Financing, investments needed to phase out coal

by Danessa Rivera – The Philippine Star, 30 Aug 2021

MANILA, Philippines — International concessional financing and private sector investment are critical in the phase out of coal developments in Asian countries, including the Philippines, which still has a heavy pipeline of fossil fuel-based plants, according to an official of the World Bank Group.

“Private sector participation is also critical, but concessional financing, international support will help accelerate in the decarbonization in those countries,” Jie Tang, World Bank Group practice manager for the energy and extractive global practice, said during a Singapore International Energy Week (SIEW) Energy Insights webinar last week.

He was referring to the four Asian countries part of his coverage, namely China, Vietnam, Indonesia, and the Philippines.

“We see that governments are trying to make a lot of effort to slow down having additional coal power in these four countries, but we see that they will continue coal power in the next five years, particularly in Indonesia, the Philippines, and Vietnam. Their coal power addition is huge, but maybe slower than what we see in the past given the climate change efforts of the government,” Tang said.

To speed up their decarbonization efforts, Tang said the four countries would need around $11 trillion in investments in the next 10 years.

“There is a huge financial resource needed, (and) that would result in increasing cost between 10 to 20 percent in those countries. These governments, they are waiting for international support on concessional financing,” he said.

World Bank, as an international financing institution, is working and struggling on how to mobilize international concessional financing to support those countries so they aggressively decarbonize the energy sector.

The four countries account for 58 percent of the world’s coal consumption, with China accounting for 52 percent alone. Most of their coal usage or 70 percent was in power generation.

The Philippines is among the countries in the Asian region that will take time in phasing out coal, given the huge coal projects in the pipeline.

Despite the clamor for the phase out of coal and the development of more renewable energy projects, it was only last year when the Department of Energy issued a moratorium on new coal plants as it recognized the need for the country to shift to a more flexible power supply mix.

Tang said the four countries would have their energy transition go through phased stages, which are slowing down coal development, stabilizing coal consumption and decreasing coal investments.

“China is moving to second stage, stabilizing coal consumption. But Vietnam, Indonesia and the Philippines, are still in the growing phase. Stranded assets going on and are being continued investment in the future. The pace of energy security demand and renewable energy demand could not catch up with the load growth, also storage and intermittency issue,” he said.