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TheshadedareasofthemapindicateESCAPmembersandassociatemembers.*

TheEconomicandSocialCommissionforAsiaandthePacific(ESCAP)servesastheUnitedNations’regionalhub,promotingcooperationamongcountriestoachieveinclusiveandsustainabledevelopment.

Thelargestregionalintergovernmentalplatformwith53memberStatesand9associatemembers,ESCAPhasemergedasastrongregionalthink-tankofferingcountriessoundanalyticalproductsthatshedinsightintotheevolvingeconomic,socialandenvironmentaldynamicsoftheregion.TheCommission’sstrategicfocusistodeliveronthe2030AgendaforSustainableDevelopment,whichitdoesbyreinforcinganddeepeningregionalcooperationandintegrationtoadvanceconnectivity,financialcooperationandmarketintegration.TheresearchandanalysisundertakenbyESCAP,coupledwithitspolicyadvisoryservices,capacitybuildingandtechnicalassistancetogovernmentsaimstosupportcountries’sustainableandinclusivedevelopmentambitions.

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COALPHASEOUT

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PAGE\*roman

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iii

Contents

Acknowledgement v

Executivesummary vi

Introduction 1

Chapter1

Currentsituation,trendsandexpansionplans 3

CurrentroleofcoalforpowergenerationintheAsia-Pacificregion 3

Plannedcoalfiredpowergeneration 6

EmissionsfromcoalpowergenerationnotconsistentwiththeParisAgreement 14

ImpactofCOVID-19crisisonpoliciesforphasingoutofcoalintheSouth-EastAsiasubregion 19

Chapter2

Driversofcoalexpansionintheregion 21

Asiancountriesarejoiningtheglobaltrendawayfromcoal 21

DriversofcoalexpansioninAsiaandthePacific 22

Chapter3

Howcantrendsbereversed–pathwaysforatransitiontocleanenergy 27

ParisAgreementcompatibleenergytransition 27

Renewableenergypotential 35

Comparisonofcostsforrenewableenergyandstoragevs.fossilfueltechnologies 37

Integrationtomaximisebenefitsfromrenewableenergypotential 40

Chapter4

Benefitsofatransitionfromcoaltowardsrenewable-basedefficientenergysystem 41

Accesstocleanandaffordableenergy 41

Employment 42

Health,reducedairandwaterpollution,andimpactonwaterscarcity 42

Avoidedriskofstrandedinvestments 43

Energysecurityandindependence 43

Environmentaldegradation 43

Landuse 44

Shiftinginvestment–opportunitiesforagreenCOVID-19recovery 45

Economicimpactsofclimatechange 46

Chapter5

Conclusionandrecommendations 51

References

59

Annexes

64

Annex1

Asia-Pacificcoalfleetpipeline

64

Annex2

Climatechangeimpacts

65

Listofboxes

Box1\ TheadditionalburdenofCOVID-19 44

Listoffigures

Figure1\

CO2emissionsfromcoalbysector 3

Figure2\

Coalgenerationaspercentageofnationalelectricitygenerationin2019 4

Figure3\

CurrentcoalfleetandpipelineinAsia-Pacificregionbystatusandtechnology 8

Figure4\

Currentcoalfleetandpipeline(left)andagedistribution(right)intheNorthand

CentralAsia(NCA)subregionbystatusandtechnology 10

Figure5\

CurrentcoalfleetandpipelineincountriesintheEastandNorth-Eastsubregion(ENEA)

withstableorcontractingcoalcapacity,bystatusandcombustiontechnology 11

Figure6\

CurrentcoalfleetandpipelineinChina,bystatusandcombustiontechnology 12

Figure7\

Coalcapacitybystatusandtechnology,incountriesintheSouthandSouth-WestAsia

(SSWA)subregionwithhighexpansionplanscomparedtocurrentcapacity 12

Figure8\

CurrentcoalfleetandpipelineinIndiabystatusandtechnology 13

Figure9\

Coalcapacitybystatusandtechnology,(left)andagedistribution(right)forcountries

intheSouth-EastAsian(SEA)subregion(allcategories) 13

Figure10\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityintheAsia-Pacificregion 14

