Episode 40

Finland, yes Finland, population 5.5 million, is an Arctic nation with about one third of its territory existing above the Arctic circle where if I may remind you, it’s very, very cold.

Indonesia, population 268 million, is a huge country with about 17,000 islands splashed across the Equator. That’s 52 times more people than Finland.

But guess what? Finland’s installed solar energy capacity is bigger than Indonesia’s. In other words, Finland, an Arctic nation, is using the (free) sun as energy more so than a country splashed across the Equator and endowed with an amazing reservoir of sun and solar energy.

Yet at the same time, we need to increase renewable energy capacity globally to 85% of electricity by 2050 to urgently tackle climate change.

What is going on in Indonesia, you might ask? You would be asking the right question.

Indonesia is part of the Association of Southeast Asian Nations or ASEAN, a block of 10 countries in Southeast Asia with a combined 650 million people. They are Brunei, Cambodia, Indonesia, again, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam and until very recently, they distinguished themselves by having a decreasing share of global renewable energy (after peaking in 2012) as a percentage relative to other regions around the world.

Yet all of these ASEAN countries have signed up to the Paris agreement to help contain warming to below 1.5 degrees Centigrade.

So let’s broaden the question to what’s going on in Southeast Asia?

Welcome to Episode 40 of The Angry Clean Energy Guy with me, Assaad Razzouk . I am so happy you’re here. Thank you.

MASSIVE NET ZERO PROGRESS

Just in the past week, there was three amazingly promising announcements that were made around the world in the fight against climate change.

First, Europe indicated it’s going to tighten its 2030 CO2 target. So it’s going to fight pollution much harder than it had already announced.

Second, California announced that from 2035, you will no longer be able to buy a petrol car there. On top, we had a massive, massive announcement from China, which said that it will be carbon neutral by 2060, which is nothing short of a complete transformation of its entire economy coming up, and of the lifestyle of every Chinese. That wasn’t even the only announcement from China. It was also going to adopt stronger policy measures and it was going to strive to achieve its CO2 emissions peak before 2030. No one thought that China was either about to make this announcement or had any intention to do so.

The positive political willingness coming out of Europe, coming out of California and coming out of China is frankly enormously encouraging.

WHAT’S UP SOUTH-EAST ASIA?

Meanwhile, what’s going on in Southeast Asia?

The ASEAN region is one of the few regions which feature very high growth in energy demand, unlike, say, Western Europe or North America. What that means is that the 650 million people in ASEAN don’t all have access to either electricity or to enough electricity and therefore their combined demand is going up.

At the same time, the ASEAN region is also distinguished by the fact that despite all the evidence, ASEAN is still threatening to set the world on fire through its coal and gas expansion plants. It’s the only region in the world still doing that. Even China just announced it won’t do that.

I’ll give you some examples from around the region.

Indonesia, for example, a nation extremely suitable for solar and wind across its 17,000 islands, continues to import diesel in polluting vessels rather than actually seek energy independence, energy security, and cost and health savings through renewable energy. It doesn’t make any sense at all.

In Thailand, what once was a very promising pivot to renewable energy completely stopped. No one really can explain logically why. Why is Thailand building gas that it doesn’t need instead of sun and wind of which it’s endowed so richly?

Malaysia until very recently distinguished itself globally as the only country where the number of solar panel installations had actually declined in recent years.

Singapore, the only first world country in the region and one that should be leading by example, remains disappointingly slow in backing solar and wind regionally and electric vehicles domestically with hardly any deployment at all.

As I said before, all in all ASEAN is the worst performing region globally in terms of renewable energy deployment and also in terms of transport sector electrification.

I was just on a bicycle today to come and tape this podcast. Throughout my five kilometre journey all I had in front of me were buses spewing diesel fumes. That really has to stop Singapore, please.

There are two notable exceptions in this part of the world.

The first one is the Philippines because it’s actually gone through the legislative effort of introducing renewables performance standards that while in their infancy, are still going to make a very big difference to the rollout of renewable energy and the death of coal in that country – as they are increasingly enforced over time.

Vietnam is the other recent exception, but I want to come back to that in a moment.

THREE INVISIBLE BARRIERS TO CLEAN ENERGY

The question is, what is it that stands in the way of ASEAN’s adoption of renewables when pretty much everybody around the world is at it?

The answer is that there are three somewhat invisible barriers but I’m going to try and make them as visible as I can.

The first one is somewhat subtle. Once you build a solar or wind power plant, you’re done, there is no more need to buy fuel to operate it . You don’t have to pay anybody for the sun and you don’t have to pay anybody for the wind. In addition, as much as you want is available of both. But when you build a coal or a natural gas power plant, you’re only getting started. For decades after that, you’ve got to buy coal and to buy the coal you’ve got to mine it, you’ve got to ship it, you’ve got to clean it, transport it, etc.  It’s even worse with natural gas because typically it comes from very far away and sometimes you’ve got to liquify it and then reprocess it to use it, all the while leaking methane, as I talked about more extensively on Episode 39 of The Angry Clean Energy Guy.

