ASEAN Clean Coal Policy: Mitigating Regional Carbon Emission

By Granita R. Layungasri

In the emerging countries and the low income countries, planning for long-term energy supply has been a real challenge. These countries need to design policies which create a less carbon constrained energy environment. This is inevitable and shall be done to reconcile with the energy demands of a growing population and economy. For example, we find that the fuel choice for electricity generators has a large impact on CO2 emissions. As such, public support for coal not only prevents the best resource allocation and harms economic efficiency but also contributes a negative impact to the environment. One of the most utilized but controversial fuels today is coal.
Coal has been characterized by a sharp decline in importance over time. Coal popularity has declined because of changing consumer preferences towards cheaper and cleaner fuels, yet 25% of world energy demand is supported by coal. As a fossil fuel, coal has played a significant role in contributing directly and indirectly towards environmental impact.Today, the world burns about 3.4 billion tons of oil, 4.5. billion tons of coal, 2.02 billion tons of natural gas (equivalent to oil), 0.9 billion tons of firewood and biomass fuel and has produced 6.3 ± 0.4 billion tons of CO2 into the atmosphere per annum. This article will examine the dependency of coal in ASEAN (Association of South East Asian Nations) and how the regional institution provides solutions for its member countries. As such, my analysis raises two important questions: (i) what is the nature of coal dependency in ASEAN; and (ii) how ASEAN address the challenge of mitigating coal carbon emission by adopting clean coal technology? In my analysis I will employ a bibliographical analysis and an examination of international legal framework. 

Clean Coal Technology and International Legal Frameworks

In response to the evidence that greenhouse gas concentration is increasing and threatening to change the earth’s climate, the UNFCCC (United Nation Framework Convention on Climate Change) was created in order to achieve stabilization of GHG (Green House Gas) concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time frame sufficient to enable the ecosystem to adapt naturally to climate change, in order to ensure that food production is not threatened, and enable economic development to proceed in a sustainable manner. FCCC obligates all parties including developing nations to adopt GHG emission programmes and address GHG emission within their energy sectors The Marrakesh Accord,Nairobi Framework and Kyoto Protocol also play significant roles in pushing developing countries to address climate change mitigation through the Clean Development Mechanism (CDM) . The Rio Convention justifies any relevant or cross-sectoral programmes and policies to mitigate or to adapt the climate change impacts with high concern on countries with fragile ecosystems, which virtually covers all developing countries. From all the measures offered by Kyoto Protocol, CDM is the most preferable for 
developing countries to obtain expertise to promote clean energy resource such as clean coal technology since the main purpose of CDM is to assist developing countries to
achieve sustainable development while attaining benefits from the GHG reduction project.

The participating developed countries also receive certificates that state their compliance levels on reduction commitments. However, this effort is not without obstacles as the United States (US) insists that it does not see targets and timetables laid by Kyoto Protocol as realistic for developing countries. The US also openly rejects the Kyoto Protocol, Bonn, and Marrakesh Accords by using non-equal responsibility  obligations between developed and developing countries as the primary excuse. However, some 
countries in ASEAN have ratified Kyoto Protocol, such as Indonesia. The Protocol requires every country that has ratified the Protocol to reduce the GHG emission by 2012 through real action.Therefore, Indonesia and other ASEAN countries have created their own initiatives to achieve this target within the regional institution.

Energy Dependency on Coal in ASEAN

Environmental Damage and State Responsibility 

Coal by far is the dirtiest pollutant. Direct impacts of coal include GHG, water pollution and land surface pollutions while indirect impacts vary from health problems to implications on biodiversity. All these result from the use of conventional coal technology within a State or a region. States have the responsibility to reduce further environmental damages caused by excessive use of coal through:

(i)            removal of fossil oil subsidies particularly coal

(ii)            imposing legislative or regulatory requirements for consideration of externality cost to promote clean energy use -particularly cleaner coal technology

(iii)          imposing legislative or regulatory requirements for the 
utilization of life cycle costing which is feasible and costless

(iv)         removal of investment and import restrictions -especially on equipment required for renewable energy

(v)          imposing pollutant taxes to promote emission reduction from marketplaces

(vi)         adopting new technology

(vii)        awarding tax incentives for the renewable energy industry and also clean coal industry

(viii)       settingpollution standards

(ix)         establishing partnership of BtoB (Business to Business, GtoG (Government to Government), and GtoB (Government to Business) to form a mutual 
understanding to promote eco-friendly energy use

(x)          taking active participation on Emission Trading, Joint Implementation, and Clean Development Mechanism. Active participation will generate GHG reduction in developing countries while at the same time assisting the 
industries from developed countries to meet the Kyoto Protocol requirements.

 In short, States have the responsibility to provide several possible techniques and objectives on their nations’ future energy policy for balancing sustainable development challenges. The following figure displays how GHG shows steady progress on increasing environmental risks:

Figure.1 

Energy Dependency on Coal in ASEAN 

Coal is, undoubtly, cheap therefore dependency on coal as a source of energy in
ASEAN is understandable as most countries in ASEAN are developing countries; especially in countries with lavish resources of coal like Indonesia. Coal is popular in ASEAN and it is known as the fastest growing energy source due to its abundance. Also, it is affected by the increasing demand of fuel for electricity generation and the industrial sector. Instead of switching into alternative sources of energy, ASEAN countries tend to expand their coal power plants by building new coal-fired power plants in mega projects. However, this dependency has forced the nations to deal with the challenge of regional environmental degradation. Hydrocarbon combustion and long-term challenges of availability have constrained ASEAN; at risk from the impact of climate change. The mounting challenges in 

adapting and mitigating climate change impact are prominent considerations for designing energy policy in ASEAN today. This situation has also alarmed the World Bank. ASEAN nations are urged to switch to a low- carbon economy particularly because of the  ASEAN tendency towards carbon emission impacts. The high dependency of coal in ASEAN has been acknowledged within ASEAN Forum of Coal as the body is now planning to promote clean coal technology within ASEAN region. The following chart displays the increasing rate of developing countries, especially in ASEAN, contributing to industrial carbon dioxide emission for a forty-year scenario (1995 - 2035). It shows that coal dependency in ASEAN nations would result in significant rise of carbon emission compared with other regions.