Figure11\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityintheNorthandCentralAsiasubregion 15

Figure12\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityinthecountriesoftheEastandNorth-EastAsiasubregionwithstable

orcontractingcoalcapacity 17

Figure13\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityintheChina 17

Figure14\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityinIndia 18

Figure15\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityinthecountriesoftheSouthandSouth-WestAsiasubregionwithhigh

capacityexpansionplans(Turkey,Pakistan,BangladeshandSriLanka) 18

Figure16\

Estimatedemissionsovertimeresultingfromcurrentcoal-firedpowergeneration

capacityinthecountriesoftheSouth-EastAsiasubregion 19

Figure17\

PotentialcoalgenerationinNon-OECDAsiaagainstParisAgreementbenchmarks 28

Figure18\

Levelizedcostofelectricity–acomparisonbetween

fossilfuelsandrenewable

sources,2019 37

Figure19\

Shiftinenergyinvestmentsfromcurrentpolicytoa1.5pathway 45

Figure20\

ProjectedchangesinGDPpercapitainsubregionsduetochangesinglobalmean

annualtemperature

48

Figure

21\

ProjectedGDPpercapitagainsfromlimiting1.5°Cversus2°Cwarmingbysubregion

49

Figure

22\

ProjectedchangesinclimateextremesoverfiveAsia-Pacificsubregions

67

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PAGE\*roman

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PAGE\*roman

v

Listoftables

Table

1\

ShareofcoalinpowergenerationandcapacityintheAsia-Pacificregionbyeconomy

5

Table

2\

ThecoalpipelineintheAsia-Pacificregion:Currentexpansionplansandrecentchanges

7

Table

3\

CountrygroupingsbyAsia-Pacificsubregionandcoalcapacityexpansioncategories

9

Table

4\

ProvidersandrecipientsofthehighestamountofG20internationalpublicfinance

forcoal,2016-2017,annualaverage(millionUnitedStatesdollars)

24

Table

5\

Shareofunabatedcoal-firedpowerintheelectricitysectorfor1.5°Ccompatible

pathwaysatglobal,regionalandnationallevels

33

Table

6\

Benchmarksfortheshareofrenewableenergyforpowergenerationfor1.5°C

ParisAgreementcompatiblepathwaysattheglobal,regionalandnationallevels

34

Table

7\

GlobalandregionalWeightedAverageLCOE(2019$/MWh):Selectedcountries

andregions

39

Table

8\

CoalfleetcapacitypipelineinAsia-Pacificbycombustiontechnologyandfueltype

64

Table

9\

Climateimpactindicators

66

Table

10\

ExtremeindicatorforspecificESCAPmemberStates

68

Acknowledgement

ThisreportwasdevelopedbytheEnergyDivisionofESCAPinpartnershipwithClimateAnalyticsundertheoveralldirectionandguidanceofHongpengLiu,DirectoroftheEnergyDivision,andMichaelWilliamsonSectionChiefoftheEnergyDivision.

KavehZahedi,DeputyExecutiveSecretaryprovidedoverallreviewandguidanceto

finalizethereport.

TheprincipalauthorsfromClimateAnalyticswereAnnaChapman,UrsulaFuentes,GauravGanti,BillHare,KatharinaLehmann-Uschner,FahadSaeedandJessieRuthSchleypen.

ThemaincontributorsfromtheEnergyDivisionincludeMichaelWilliamsonandDavidFerrari.

PeerreviewandvaluablesuggestionswereprovidedbyMatthewGiddenandDeborahRamalopeandXunpengShi.

RobertOlivereditedthemanuscript.ThecoveranddesignlayoutwerecreatedbyLowilEspada.PrachakpornSophoncoordinatedlayoutdesignandproofreading.

MitchellHsieh,KatieElles,KavitaSukanandan,ChristopheManshoven,SompotSuphutthamongkhonandChavalitBoonthanomoftheESCAPCommunicationsandKnowledgeManagementSection,coordinatedthedisseminationofthereport.

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Executivesummary

TheAsia-Pacificregion,morethananyotherglobalregion,ishighlyreliantonfossilfuels.HowittransitionsawayfromfossilfuelswillbeapivotalissueforAsia-Pacificandtheworldinthecomingyears,inlightofthecurrentandfutureclimateimpactsandthesustainabledevelopmentbenefitspossiblethroughanenergytransition.

