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A new coal war frontier emerges as China and Japan compete for energy projects in Southeast Asia

April 3, 2018
tags: ,

By Paul Homewood

 

From The South China Morning Post:

 

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A joint report by Greenpeace, the Sierra Club and CoalSwarm indicates that Southeast Asia will be the new epicentre of coal production. Asia accounts for 85 per cent of new coal power development in the world’s top 20 coal producing countries, with China as the leader of the pack. However, while tighter restrictions on domestic coal plants have been imposed by the central government to curb pollution, Beijing has pushed the development of high-efficiency, low-emission coal plants across Southeast Asia as part of the “Belt and Road Initiative”.

As China is expanding its influence, Beijing’s foremost strategic competitor in Asia, Japan, is being forced to step up efforts to combat its shrinking influence in the region. The booming energy sector of Southeast Asia, especially coal, is proving to be the new front line in the geopolitical rivalry between Asia’s two industrial giants.

China’s coal drive is part of a larger energy-driven investment policy that follows its attempt to reduce carbon emissions by clamping down on the coal industry and pledging to increase investments in renewables. However, Chinese energy planners have realised they cannot relinquish coal as a major power source for the foreseeable future. The country remains highly dependent on coal, with coal sources accounting for roughly 73 per cent of China’s electricity production in 2014, according to World Bank numbers. Instead of abandoning coal, China is developing cleaner and higher-efficiency coal plants – and, as a boon to its plan for greater regional influence, aims to export the technology abroad.

China is developing cleaner and higher-efficiency coal plants – and, as a boon to its plan for greater regional influence, aims to export the technology abroad

To that end, the China Development Bank and China Export Import Bank last year lent US$25.6 billion to global energy projects. This figure surpassed even the US$22.6 billion provided by the International Bank for Reconstruction and Development.

From a market perspective, Beijing’s plan to become the world’s primary high-efficiency, low-emission technology provider comes at the right time. Coal consumption across Asia is slated to outpace that of China over the next 20 years, coupled with an absolute increase in global coal demand over the next seven years. The more than 1,600 coal plants scheduled to be built by Chinese corporations in over 62 countries will make China the world’s primary provider of high-efficiency, low-emission technology.

Because policymakers still regard coal as more affordable than renewables, Southeast Asia’s industrialisation continues to consume large amounts of it. To lift 630 million people out of poverty, advanced coal technologies are considered vital for the region’s continued development while allowing for a reduction in carbon emissions.

Clearly, the countries providing this technology will inevitably expand their sway with regional governments. As a consequence, a race between Tokyo and Beijing over the construction of coal plants is already under way.

China is currently in the lead, having overtaken Japan in 2000 as Asia’s leading exporter of coal industry equipment. It remains the largest technology supplier to India and the second-largest investor in coal projects in Vietnam, behind Japan. It is also constructing Bangladesh’s first clean coal plant. These developments reflect Beijing’s advantage in providing the necessary coal funding. China has been “greening” for years, developing renewables and carbon capture technologies at breakneck speed, while also investing more aggressively in the region than Japan at a time when most multinational banks have restricted coal funding. The results speak for themselves. Between January 2010 and March 2017, the Japan Bank for International Cooperation was involved in five financing deals while Export-Import Bank of China inked seven.

But Japan is not exactly twiddling its thumbs, either. Since the 2011 Fukushima disaster, Tokyo has ramped up coal use and has raced ahead in clean coal technology development. Japan now boasts the world’s most efficient coal-fired plant, which uses less coal to produce more electricity. Seizing on this competitive advantage, Japanese Prime Minister Shinzo Abe has tried to capitalise on these capabilities in a bid to increase Japan’s reach across Southeast Asia – and in China’s backyard. Through the Japan-led Asian Development Bank, Tokyo has pledged US$6.1 billion for projects throughout the Mekong as well as for various other projects from Vietnam to Myanmar, providing an alternative to China’s regional designs.

What’s more, Japan will soon receive a boost from the Trump administration through the Japan-United States Strategic Energy Partnership. The partnership could be a game-changer in terms of Sino-Japanese energy competition, with a joint commitment by Tokyo and Washington to promote high-efficiency, low-emission deployment throughout South and Southeast Asia. With the Trans-Pacific Partnership in the doldrums, the new partnership is designed to counter Beijing’s energy diplomacy through a more coherent bilateral push.

This may well be only the beginning. US Energy Secretary Rick Perry has repeatedly emphasised that coal will be a key part of the Trump administration’s policies. Washington is already working to launch an international alliance that is set to include a host of other countries committed to introducing clean fossil fuel technologies – including a number of Association of Southeast Asian Nation states.

Given that Southeast Asia will account for a large part of the world’s coal use in the coming decades, the geostrategic battle lines are already drawn. Both the US and Japan have a clear interest in limiting China’s rising dominance. Apart from the military dimension, soft power aspects like energy are emerging as the battlefields of the future. Through the partnership with the US and a possible clean coal alliance, Japan may finally have the support it needs to keep up with Beijing’s expansion.

