't always so obvious.

Driving the news: Enter a new paper in Energy Research & Social Science that explores what's driving demand for China's financing of coal-fired power plants in the region, even as other power sources are cost-competitive.

Why it matters: It notes building coal plants that lack CO2-trapping tech is "incompatible" with holding global temperature rise to 1.5 °C above pre-industrial levels — the very longshot goal of the Paris agreement.

  • And the International Energy Agency's main projection shows coal demand growth in India and Southeast Asia over the coming decade, even as it levels off in China and falls elsewhere.

The big picture: Here are some findings from the study led by Tufts University scholars and focuses on India, Indonesia, Vietnam and Bangladesh...

  • China is a willing source of finance, even as multilateral development banks have moved away from coal-fired power, and Chinese policy does not push investors and companies to go beyond host-country environmental standards.
  • There's a suite of existing relationships between Chinese financiers and suppliers on one hand and countries' energy ministries and power companies.

Yes, but: Looking only at Chinese decisions provides a very incomplete picture, because countries receiving finance tend to have several characteristics that favor coal.

  • The list includes absent or limited emissions control policies tailored specifically to the power sector.
  • There are also "monopolistic utility structures," protections for coal-related jobs, and more.
  • Costs for clean power sources are "perceived to be a barrier," though India's posture is changing.

The intrigue: The analysis also explores wider socio-political forces.

  • For instance, they see policymakers in countries building new plants acting under a "stop rule" mindset in which they make decisions "once a minimally-acceptable option emerges."
  • In these cases, that means readily available Chinese finance and cheap tech that helps provide a solution to fast-rising demand.

The bottom line: China's Belt & Road Initiative could do more to unlock markets for Chinese clean energy tech while also meeting the needs of developing countries in a climate-friendly way.

  • But this will only happen if countries "exercise more agency and/or if Chinese overseas investment policies change," the paper argues.

What we're watching: The incoming Biden administration. Per the Financial Times, President-elect Joe Biden has "vowed to hold China accountable for coal investments through its Belt and Road programme."

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