Thispaperaimstoprovideinsightsintohowtheregioncantransitionawayfromcoaltoarenewable-basedefficientenergysystemcompatiblewiththeParisAgreementandSustainableDevelopmentGoals(SDGs).Thestudybringstogetherasystematicreviewofliteratureanddatatoprovideabackgroundonthecurrentsituationaswellasdriversofcoalexpansionintheregion,optionsforacleanenergytransitionandthebenefitsofatransition,tohighlightpolicyoptions.Thepaperreviewsthedataoncoal’sshareintheAsia-Pacificregion’spowergenerationandcapacity,andassessesthebenefitsofatransitionawayfromcoal.Itpresentsananalysisontheimpactofgreenhousegasemissionsattheregionallevelaswellasregionalimpactsofglobalwarming,illustratingtheimportancefortheregionofachievingtheParisAgreementgoals.Thepaperconcludeswithareviewofprovenpoliciesbasedonexistingliterature,evaluatingtheirpotentialapplicationintheregiontoproviderecommendationsforGovernmentstoadoptbestpractices.

CoalgenerationisstillexpandinginAsia-Pacific–againstthetrendinotherregions

TheAsia-Pacificregionhasaverylargeshareofcurrentglobalcoalcapacityandgenerationaswellasexpansionplans.Atotalof27countriesintheAsia-Pacificregionaccountforabout76percentofcurrentglobalcoalgenerationcapacityandforalmosttheentire(94percent)globalpipeline1ofcoal-firedpowerplantsunderconstruction,plannedorannounced.ThecountriesintheSouthandSouthWestAsiasubregionwithcoalcapacityatpresentareallexpandingtheircapacity,mostofthemhaveveryhighexpansionplanscomparedwiththeircurrentcapacity,reflectingtheirfast-growingenergysupplyparticularlyelectricitydemand.ThegroupofcountriesinSouthandSouth-WestAsiawithhighexpansionplans(Turkey,PakistanandBangladesh)includeonly2percentofcurrentcoalcapacitywithintheAsia-Pacificregion,but13percentoftheexpansionpipelinewithinthisregion.WhileIndiastillreliesstronglyoncoalforpowergeneration,coal-firedpowergenerationhasdecreasedandthepipelineisshrinking.Withstrongpoliciestoenhancerenewableenergyuptake,thereispotentialforIndiatomoveawayfromcoalfaster.

South-EastAsiaischaracterisedbyparticularlyhighgrowthofdemandinenergy,andinparticularelectricitydemand,andisdominatedbycountrieswithexpansionplans.Itincludes5percentoftheAsianandPacificcoalcapacity,but16percentofitscoalpipeline.Mostofthesubregion’scountriesthathaveexpansionplansalreadyhavehighcapacity(Indonesia,thePhilippines,ThailandandVietNam),twohaveexpansionpipelineslargerthanthecurrentcapacity(VietNamandthePhilippines)andseveralhavecurrentlylowcapacitybutlargeexpansionplans(CambodiaandtheLaoPeople’sDemocraticRepublic).

1“Pipeline”referstocoalfiredpowerplantsunderconstruction,plannedorannounced.,plannedcoalcapacityincludesthosethatareindi?erentstagesofpre-permitdevelopmentorhavereceivedallnecessaryapprovalsbutnotyetbegunconstruction.

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Executivesummary

Evenwithoutcountingtheadditionalcapacitythatisinthepipeline,emissionsfromcoal-firedpowergenerationintheAsia-Pacificregionwouldcontinueataveryhighleveluntilafter2040,andwouldonlybephasedoutbyaround2060.ThisisinstarkcontrasttotheneedsoftheParisAgreementLong-termtemperaturegoalwhichwillrequiretheglobalphase-outofunabatedcoalby2040andtheachievementofpeakcoal-firedpowergenerationby2020beforequicklyreducingafterwardsto80percentbelow2010levelsby2030.Existingcoalplantassetsareatriskofbecomingstrandedassets.Anynewcapacitywillbeexposedtoevengreaterrisk,threateningtounnecessarilyincreasethecostoftheenergytransitionandplacingahigherburdenontheemergingeconomiesthatarelessabletoaffordit.Atthesubregionallevel,thisriskisparticularlyhighinthesubregionswithrelativelynewcoalcapacityandlargeexpansionplans,suchasinSouthandSouth-WestAsiaandSouth-EastAsia.