When you build the coal or natural gas power plant , you need to supply it with fuel for 40 years or longer. Not only is that a lot of coal to be mined or gas to be fracked than processed and transported again, but it also means that you’re paying out literally billions of dollars each year in cash to buy that coal and that natural gas. And again and again for decades. So just imagine the influence, the vested interests, the perverse anti-renewables incentives and the power that goes with all that cash that’s being distributed around. The sun and the wind can’t compete because they’re competing on merit alone.

The Indonesian electricity monopoly PLN alone needs 100 million tons of coal to fuel its power plants, which means that in some years, depending on the price of coal, it could be paying out as much as $10 billion into that coal support ecosystem which is basically addicted to these $10 billion.

It’s a disease.

That’s why it is a somewhat subtle reason this number one barrier to renewables is powerful: Vested interests are in play still in ASEAN.

The second barrier to renewable energy in South East Asia is that governments make a lot of money taxing petrol. This money is important in countries’ budgets, at least those that don’t subsidize fossil fuels on top. Electric cars and electric buses, therefore, have an uphill battle to fight because even if they are cost competitive and much, much, much cleaner, which they are of course, they’re not welcome unless there is some way for governments to make up for the lost revenue, which of course is not that complicated. All you need to do is to increase the taxes on dirty fuels as the number of electric vehicles rises.

Singapore, for example, is starting to do that, doubling diesel duty recently, but that’s very, very little and frankly, very, very late. Governments can also make up for revenue losses by relying on carbon taxes (or if you don’t want to call them taxes call them pollution levies ), or on increases in value added taxes on electric transport.

Most importantly, they need to do the math.

What that means is that they have to take into account the negative externalities of fossil fuels and the intrinsic benefits of clean energy on their citizens’ public health, on their citizens’ air quality and on their country’s environment.

That’s the second reason standing in the way of Southeast Asia’s adoption of renewables: Governments make a lot of money taxing petrol and are not being creative about getting around the problem .

The third somewhat invisible reason is that money and access are powerful barriers to change. Nowhere is this more evident than with Big Oil in America today, fighting a losing battle through this administration to negate environmental gains acquired at a great cost over the last 40 years. The oil, gas and coal industries have influential voices and tentacles everywhere in ASEAN. The clean energy industry however, small, distributed and poor by contrast, does not.

Now to the good news: The resistance to renewable energy in ASEAN is just not going to last.

The clean energy revolution is going to steamroll fossil fuels here just as it’s doing worldwide. Why? The reason is super simple: Cost competitiveness and cleanliness.

Recently, for example, in Portugal, a solar auction achieved yet another world record-low price of 1.316 cents per kilowatt hour.

Forget what that price is. Just remember that that price is so low that forecasters thought it would not be reached until 2050. That’s 30 years from now.

So we’re 30 years ahead of the cost projection curve for solar that some forecasters thought we were on until now.

Solar costs are down 80% since 2015, 17% this year alone. There is little ASEAN can do to resist these powerful global trends. This region, Southeast Asia, where power generation is expected to double by 2025, one of the fastest rates of growth in the world, while overall energy demand grows 50% by 2025 can not continue to so thoroughly ignore renewables and electrification.

We’re on the cusp. This year, Myanmar, for example, which had just 88 megawatts of solar capacity at the end of 2019 closed a one gigawatt solar tender. That’s an 11 times multiplication of its capacity in just one year.

Vietnam executed a solar miracle, which shows you that renewables come slowly slowly at the beginning, and then, all of a sudden. Vietnam had just 134 megawatts of solar capacity in 2018, which is two years ago. It then added 41 times that amount – 5.5 gigawatts – in just one year.

Myanmar and Vietnam clearly show that utility scale solar and onshore wind are already more than competitive with fossil fuel electricity in ASEAN without any subsidies whatsoever.

Second, as Abraham Lincoln said, you could fool all the people some of the time and some of the people all the time, but you can’t fool all the people all the time. While coal-fired power is losing ground everywhere around the world, ASEAN, which continues to try (and they’ll fail) to increase reliance on coal argues – or at least many government officials in this region argue – that providing energy from coal is the least costly option compared to other sources. This could not be further from the truth. Coal is already more expensive than renewables in every single ASEAN country and on top, it benefits from broad, deep structural subsidies.

Renewables can also be deployed much, much faster. Why spend 10 years building a coal-fired power plant to give electricity to your people and industry, when renewables can do it in one year as Vietnam just showed? It doesn’t any sense.