Frederick Kuo is a San Francisco-based writer and broker

 

http://www.scmp.com/comment/insight-opinion/article/2139667/new-coal-war-frontier-emerges-china-and-japan-compete-energy

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25 Comments
  1. April 3, 2018 7:33 pm

    630 million people are living in poverty and billions of whatever currency are being chucked at cleaning up coal power stations.

  2. HotScot permalink
    April 3, 2018 7:57 pm

    Will this be dubbed “The Warm War” by our children and grandchildren?

  3. sarastro92 permalink
    April 3, 2018 9:19 pm

    Notice, Beijing is not aiming for carbon sequestration, only scrubbers mostly to remove particulates … the Chinese don’t believe CO2 and Climate Change are a threat… that’s just propaganda saps and suckers in the West adhere to… the source of Western demise.

  4. markl permalink
    April 3, 2018 9:35 pm

    Hello, is anyone listening? China Development Bank steps in where the World Bank has stepped out. If you’re looking for collusion it’s staring you right in the face. World Bank no longer bankrolls coal fired power plants because of “Climate Change” and China, the new standard bearer ( 🙂 ) for CC, becomes the leader. You don’t have to believe in conspiracy to see what’s happening.

  5. John F. Hultquist permalink
    April 4, 2018 3:05 am

    I think we have CO2 to thank for coal, and now coal to thank for CO2.
    I expect to check out long before coal does.
    Even if a new miracle discovery is announced this month, it would take 20 years of frenzied construction — materials, workers, finance — to make a dent in the coal/gas production now existing.
    Many entities are coming up against a wall of money demands — medical care, pensions, and interest payments on existing debt. It appears there is no room for a frenzied built out of new technology, even if there is a new technology.

  6. AngryScot permalink
    April 4, 2018 8:27 am

    As a mere pilot, I watched, from 35000 feet, the rapid construction of China’s power stations over a period of 15 years (even though it was only 50 miles either side of the airway!). They differ markedly from other sites around the world in that they seem to be preparing for a fuel switch-over at some point in the future as they are building redundant generator structures. My postulation has always been that each and every one of them will be able to utilise, for example, Thorium nuclear technology once it becomes viable, and in a very short timescale. Allied to this is China’s funding of European and Norwegian Thorium power research. Red herring, or are the Chinese really thinking out of the box on this one?

  7. April 4, 2018 9:03 am

    Some of the usual suspects are pushing for net zero UK ’emissions’.

    http://www.climatechangenews.com/2018/03/30/10-years-success-uk-climate-change-act-needs-upgrade/

    • Robin Guenier permalink
      April 4, 2018 4:23 pm

      Climate Change News no longer allows comments. However The Conversation – the original publisher of this article does: http://tiny.cc/wqydsy. Some may interest you – perhaps adding something of your own.

  8. Gerry, England permalink
    April 4, 2018 9:40 am

    Not to mention the work both countries are doing in Africa where the lack of funds from other sources has left a gap. Not sure if Japan is doing it to get resources but China certainly is.

  9. April 4, 2018 10:20 am

    Black Dick’s ECIU issue a rallying call for windmill replacement.

    It contains this gem:

    Report author Dr Jonathan Marshall, ECIU Energy Analyst, said that with onshore wind the cheapest source of new electricity generation, repowering is a cost-effective way to secure new capacity:

    With a <25% load factor. As ever – the claim is suspicious – anybody seen a credible review of the workings of that "lowest cost electricity" is from onshore windmill claim?

    They seem hell bent on following S. Australia.

    • A C Osborn permalink
      April 4, 2018 11:13 am

      His JOB depends on it.
      So don’t expect even a grain of truth.

    • April 4, 2018 4:21 pm

      If it’s so cheap why is it getting subsidised?

  10. Harry Passfield permalink
    April 4, 2018 11:34 am

    Hi Paul,
    Back in February, in a comment on your post: “UK Wind Capacity Is Increasing–But At What Cost?” I said that I would write to my MP and ask him to forward my letter to Claire Perry for her comments. Well, at long last she has replied. I hope you don’t mind but I have copied her reply here. Basically, even though she claims to have read your blog post she fills the letter with loads of waffle and claims that the ‘low carbon sector’ is thriving and providing loads of work for people. That she fails to understand the ‘broken window fallacy’ is obvious.

    I am working on a response – either that or I shall go outside and bang my head against a brick wall:

    Thank you so much for your letter dated 1 March 2018, on behalf of your constituent concerning electricity prices.

    The UK is a world leader in cutting emissions while growing the economy. Provisional statistics indicate that UK emissions in 2016 were 42 per cent lower than in 1990 and 6 per cent below those in 2015. At the same time, the UK’s GDP has increased by 67 per cent since 1990 showing that a strong, growing economy can go hand in hand with reduced emissions.