Theglobaltrendofdecliningcoalcapacity,nowexpectedtobeacceleratedbytheCOVID-19pandemic,isdominatedbytrendsoutsideoftheAsia-Pacificregion,particularbyrecordretirementsintheEuropeanUnionandtheUnitedStates.ThepictureintheAsia-Pacificregionisdifferent,withanoverallnetincreaseofcoalcapacityby10GWinthefirsthalfof2020thatwasmainlydrivenbyChina(9.6GW).OutsideofChina,netretirementsintheRepublicofKorea,theRussianFederationandIndiahavebeenalmostcancelledoutbyanetincreaseincapacityinJapan,VietNam,BangladeshandIndonesia.

Lookingforward,thesharpreductionincostofsolarandwindpoweraswellasstoragetechnologies–particularlysolarphotovoltaics(PV)–togetherwithpoliciesagainstairpollution,increasingadoptionofclimatechangepoliciesaswellasawarenessoftheneedtophaseoutcoaltodelivertheaimsoftheParisAgreement,isleadingtoanincreasingmovetophaseoutcoalforpowergenerationatthenationalorsubnationallevel.Therearealsoclearsignsofanincreasingaversiontowardsfinancingnewcoal-firedpowerplantsamongmanygovernmentandinvestors,giventhesetrendsandtheincreasingawarenessoftheriskofstrandedassets.

DriversintheAsia-Pacificregionofsupportforcoalandexpansionofcoal-firedpowergeneration

Contrarytotheglobaldriversretardingtheuseofcoal,therearefactorsthatarestilldrivingsupportforcoalandexpansionofcoal-firedpowergenerationwithinmanycountriesintheAsia-Pacificregion.Theseinclude:highdemandgrowthinSouthandSouth-EastAsia;thepresenceofalargeshare(morethan60percent)ofglobalcoalreservesintheregion;andahighdependencyonincomefromcoalexportsinsomeofthecountriesintheregionwhoseGovernmentssupportcoalminingandcoal-firedpowergeneration,includingthroughsubsidiesandpublicfinance.

SupportforcoalintheAsia-Pacificregionisdrivenbythegeopoliticalinfluenceoffourcountries–China,Japan,theRepublicofKoreaandIndia–thathavehistoricallyreliedoncoalandarelargecoalimporters.Governments,government-ownedfinancialinstitutionsorgovernment-ownedutilitiesinthosefourcountriesarestronglysupportingcoalexpansionintheregion.ThemainrecipientsofthissupportarecountriesinSouthandSouth-EastAsia–Bangladesh,Indonesia,PakistanandVietNam.Internationalsupportintheregionandthelargeinfluenceofthecoalindustryonnationalpolicyanddecision-makinghassupportedthecontinuingprevalenceofthenarrativeofsupposedlycheapcoalandtheneedtoprovide“baseloadpower”toaddressthegrowingenergydemand.Thisnarrativeiskeptalivebyvestedinterestslargelyfavouringcoal.Togetherwithinconsistentpolicysignalsanduncertaintyregardinglong-termgoalsaswellascomplexenergypolicyresponsibilitieswithinGovernmentswiththestronginfluenceofstate-ownedsourceshasledtoinvestorsholdingbackmorethaninotherregions.Ithasalsoresultedinadelayinthedevelopmentofpoliciesandenergyplansneededtoovercomebarrierstofasterexpansionandintegrationoflargersharesofrenewableenergy,especiallywindandsolar.

