GENERATION REPORT: COAL AND GAS

institutions have the capacity, the power, and the incentive to put the world on course to meet our global climate and public health goals by ending the flow of capital that has sustained the era of coal for too long,” Ajaz said.

“Until then, energy planning that promotes new coal plants or props up existing coal plants presents a risk and delays the much-needed transition to cleaner energy sources,” she added.

Grid infrastructures will also need to be upgraded to handle the increased load coming from existing renewable energy sources, a project that would require massive investments.

Ajaz flagged that the lack of development in grid systems has made investments in renewables seem to be less attractive.

and solar projects present a wiser investment choice, as they now cost, on average, 40% less than new coal or gas plants.”

Renewable energy investments

The East Asia and the Pacific region continue to dominate the investment in renewable energy globally, securing around 45% of the total in 2019 to 2020, which translates to US$307b annually, according to the International Renewable Energy Agency’s (IRENA) World Energy Transitions Outlook 2023.

In 2022, the region accounted for almost two-thirds of the total investments. China comprised over 80% of the investment in the region on the back of the government’s goal to peak emissions by 2030 and achieve carbon neutrality by 2060.

Globally, the total installed solar capacity reached 1,047 GW. Of the total 191 GW installed in 2022, accounting Asia for 59% of the installations, IRENA said.

The region also led in onshore wind with 393 GW out of the 836 GW total capacity. Along with Europe, Asia contributed 50% to the total offshore wind capacity, the report read.

Transition ‘not fast enough’

Ajaz observed that whilst significant strides have been taken to rid power mixes of coal, the transition away from existing and planned fossil fuel projects is still not moving “fast enough.” “Even though the past year has underscored the risks — especially in Asia — of relying on natural gas imports, the region ranks highest in the world for prospective gas power plant buildout,” she added.

Not only that, GEM found that even as financial institutions are implementing coal divestment policies, coal could still source funding from other financial pipes.

“For the era of coal to come to an end, all these pipes must be closed. Financial

Additionally, governments and financial institutions should further look into equitable funding for the transition, similar to the JETP in Indonesia and Vietnam. This is particularly important as renewables deployment remains economically nonviable in some Asian markets.

“Renewables are not yet economically viable in many Asian countries. So, switching to renewables in current conditions might mean an increase in tariffs. The cost of switching to renewables is also a significant issue,” Ajaz noted.

“Transitioning away from fossil fuels, especially in the short run, will also come with a financial loss in terms of stranded assets, as the existing infrastructure might end up being abandoned,” she added, citing the case of the Philippines which recently saw its first LNG terminal commissioned.

On top of this, “strong and clear” long term government policies will also be needed for the transition.

Dr. Tay recommended a carrot and stick approach through subsidies for renewables investment as well as carbon tax on emissions. Phase outs will also need to cover both direct and indirect subsidies on fossil fuels towards this end.