    The global transition to a low carbon economy offers huge growth opportunities which the UK is well placed to take advantage of as a core element of our lndustrial Strategy. Our low carbon sector already employs over 230,000 people directly and another 200,000 through supply chains. Analysis for the Committee on Climate Change estimated that the low carbon economy has the potential to grow 11 per cent per year between 2015 and 2030 – four times faster than the rest of the economy.

    I would like to thank your constituent for including the article which I read with interest. Offshore wind can play an important role in the energy mix alongside new nuclear and new gas into the next decade and beyond. Offshore wind costs continue to fall faster than anyone could have predicted. The dramatic reduction in the cost of offshore wind is an example of how business innovation can be supported through effective market design. The Government will continue to work closely with the offshore wind industry to further drive down the costs of
    clean power, while building UK supply chains.

    I would like to assure your constituent that the Government does recognise concerns over bills. Her Majesty’s Government (HMG) is taking action to control electricity prices using the energy review, so that the Government and regulators can continue to deliver secure, affordable power, while ensuring the UK meets íts domestic and international climate targets.

    Thank you again for taking the time to write. I hope you and your constituent find this information useful.

    THE RT HON CLAIRE PERRY MP
    Minister of State

    • April 4, 2018 1:39 pm

      Better get your crash helmet out then!!

      • Harry Passfield permalink
        April 4, 2018 3:36 pm

        (grin)

    • dave permalink
      April 4, 2018 4:18 pm

      On the subject of waffle, I thought I would share this item, highlighted by the magazine Computer Active:

      “What are they talking about?

      What they say:

      Tesla boss Elon Musk

      ‘Narrow AI is not a species-level risk. It will result in dislocation…lost jobs…better weaponry and that sort of thing. It is not a fundamental species-level risk, but digital super intelligence is.’

      What they mean:

      ‘Self-driving cars won’t take over the world. But if someone makes a computer that is smarter than a human, it might decide the world is better off without us.’ “

      • dave permalink
        April 4, 2018 4:25 pm

        “Government and regulators can continue to deliver secure, affordable power…”

        The GOVERNMENT is delivering power? I have a persistent image now of Ms Perry and Ms May’s butts waving in the air as they puff away on stationary bicycles, putting just enough into the grid for me to send this message.

      • April 4, 2018 4:26 pm

        ‘a computer that is smarter than a human’ – even a smartphone can do things humans can’t do. A computer that generates its own power supply would be quite smart 😉

    • April 5, 2018 4:02 am

      It never ceases to amaze me.

      Some people seriously advocate for certain kinds of energy on the basis that while a particular energy type contributes only ten percent of the energy total, it is vastly superior to another type that produces seventy five per cent. The argument being that it takes five times as much labor to produce the ten percent type than it does to produce the seventy five percent type.

      Somehow we are supposed to want to choose the inefficient, labor intensive type because it creates more jobs. Even more amazingly, even though it is incredibly labor intensive, it is also cheaper by some mysterious system of reckoning.

      It is almost as if there was nothing else we could possibly come up with as a use for all that capital and labor than producing unreliable, expensive, labor sucking energy. No buildings to be retrofitted or replaced with safer construction materials or design, no hospitals to be physically upgraded, no bridges to be made safer, no transportation modes made more efficient. Just to name a few items that could be improved without any immediate, identifiable return on investment but would at least make everyone feel a lot better about life in general than windmill, sunshine and water wheel (tidal generators) power sources do.

      • Harry Passfield permalink
        April 5, 2018 11:49 am

        Some very good points, Ron. Perry could equally have argued that by closing down JCB instead of coal-powered generation the country would benefit from the full employment of men (oh, and women in these gender-neutral times) with shovels.
        She does not understand that she is being misled by the green blob in her ministry: cheap power generation is the easiest way to a healthy GDP. That said, she should concentrate on cleaning up real pollution and not the chimera that is CO2. If she worked in the real world she would understand the concept of USPs and getting value for money, but like all politicians she is happy spending other people’s money on boondoggles where she would not risk her own.

  11. Robin Guenier permalink
    April 4, 2018 4:29 pm

    It’s interesting that the link in the article re China’s attempt to “reduce carbon emissions” leads to an article entitled “China helping push carbon emissions to all-time high”!

  12. April 4, 2018 9:04 pm

    Here Harry I analysed Perry’s guff

    • April 4, 2018 9:06 pm

      If you can’t read that, click Ctrl+ to boost the zoom of your browser

  13. Harry Passfield permalink
    April 5, 2018 7:39 am

    @Stewgreen. Thanks for that analysis. It’s obvious that Claire Perry had one of her green assistants put that letter together. It was full of B.S. baffles brains data, like the unverifiable growth in GDP. I shall work on it.

  14. Harry Passfield permalink
    April 6, 2018 2:40 pm

    Hi Paul! I stopped banging my head against the wall and wrote a response to Claire Perry. It’s three pages and I have it saved as a PDF. If you’d like to see it I’d be happy to fwd it. I’d value your thoughts.

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