Coal Backlash Creates Energy Dilemma in Southeast Asia

Southeast Asian governments are finding themselves caught between pressure to meet regional power demands and backlash from citizens fearing the environmental effects of coal-fired electrical plants.

How these growing economies will resolve the conflicting interests could have major implications for construction orders for these plants awarded to multinationals, as well as regional energy prices, Nikkei reported.

When Thai Prime Minister Prayuth Chan-ocha traveled to Songkhla Province in the south last November, demonstrators protesting the construction of a local coal-fired plant clashed with police. At least 15 people were arrested in the incident.

But the protesters seemed to have achieved a victory of sorts: Coal-powered plant projects in both Songkhla and Krabi provinces have come to a virtual standstill.

The Krabi and Songkhla plants, originally set to begin operation in 2019 and 2021, respectively, would have helped solve the energy shortage plaguing Thailand’s south. Together, they would have generated 2.8 million kilowatts of electricity, enough to cover nearly 10% of Thailand’s net output increase goals for 2036.

But the local resistance to coal plants has set back those plans. The power stations have become a touchy issue even for Thailand’s powerful military junta.

Myanmar Millstone

In neighboring Myanmar, the lack of electricity has been the biggest millstone holding back the country’s industrialization. Even in that context, coal plants have faced resistance.

TTCL, a joint venture between Toyo Engineering of Japan and Thailand’s Italian-Thai Development, won an order to build a $2.8 billion plant in Mon State in 2015. After two years, a storm of protests has stalled the project.

The facility, of a type the Japanese government calls “advanced-ultra super critical,” is said to employ the latest technology to minimize the environmental impact. But that is not enough to placate opponents, who say the plant will still produce smoke and soot.

TTCL plans to build another $2.8 billion coal plant in the neighboring state of Kayin. The state government supports the project, contending that it is essential for economic growth. Opposition has erupted among local residents over that power station as well.

The International Energy Agency says Southeast Asia produced 918 billion kilowatt-hours of electricity in 2016, which is roughly in line with Japan. That output is 2.5 times the figure in 2000. But coal’s share of power generation also jumped from 21% to 35%.

A common thread tying Southeast Asian countries is the desire to rein in the balance of international payments.  The deeper penetration of automobiles will inevitably result in greater petroleum imports, so powering part of the grid with cheaper coal looked like the clear solution.

The IEA estimates that Southeast Asia will generate 2.2 trillion kilowatt-hours of electricity in 2040, more than double the 2016 figure. Coal is expected to produce 40% of that power, outstripping natural gas.