July 4, 2024
SINGAPORE – The use of coal in electricity generation in Indonesia and the Philippines reached a record nearly 62 per cent share in 2023, with no sign of slowing down – despite both countries having abundant solar and wind power potential.
In a report released on July 1, London-based energy think-tank Ember said coal generates nearly two-thirds of electricity in South-east Asia’s two most populous countries. In the Philippines, coal’s share of power generation rose from 59.1 per cent in 2022 to 61.9 per cent in 2023. Indonesia’s share increased marginally to 61.8 per cent.
This indicates an increase in coal reliance in the two Asean countries when the region is being urged by the United Nations to speed up the switch to green energy or risk missing targets to slash greenhouse gas emissions. South-east Asia is also one of the regions most vulnerable to the impacts of climate change, such as heatwaves, more powerful storms and rising sea levels.
“Indonesia and the Philippines are the two most coal-dependent countries in South-east Asia and their reliance on coal is growing fast,” said the report, adding that tapping their wind and solar potential could help meet rising electricity demand and cut emissions.
In total, the two countries still have very low shares of wind and solar in their electricity mix, compared with regional peers. The Philippines at 3.2 per cent is ahead of Indonesia at 0.3 per cent, but still behind the Asean average of 4.4 per cent and Vietnam’s 13 per cent, the highest in the region.
Coal is a concern because it is the single largest source of carbon dioxide pollution heating up the planet, and a leading source of deadly air pollution.
Despite this, the entrenched reliance on coal remains hard to change, in part because of the influence of the coal industry and the need to ensure energy security, despite the climate risks, experts say. Coal is abundant in Indonesia, which is the world’s top exporter of the fuel burned in power plants.
In January 2024, the Indonesian government said it was planning to slash the targeted share of renewables in the national energy mix in the short term, signalling the difficulty in shifting from black to green energy. The new target will hover at between 17 per cent and 19 per cent by 2025, from 23 per cent.
Indonesia and the Philippines have now surpassed China in terms of percentage share of electricity generated from coal.
China is the world’s largest coal producer and consumer, but it is also the largest investor in and producer of green energy. This is helping the nation to slowly reduce its dependency on coal for power generation, falling from 81 per cent in 2007 to 60.7 per cent in 2023, data from Ember shows.
In China, wind and solar produced 15.5 per cent of electricity in 2023. South-east of Indonesia, in Australia, 31 per cent of electricity came from wind and solar that year. The global average is 13 per cent, according to Ember.
Poland, also historically reliant on coal, has similarly cut its use of the fuel as wind and solar have grown. In 2000, coal generated nearly 95 per cent of Poland’s electricity. In 2023, it was 61 per cent, while wind and solar output grew by 26 per cent, causing a 17 per cent drop in coal-fired power generation, according to Ember.
Electricity demand in China rose by 6.9 per cent in 2023, and nearly half of that demand growth was met by solar and wind, Ember said.
By contrast, coal met 67 per cent of Indonesia’s electricity demand growth of 5.1 per cent in 2023 year on year, with gas providing much of the remainder.
In the Philippines, wind and solar generation met about a fifth of the total increase in year-on-year electricity demand of 4.6 per cent.
South-east Asia has the potential to produce many times its power needs from green energy, said experts.
The US government’s National Renewable Energy Laboratory estimates that the region has 30,523 gigawatts (GW) of solar and 1,383GW of wind power generation potential. For comparison, Singapore’s total power generation was about 13GW in 2023.
US non-profit Global Energy Monitor, which tracks fossil fuel and renewable energy projects worldwide, said in May 2024 that there are about 72GW of solar and 150GW of wind power projects in the pipeline in South-east Asia.
But there is no guarantee that all of these will be built.
Building them could meet a large portion of the region’s growing energy needs.
Bloomberg reported on June 21 that the Philippines has become a regional leader in planned clean-power projects as fewer investment restrictions and green-minded policies attract domestic and foreign cash.
Changes such as allowing full foreign ownership of renewable energy projects have already helped secure a pipeline of 99GW of wind and solar developments. That is more than enough power to supply all Philippine households, and is ahead of Vietnam’s planned 86GW and about five times higher than in Indonesia.
And if all 99 GW capacity is built, it should reduce the coal generation, said Ember’s Asia programme director, Mr Aditya Lolla.
But much depends on availability of necessary grid infrastructure to accommodate green electricity, whether enough energy storage capacity is being built, and the ease of moving away from existing power-purchase contracts with coal power generators. “All these determine how coal use will change in the coming years,” he told The Straits Times.
Dr Dinita Setyawati, Ember’s regional senior electricity policy analyst, said: “Indonesia’s investment in renewable energy has lagged significantly behind the rest of Asean in recent years. Renewable capacity has increased by 6.6 per cent on annual average between 2018 and 2023, compared with an average of 13 per cent annual increase in Asean.”
She said renewable energy technologies have become a cost-competitive alternative to fossil fuels, but need better policy support to lure investment. Much of Indonesia’s renewable energy comes from hydropower and geothermal plants.
For now, coal will remain dominant in Indonesia, which became the fifth-largest coal power generator in the world in 2023, overtaking South Korea for the first time, Ember said.