Five years ago, I wrote about the crossroads that the Philippines and Southeast Asia were confronting as the last battleground of coal.
Back then Southeast Asian nations – specifically Indonesia, Vietnam, the Philippines, Myanmar, Malaysia, and Cambodia – were among the top 30 countries with the biggest coal expansion plans. With a total planned capacity of 125,307 MW, they accounted for nearly 15% of the total coal power in the global pipeline.
Southeast Asia chose its path away from coal. Coal pipeline fleets were defeated in the Philippines, while government policies in South Korea and other Asian countries and major bank policies and massive energy finances diverted away from coal financing. The hope to achieve the 1.5°C global goal became more realistic. Unfortunately for the country and the region, that was not the end of the story.
Coal was being displaced, only for another fossil fuel to take its place – fossil gas. A massive 138 GW of new gas-fired power plants and 118 liquified natural gas terminals are being proposed or already being built in the region, amounting to a massive US$33.4 billion in investments, which surpasses even that of China’s gas pipeline in 2022.
This trend is led by the same countries that have embarked on a coal avalanche in the region five years ago, and the very same countries that have vast renewable energy potentials – Vietnam, Indonesia, Philippines, and Thailand. The Philippines alone boasts more than 10 times of renewable energy potential compared to its total installed power capacity at present.
Although couched in the language of transition, this clearly is not a case of fossil gas being a bridge fuel, rather it is another path away from renewable energy. This is a major challenge for the climate vulnerable region given the very small window we collectively have in avoiding runaway climate change in this decade.
It is for this reason that the study, Financing a Fossil Future: Tracing the Money Pipeline of Fossil Gas in Southeast Asia by the Center for Energy, Ecology, and Development comes at a perfect time.
From this report, which maps the drivers and financial backers of fossil gas and LNG developments in Southeast Asia today, we know that Philippine conglomerate San Miguel Corporation Global Power Corporation’s (SMC Global Power) accounts for the largest share of new fossil gas power in the region, with a total of 14.1 GW in the pipeline – a capacity bigger than any other developer’s.
Financial institutions continue to underwrite these projects despite their pledge to decarbonize. In fact, 15 of these institutions which joined the Net-Zero Banking Alliance, Net-Zero Asset Owners Alliance, or Net Zero Asset Managers initiative, still funded US$1.5 billion in loans and bonds for these projects.
International financial institutions and government-backed financial institutions also funded these fossil gas projects, such as the Asian Development Bank, South Korea’s Korea Development Bank and Export-Import Bank of Korea, Germany’s KfW, Thailand’s Government Savings Bank and Export-Import Bank of Thailand, Norway’s DNB Bank, and Japan’s Japan Bank for International Cooperation and Nippon Export and Investment Insurance.
This financing makes the SMC Global Power’s proposals, along with those of other companies in other countries in the region, feasible despite their threat to the environment.
SMC Global Power claims that fossil gas is our best bet for a shift to clean and safe energy, but this could not be farther from the truth. In the Philippines, SMC Global Power’s projects threaten the Verde Island Passage, the center of biodiversity in the Philippines, as large fossil gas carriers ferry their load to and from the terminals to be situated in the area.
While we regret facing this challenge in the region instead of leapfrogging towards 100% renewable energy systems, we are still in a better situation compared to 8 to10 years ago. Renewable energy technologies are far more competitive now, if not cheaper, compared to coal and fossil gas.
There are also more policies and mechanisms in place to advance renewable energy. Global fossil gas, on the other hand, is at an all-time high now – thus the myth that fossil gas can bring the needed development and poverty alleviation, especially in a region with high level of energy poverty, can be debunked.
We hope that this study will provide energy transition advocates, academics, NGOs, communities and movements in the region a wealth of data and analysis on who to engage and put pressure on.
As the famous saying goes, “We do not inherit the earth from our ancestors; we borrow it from our children”. We owe it to our children and their children, and grandchildren to overcome this new challenge.
This story was originally published on Thomas Reuters Foundation News.