Figure.2 

The Role of Adapting Clean Coal Technology in ASEAN Energy Blueprint 

Clean coal technology (CCT) is a set of technologies and industry practices that increase coal-derived energy generation efficiency. This technology set includes coal gasification, carbon capture and sequestration (CCS), or converting coal to chemical fuels (CTL: Coal to liquids). The main objective of the introduction of this technology is to obtain clean energy from coal. From all of the known methods, CCS and IGCC (Integrated Gasification Combined Cycle) are the cleanest technologies to be applied. IGCC is the cleanest technology and is the most favorable for CO2 capture even though it is more expensive than CCS. CCT is one of the best possible applications to implement the clean development mechanism (CDM) in ASEAN. Energy use is influenced by geography and climate, economic structure and the degree of competition in domestic energy market, population density and resource endowment. The unique nature of ASEAN makes it fit for the application of CCT. 

Economics plays the most significant role in the switch from conventional coal technology to CCTs. End-use price is a key factor in influencing energy consumption and CO2 emission. To gain support from the industry, the State has to understand that the greatest need for promoting CCTs is a strong political will which could provide visionary incentives and implementing mechanisms to reduce risks for potential investors. If this neglected by the State, no investors will pay attention to the new technology. Successfully developed clean coal would allow the coal-producing countries and coal- consuming countries to rely safely on an abundant energy resource. CCT is aimed at assisting the governments to form an appropriate approach towards future energy policy. If CSS is adopted within the region of ASEAN, increased coal use will not increase CO2 emission. CCT can also allow more effective constraints to be imposed on CO2 emissions. With present technology and higher quality coal, the cost of electricity generated with CCS is cheaper for IGCC than other technologies such as oxygen driven SCPC (SuperCritical Pulverized Coal). After all, controlling the conventional pollution is easier by using IGCC.

Figure.3


Therefore ASEAN has since initiated  the ASEAN Plan for Energy Cooperation (APAEC) in 2004. Through APAEC, ASEAN member countries are working together to develop clean coal cooperation namely : (i) Promotion of Small-Scale Clean Coal Technology for Rural Electrification; (ii) Greening of Coal-Fired Power Plants in the ASEAN; and (iii) Coal Bed Methane Development. 

The ASEAN member countries broke down the strategies to support clean coal initiatives into a five-year plan (2004-2009). These strategies are: (i) strengthen institutional and policy framework; (ii) promote clean coal technology (CCT); (iii) promote private sector investment (iv) promote intra-ASEAN coal trade; and (v) promote environmental assessment of coal projects. The first strategies should be fully-supported by AFOC (ASEAN Forum on Coal). AFOC will also establish a Coal Business Forum  to create a bond between industries and the State while the promotion of clean coal technology will rely on cooperation between the State, private developers, and media to educate and promote the advantages of present generation coal power plants. These strategies will also be supported by establishing modern coal laboratories in ASEAN and conducting feasibility studies for each project. ASEAN is not facing problems at all.

Coal gasification and CTL (Coal to Liquid) plants are extremely expensive to build and operate. Thus, to gain access to financial and technology resources, ASEAN has established cooperation with European Community (EC). This partnership aims for
development of specific joint regional projects in the energy sector, i.e. electricity, natural gas, clean coal, energy efficiency, renewable energy, etc. The projects are as follows: (i) Implementation of the clean development mechanism (CDM) in the ASEAN energy sector, exchanging experiences in Indonesia; (ii) Master Plan and Feasibility Study for the Improvement of Coal-fired Power Plant in Philippines; and (iii) Strengthening the Capacity of ASEAN Business to Invest under the CDM; (Thai, Indo, Phil) in Thailand. This partnership agreed on total cost estimated is at EUR 38.51 million. The fund includes the individual project partners' contributions of EUR 16.5 million. The commitment 
of the EC is fixed at EUR 21.5 million as grant and the ASEAN Centre for Energy (ACE) makes in-kind contributions to the Programme management at a counter value of EUR 510,000. 

NUTSHELL:
According to Granita, aside from the US perspective that new technology in energy is not suitable in developing countries, ASEAN has proven that the partnership within the region enables the member countries to access and implement strategies ,which in turn are being applied in each member country according to the blueprint. The financial issue in this matter is no longer a problem as the European Community is committed to provide the required capital flows into ASEAN projects on clean coal. Implementing Clean Coal Technology is essential to achieve Kyoto Protocol target’s on climate change mitigation by using Clean Development Mechanism. In short, ASEAN is ready to deal with its dependency on coal by implementing new set of technologies for its existing resource (coal) instead of switching into a total different source of energy. 

ASEAN will benefit from the deployment of IGCC and other clean coal power plants through good promotion and good partnership with the industry by using economical incentives. Because of a guaranteed rate of return on investment and at lowered interest rate, investors will be adequately incentivised. Thus, electricity utilities will be less hesitant to construct IGCC plants. Also, the environmental impact will be controlled along the reduced carbon emission process. 

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