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Benchmarksandbenefits–pathwaysto100percentrenewableenergyinlinewiththeParis

AgreementandSustainableDevelopmentGoals

Basedonmultiplelinesofevidence,arangeofbenchmarksforthepowersectorhavebeendevelopedthroughanin-depthanalysisofmodellingstudies,withbetween50to80/85percentofrenewableenergyshareachievableby2030inSouthandSouth-EastAsiaby2030,onapathwaytowards100%renewableelectricitygenerationby2050.UtilizationofsolarandwindcouldsatisfytheneedsofalmostallSouthandSouth-EastAsiancountriesmanytimesover.Renewableenergycostshaverapidlyfallenduringthepast10yearsduetotechnologyimprovements,economiesofscale,competitioninrenewableenergysupplychainsandadvancingindustryexperience.SolarPVisnowthecheapestsourceofnewelectricitygenerationinmostpartsoftheworld,includingcountriesinSouthandevenSouth-EastAsia,whichhadshownhighercostsinthepast.Feasiblecostreductionsof40-50percentinsolarPVinIndonesia,ThailandandVietNamaswellas15-45percentforonshorewind–resultingmainlyfromindustriallearningcurvesthroughouttheworld–showthatthereispotentialforcontinuedcostreduction.

Theregionalintegrationofpowergridsoffersnumerousfurtheradvantagesforrenewableenergyresourcesharingandcostreduction,withlargergridintegrationandtransmissionprovidingmoreflexibilityandlessneedforadditionalstorage.Anemergingoptioninadditiontolargerregionalgridintegrationistradeofgreenhydrogenproducedfromrenewableelectricity,wherecountrieswithstrongrenewablefullloadhoursprovidecost-efficientgreenhydrogen.

TheAsia-Pacificregionhascountriesthatareextremelyvulnerabletoclimatechange,makingitthemostdisaster-proneregionglobally.However,substantialavoidanceofseverityoffutureclimateextremescanbeachievediftheglobaltemperatureincreaseiskepttotheParisAgreement’s1.5°Climit,comparedtoeither2oCwarmingorthelikelyresultfromtheNDCs–anincreaseof3°C.Thisemphasizestheneedofearlyandsubstantiveeffortstocurbgreenhousegasemissions,andreinforcestheurgencyoftransformativechangeintheenergysystemofcountries,regionallyaswellasontheglobalscale.

Three-quartersofallpeopleaffectedbynaturaldisastersworldwidearelivingintheAsia-Pacificregion.Theaverageannualeconomiclossfromnaturaldisastersisnowestimatedtobe2.4percentofGDP,withanexpectedclearupwardtrendwhentemperaturescontinuetorise.IncreasedglobalwarmingisprojectedtoleadtosubstantialchangesinGDPpercapita.AlmosthalfoftheAsia-PacificcountriesconsideredinthisanalysisareprojectedtoexperienceGDPlossesbetween30and41percentbytheendofthecenturycomparedtothebaselinescenario.CleargainsinGDPpercapitaofupto12percentinmid-centuryandupto18.3percentbytheendofthecenturyareexpectedforcountriesinthePacific,South-EastAsia,andSouthandSouthWestAsiainachieving1.5°Criseinsteadof2°C.ThelargestgainsareexpectedinThailand,Cambodia,Bangladesh,theLaoPeople’sDemocraticRepublicandVietNam.

Renewableenergyprovidesalargerangeofbenefitsforsustainabledevelopment:

Renewableenergycanbedeployedrapidly,andinareasthatarenotconnectedtothegrid,important

foraregionwherenotallofthepopulationhasaccesstoelectricity;

Installationofrenewableenergycanreplacefossilimportscreatingsecurityandalsoavoidprice

fluctuationsoffossilfuelimports;

Renewableenergyprovidesemploymentopportunities,andemploymentiscrucialforpost-COVID-19

recovery;

Phasingoutcoalreducesair,waterandsoilpollutionaswellasnegativeimpactsonwaterqualityandwaterscarcity.

