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Lurching to Penury?

by: Red Constantino

We’re likely in for a rude surprise, unless friends in government wise up and start scanning the horizon.

In terms of energy choices the country is facing today, old arguments remain unfortunately ascendant, untested by rapidly developing realities across the world.

Absent a review of strategy, the Philippines is likely to see the rapid deployment of coal-fired power across the archipelago, with 17 plants proposed thus far representing 8,262 megawatts.

We can dispense with issues raised often against the the rise of coal, involving threats to community livelihoods, local pollution, health problems and climate change. Let’s pretend these matters are immaterial; as proponents argue, coal is still the est option and its abundance across the planet means it will remain the go-to energy choice of most countries and thus it will be around for a long while.

Look around, though. Look around. When you get an inkling of the massive realignment of priorities and opportunities taking place elsewhere, except, it seems, in this country, the fecklessness of the coal proposition becomes progressively staggering.

Analysts had already previously projected that around 30,000 megawatts of US coal-fired power would retire over the next ten years. Who would have thought, however, that in less than three years the predictions would be more than surpassed as local and national groups coalesced to secure the retirement of 150 coal plants, or over 58,000 megawatts of dirty carbon energy. Vera Owen, a volunteer who helps lead the Beyond Coal campaign of Sierra Club, said the figure represents over one-sixth of the entire coal capacity of the US and more than a fourth of all coal plants in the country.[1] Huge.

The wind is clearly at the backs of no-coal campaigners in the US, whose only fault is that they appear to be doing a piss poor job at communicating to the rest of the world the huge advances being made by their flourishing grassroots campaign.

Just last week, Nick Akins, the CEO of American Electric Power (AEP), the largest coal burner in the Western Hemisphere of the US, said coal is now being “taken out of the picture” as a fuel for power plants because of federal air quality regulations, particularly proposed rules on carbon dioxide emissions.[2]

This echoed a report Goldman Sachs had released earlier which declared that “the window for profitable investment in coal mining (for export) is closing.”[3] “We believe that thermal coal’s current position atop the fuel mix for global power generation will be gradually eroded,” wrote Christian Lelong, an analyst at Goldman Sachs in Australia, in a report released last July. “Most thermal coal growth projects,” Lelong said, “will struggle to earn a positive return.”[4]

In India, a country touted often as a coal-use leader, there is currently a mega discount sale of over 30 distressed coal power projects. On offer, according to Mitul Thakkar of the Economic Times, “are large power projects at various stages of construction with a combined capacity of 35,000-50,000 megawatts.” But no one wants to them.

And China? The assertion has been oft made that China is building a new coal plant every week, but that’s mostly a canard. The facts: a full one-third of coal plants approved in China in 2011 stalled while investment in new Chinese coal power stations, according to Ailun Yang of the World Resources Institute, “were not even half of what was invested in 2005.”[5] Here is more — China actually closed down over 80,000 megawatts of coal plants during the period 2001 to 2010, and it is planning to phase out an additional 20,000 megawatts. To put that in perspective, wrote Sierra Club’s Justin Guay, in a strident piece that came out last May, the closures represent “roughly the size of ALL electricity sources in Spain,” which hosts the world’s 11th largest electricity sector.[6]

Last September saw Denmark, Finland,  Iceland, Norway and Sweden join the Obama administration in a joint statement calling for an end to coal financing of new coal power plants overseas, except in rare instances.[7] The development came after the US government’s pronouncement in June that it will put in place stringent carbon pollution standards and that it would no longer finance overseas coal plants through the US Export-Import Bank. The World Bank and the European Investment Bank  subsequently dropped support for coal projects.[8] Analysts have also noted that the developments “could curb construction of new plants” in developing countries” and “dampen new export markets for coal mined in the US, Indonesia or Australia.”[9]

There is still significant growth projected in the coal sector, however. A distinguished “market research and consulting team that provides in-depth analysis of global clean technology markets,” Navigant Research recently forecast that the market for coal plant decommissioning in Norther America and Europe will grow from $455 million in 2013 to $1.3 billion in 2016, with the projection going up as far as $5.3 billion between 2013 and 2020 based on research that suggests “a combination of tightening environmental regulations and increasingly competitive alternative energy sources will result in a spate of plant closures.”[10]

Trends are already discernible and momentum has clearly shifted away from the world’s most carbon intensive sector.

Without sustained attempts by friends in government to seriously reassess the country’s energy trajectory, the Philippines will likely be stuck with having to keep to a multitude of increasingly gargantually costly and polluting multi-decade coal plant contracts, while the world moves steadily away from more expensive and more harmful coal. That’s no legacy to leave behind. Our children deserve better.

This piece was first published as an op-ed article for World Energy Day (October 22) as part of “Growing A Better Future Opinion Series” under Oxfam’s global GROW campaign. (http://www.oxfamblogs.org/philippines/grow – a campaign for better ways to grow, share and live together) 

Resources:

[1] “Coal on the decline — 150 coal plants set for retirement,” Sierra Club statement, 8 October 2013. See <http://content.sierraclub.org/press-releases/2013/10/coal-decline-150-coal-plants-set-retirement>

[2] AEP takes coal “out of the picture” as it plans for the future, Jeff Bell, Columbus Business First, 16 October 2013. See < http://www.bizjournals.com/columbus/blog/2013/10/aep-takes-coal-out-of-the-picture-as.html?ana=RSS&s=article_search>

[3] “Demand cools as fight rages over coal-export terminals,” Hal Bernton and Brian M. Rosenthal, The Seattle Times, 3 September 2013. See <http://seattletimes.com/html/localnews/2021747781_coalexportmarketsxml.html>

[4] “Coal at risk as global lenders drop financing in climate,” Mark Drajem, Bloomberg.com, 6 August 2013. See <http://www.bloomberg.com/news/2013-08-05/coal-at-risk-as-global-lenders-drop-financing-on-climate.html>

[5] “What is the future of King Coal in China,” Ailun Yang, WRI Insights, 15 October 2012. See <http://insights.wri.org/news/2012/10/what-future-king-coal-china>. The more strident and interesting take that summarizes Yang’s paper with those of other studies is by Justin Guay of Sierra Club, in “The Chinese coal bubble,” Justin Guay, Huffington Post, 29 may 2013. See  <http://www.huffingtonpost.com/justin-guay/the-chinese-coal-bubble_b_3355508.html>

[6] “The Chinese coal bubble,” Justin Guay, Huffington Post, 29 may 2013. See  <http://www.huffingtonpost.com/justin-guay/the-chinese-coal-bubble_b_3355508.html>

[7] “Obama climate plan wins overseas support in run-up to G20,” David J. Unger, Christian Science Monitor, 5 September 2013. See <http://www.csmonitor.com/Environment/Energy-Voices/2013/0905/Obama-climate-plan-wins-overseas-support-in-run-up-to-G20>

[8] Ibid. 4.

[9] Ibid 4.

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