Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

CCS will be key as Asia faces steep rise in coal power

© Shutterstock / Svet fotoCoal-fired power and carbon capture.

Ageing coal-fired power is increasingly replaced by renewable energy generation in the US and Europe. However, transitioning away from thermal coal will be complex and slow for Asian nations, particularly India and China, which make up 70% of global coal demand and face a steep rise in power demand.

Significantly, according to the latest report from S&P Global Ratings, the success of meeting net-zero targets for countries such as China, India, and Indonesia, hinges on the future economic and technical feasibility of carbon capture, usage, and storage (CCUS) technology.

Different economic realities and priorities

“The economic realities in Asia Pacific mean that any significant reduction of coal consumption will prove challenging. Large Asian economies are experiencing a strong rise in electricity demand, which is set to continue over the coming decades to sustain economic growth. When it comes to meeting new demand, coal is still seen as the most affordable option for base-load power,” noted S&P.

“At the 26th U.N. Climate Change Conference (COP26) in November 2021, China and India were the two major holdouts on coal, agreeing only to phase down rather than phase out this fossil fuel. In China for instance, coal-fired generation will remain relatively flat and elevated this decade, although its share is set to reduce to 51% of power generation by 2030 from two-thirds today, with faster growth in renewables. In India, coal-fired generation will still expand substantially this decade to meet soaring demand,” added S&P.

Moreover, “Asia’s fairly new coal-fired generation fleet is another reason for its reluctance to turn away from coal. The average age of a coal plant in the US and Europe is between 40 years and 50 years, and most are now approaching the natural end of their useful life spans. In Asia, much of the fleet has been built in the last 10 years, making significant plant closures unlikely before 2030 at the earliest,” said S&P.

Carbon storage sites in Asia among cheapest globally

“The energy transition is also now more complex because of security of supply and geopolitical considerations, exacerbated by the ongoing Russia-Ukraine conflict. China, for instance, has declared that, although its decarbonisation efforts will continue, energy security is its first priority,” added the firm.

Carbon capture and storage may be key

CCS may hold the key to long-term coal usage in Asia’s power sector, but without strong carbon pricing or policy mandates, CCUS technology is unlikely to be applied in power generation, predicted S&P.

Indeed, for CCUS technology to be competitive, it would need a carbon price of $40-$60 per ton of carbon dioxide (CO2), whereas Chinese carbon prices currently trade at less than $10 per ton. The International Energy Association (IEA) estimates the cost of CCUS technology varies widely between $40 per ton and $120 per ton of CO2.

“Financial markets are independently taking action on the energy transition, and often ahead of policymakers. The pool of funding for coal projects is shrinking, with an increasing number of governments, financiers, and investors devoting more attention to climate risks,” added S&P.

“Domestic bank funding is still available in China and India but, like all other funding channels, is steadily decreasing. With investor appetite diminishing, some coal projects are struggling to refinance, with access to capital–and not just its price–increasingly becoming an issue, heightening the risk that some assets may become stranded, or even default,” warned the credit ratings company.

Still, as Energy Voice recently reported, the coal plus renewables energy transition led by Asia Pacific’s largest growth markets – China and India – is gathering speed. Significantly, it is a lot cheaper than the natural gas plus renewables path followed by the EU and US to lower emissions.

More from SG Voice

Latest Posts