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Executivesummary

PolicyrecommendationsforkeyactorsintheAsia-Pacificregion

DrawingfromtheanalysisofcurrenttrendsanddriversintheAsia-Pacificregion,thegapwithParisAgreementbenchmarksforphasingoutcoalandacceleratingthetransitiontocleanenergy,aswellastheoverviewofpolicyareasincludingbestpracticeexamplesinotherregions,thisstudyhasformulatedthefollowingrecommendationsforkeyactorsintheAsia-PacificregiontoacceleratephasingoutcoalinlinewiththeParisAgreementbenchmarks:

1

NationalGovernments:Adoptbestpracticepolicies–phaseoutfossilfuelsubsidies,carbonpricing,renewableenergysupport,encourageandpushshiftsininvestmentthroughgreenrecovery

Phasingoutfossilfuelsubsidies,combinedwiththedevelopmentofcarbonpricingandtargetedadoptionofkeybestpracticepoliciestoenhancetheshareofvariablerenewableenergyandaccelerateinvestment–particularlyinwindandsolar–throughmarketdesign,demand-sidemanagement,transmissionanddistributionsystemenhancements,gridinterconnectionsandsupportforenergystoragearecrucial.GreenrecoveryneedstobeattheheartofeconomicstimuluspackagesdevelopedbyGovernments.Thisneedsafocustobeplacedondirectingpublicfundingandincentivisingprivateinvestmentstowardsrenewableenergyandrelatedtechnologyandinfrastructuredevelopment,suchasstorageandtransmissiongrids,aswellasonelectrificationofend-usesectorsandfurthermeasurestoimproveenergyefficiencyacrossend-usesectors.

2

NationalGovernments:Movetotransformationalpolicies,targetsandlong-termplanning

TheneedtoratchetupNDCtargetsanddeveloplong-termlowcarbondevelopmentstrategiesinthecontextoftheParisAgreementisanimportantstep,asthesegoalswereduein2020andareexpectednolaterthan2021.Developingcoalphase-outplansby2040isthesinglemostimportantstepthatneedstobeincludedinthesetargetstoensureconsistencywiththeParisAgreementandSDGs.Thisneedstobecombinedwithaprocessofplanningandmanagingthetransitionthatisdevelopedwithstakeholdersfromtheregionsaffected,particularlythosethatcurrentlydependonemploymentandincomefromcoalminingandcoal-firedpowergeneration.

3

Clearpathwaystoenableanticipationofchangeandavoidanceofmorestrandedassets

AnimportantelementinelaboratingNDCtargetsandlong-termstrategiesinlinewiththeParisagreementisthedevelopmentofscenariosandanalysis,involvingandinformingstakeholdersandsupportingadialogueaboutbenefitsatthesectorallevel.Akeygapinleadingthedevelopmentofbothnationalandregionalstrategies,plansandpoliciesistheneedtodeveloparangeofscenariosfortheenergysystemthatareinlinewiththeParisAgreementandSDGs,andtoaimfor100percentrenewableenergy.

4

Financialsupportandcapacity-building

CountriesintheAsia-Pacificregionthatareinthepositiontodoso,needtofocustheirfinancialandotherdevelopmentsupportonshiftinginvestmentsandenergysystemtransformationtowardscleanenergy.ThisholdstrueforAustralia,Japan,theRepublicofKorea,ChinaandIndia,whichcurrentlyplayastrongroleincementingdependencyonfossilfuelsinpoorercountriesintheregion,particularlyintheSouthandSouth-EastAsiansubregions.CoordinationofGovernmentdonorswithphilanthropybytheprivatesectorcanbeanimportantstrategy.ThisapproachhasstartedwithafocusonSouth-EastAsia,butitalsoneedstobeappliedtoothercountriesintheAsia-Pacificregion,particularlywhereinvestmentinnewcoalorgas-poweredgenerationisonlyjuststarting.

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5

Regionalandinternationalcooperation–alignmentwithParisAgreementGoals,engagingstakeholders,theprivatesectorandcivilsociety

RegionalandinternationalcooperationintheAsia-Pacificregioncanplayanimportantrole.CountriesintheregioncaneitherjoinexistinginitiativessuchasthePoweringPastCoalAlliance.ThisandotherrecentinitiativesintheareaofenergysystemtransformationareoftensuccessfulwhentheyincludeGovernmentsatboththenationalandsubnationallevelsaswellastheprivatesector,researchorganisationsandcivilsocietyinordertobeeffectiveinmobilisingstakeholderengagementandsupportingashiftinnarrativeandperception.Aninitiativeattheregionallevelcouldalsofocusonjoiningeffortstoovercomebarrierst