Vietnam, Indonesia, and Philippines could lose around $60 billion worth of coal assets in the next decade according to a new study by London-based think tank Carbon Tracker.
The study cited tighter environmental policies and competition from renewable energy will reportedly contribute to this decline, serving as a warning to those planning new coal plants.
“This is a warning shot to those investors who are standing at the ledge,” said Matt Gray, the head of power and utilities analysis at the not-for-profit think tank, adding it’s easier to stop a new project than shut down an existing one. “We think it’s a mistake and may result in costly impairments.”
The findings underscored the quick advances in renewable energy and how it’s changing the power landscape, as new wind and solar plants are projected to have cheaper costs compared to coal in those countries amid a combined $120 billion in coal investments by the end of next decade.
According to the International Energy Agency, coal is the fastest-growing energy source in the region through 2040, due to its abundance in places like Indonesia; its relatively low cost; and lax government policies what prioritize access to reliable and affordable electricity instead of decarbonization.
However, costs of renewable sources are also seeing a decline which can challenge coal’s place as a main energy source. In Vietnam, new solar plants may become cheaper than operating existing coal projects by 2027; 2028 in Indonesia; and 2029 in the Philippines. Coal plants will go idle more often and struggle to repay their loans as more cheaper solar and wind generation is added.
“There are a lot of plants in the planning stage, but many of them won’t get built because there are better options in the future,” Bhargava said. He estimates renewables capacity will rise from 8 GW to about 100 GW in Southeast Asia in 20 years.
Vietnam, Indonesia, and the Philippines have all signed the 2015 Paris Climate Agreement, which brings nations together with the goal of limiting carbon emissions and fight climate change. To help fulfill their commitments, the countries are called to pass regulations that support renewable energy investments or control the use of fossil fuel to help accelerate the shift away from coal.
