Sara Jane Ahmed is an energy finance analyst at the Institute for Energy Economics and Financial Analysis
From oil price shocks to billion-dollar bailouts, the mayhem wrought on the energy sector by coronavirus has led many to wonder just which companies will survive and which technologies will thrive when we emerge from the crisis.
Early signs are that volatility in the fossil fuel sector is further driving the case for Asia to embrace the security of domestic renewable energy and, if anything, hasten the clean transition.
Late last year, I took part in a meeting to talk energy with Asian political leaders, including the Japanese environment minister; large companies such as Macquarie Bank and electric car company Tesla; and the Asian Development Bank.
For years, I have found myself in similar settings, hearing that coal is the only cheap, reliable option to fuel Asia's growth. But as I sat in this room, it dawned on me just how much the world has changed. Now, coal is under threat.
Their question was not if we should do it but rather which route we take: can the transition be planned and orderly, or will we waste time and money by allowing vested interests to lock in higher priced polluting power?
The Philippines are a perfect example of the debate playing out in real life. In February I met Energy Undersecretary William Felix Fuentebella and came away with the clear sense he backs a move away from coal power and toward a renewables-led, secure and flexible energy system. In late March the Philippines approved 1.2 gigawatts of offshore wind capacity.
Not that long ago, the Philippines was busy planning over 10 gigawatts of new coal plants. Today, the likelihood is that no more coal power will be built past 2023, if at all.
The Philippines is far from alone. In October 2019, citing a report by analysts Global Energy Monitor, Bloomberg reported that "the pipeline of thermal power projects beginning in Southeast Asia has fallen to zero this year everywhere except Indonesia."
A rapid energy transition is unfurling across Asia, from the world's biggest floating solar farm in Thailand to Taiwan quadrupling its target for renewable energy to Vietnam hitting its solar targets six years ahead of schedule.
Even Indonesia, with its significant domestic coal reserves, signaled in January it will replace its aging coal plants with renewable energy.
But competition is the key. Rather than price guarantees for renewables, such as feed-in tariffs, we need well-structured bidding, such as auctions. These transparent processes shed light into the corrupt backrooms which let vested interests thrive. Around the world, auctions deliver the kind of low-cost power which Southeast Asia needs for growth and competitiveness.
The situation in India holds up a mirror to events playing out in Southeast Asia today. Like Southeast Asia, India was once heralded by the coal industry as its next big thing. Smart policy, such as open bidding through auctions, has pulled the rug out from under their feet.
Today, as Reuters columnist Clyde Russell put it, India's "domestic coal sector is under siege," with the price of renewables "coming in at levels at which even existing coal plants cannot compete." Indeed, since 2014, a remarkable 84% of India's coal pipeline has been canceled.
There is no doubt that the financial sector is on board. Over 120 major financial institutions, including Asian banks such as Standard Chartered and DBS Group Holdings, have now placed restrictions on funding coal and other fossil fuels. Even U.S. giant JPMorgan Chase, known as the largest and most enthusiastic lender to fossil fuels, has now signaled an end to coal finance.
So what is keeping cheaper and more efficient options from overwhelming expensive, obsolete thermal power? The answer is politics that props up bad economics.
Coal power development in Southeast Asia is reliant to a large extent on investment from Japan, China and South Korea. These governments retain an interest in propping up their own domestic manufacturers to sell outdated coal technology overseas.
Yet even here, things might be changing. South Korea's government won a majority of seats in April on a platform of ending overseas coal finance, and in Japan the big three commercial banks have now signaled a desire to move away from coal.
Following international criticism and a high-level wrangle over potential Japanese funding for the Vung Ang 2 coal plant in Vietnam, Environment Minister Shinjiro Koizumi has courageously made public what the world already knows: Japan should not be funding a dying coal industry in the face of a climate crisis. Even Tadashi Maeda, governor of the Japan Bank of International Cooperation, agrees. In an interview with the Diamond Online in April he said: "We will no longer accept loan applications for coal-fired power generation projects."
If Japan puts an end to exporting coal power and focuses exclusively on catalyzing renewable technology, South Korea and China would be under tremendous pressure to change.
Doing so would be a win-win, not just for Asia, but for the whole planet emerging from one crisis only to face another in the form of spiraling climate risks.