On that note about the utility of coal providing power to the people, IRENA, an intergovernmental organization calculated that external costs from air pollution from fossil fuels in ASEAN, which by the way also includes gas, are running at about $170 billion per year. These are the health and environmental costs of what this region is doing and frankly, who can afford to just burn $170 billion a year in health and environmental costs, just because somebody wants to build a gas fired power plant or an LNG terminal or a coal fired power plant? It makes no sense.

IGNORE CLIMATE CHANGE AT YOUR PERIL

So as I hope you can hear, external but also internal pressure is mounting on ASEAN countries to join the renewable energy revolution as Myanmar just did. One of the key drivers is because ASEAN cannot continue to ignore climate change for much longer.

The Singapore prime minister is on record saying that Singapore is going to have to spend a $75 billion to fight and adapt to sea level rise.

The Philippines, Thailand and Vietnam are routinely ranked top 10 countries most vulnerable to climate change globally.

This is not just about renewable energy.

This region, Southeast Asia, can do so much better on air conditioning. Have you been freezing in the office across ASEAN? I have been. have you seen people wearing sweaters because the temperature is maintained at a level 40% cooler than it needs to be? Any one of these countries, with a stroke of a pen, can mandate that temperatures in shopping malls, office buildings and elsewhere if legally allowed, should be a minimum of 24 degrees Celsius for example. In Japan, the government decreed that all government agencies set their air-conditioning to no colder than 28 degrees Celsius during the summer.

This is also about single-use plastic. Plastic is such an elegant word to describe the waste product of oil. Forget “plastic”, it’s actually just oil. That plastic bag at your supermarket, that’s oil.  99% of plastic is oil. Visitors to some ASEAN countries, Singapore for example, can immediately see that single-use plastic is shocking compared to anywhere else, even compared to Mumbai.

Plastic is everywhere. Everyone from baristas to supermarket checkout staff don’t see anything wrong with packing multiple layers of completely unnecessary plastic one on top of the other.

I bought some cut papaya fruits recently. They came in a plastic bag inside a plastic container which checkout staff subsequently tried to place in a small, tight plastic bag before storing it in a carry-on plastic bag.

Surely the country can ban single-use plastic with a stroke of another pen, or at a minimum mandatory plastic bag fees should be introduced across ASEAN.

What we also need in ASEAN is we need a strong push towards electric mobility.

It’s incredible that Singapore’s amazing public transit system is anchored around fossil fuel-powered buses everywhere, gingerly polluting the air, together with diesel-powered school buses and trucks and petrol-guzzling cars. Electric mobility is slow to arrive across every country in ASEAN, without any exception. In Vietnam for example, why aren’t all scooters, of which there are millions, why aren’t they electric? If they were, city pollution would be cut drastically, instantly, as well as noise and health indicators would improve as a result. The same with Manila or Jakarta. All two wheelers and three wheelers should simply be electric.

Bicycle lanes should be introduced everywhere. I never fell to be surprised by the priority given to cars over both pedestrians and cyclists and scooters. This makes no sense to me.

Electric bicycles for example are amazing. They solve air pollution problems in cities at a stroke because up to 50% of e-bike trips are substituting car trips . They cost less to buy and maintain than cars. They need a lot less resources to manufacture. They need almost no infrastructure in terms of parking compared to cars – and parking is a typical, useless space that we could use so much more intelligently.

The other area where ASEAN is lagging is divestment from fossil fuels, or at least not actively backing fossil fuel expansion around the world.

Some of the biggest sovereign wealth funds in the world are in this region and are still investing in fossil fuels worldwide, even though this region, Southeast Asia, has to then defend itself from sea level rise which is a direct consequence of those fossil fuel investments around the world.

That needs to stop.

I hope this quick tour of the renewable energy and electrification landscape in Southeast Asia gave you a good perspective of how much we’re lagging here, compared to the rest of the world, but also that we’re on the cusp of something big.

What happened in Vietnam, the solar miracle in terms of deployment  – up 52 times in one year, or even Myanmar up 11 times in one year, is changing the landscape right in front of our eyes. It’s only going to accelerate from here because the time for forceful action is right now.

GREEN VISION FOR SINGAPORE

Let me close by giving you a vision of how Singapore can emerge with an all-encompassing green vision within literally a few years.

This would be connecting electric vehicles, buses, two-wheelers, charging stations and vehicle-to-grid tech, which therefore allows total electricity consumption to start going down instead of up; with a vibrant biotech, big data, AI and robotics green research and investing ecosystem; managed air conditioning across the city; very little or really no single-use plastic outside of the healthcare system; and a university and school system that nurtures first-rate human resources that are greening shipping, aviation, buildings, steel, cement, fashion and food through innovation and investments; and then shining this green beacon across ASEAN to lead by example.

Thank you so much for listening to this Episode 40 of The Angry Clean Energy Guy with me, Assaad Razzouk and have a great couple of weeks.