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Tuesday, 22 December 20
SOUTHEAST ASIA'S COAL DEMAND IS SET TO EXPAND AFTER THE PANDEMIC-INDUCED HIATUS IN 2020 - IEA
IEACoal consumption in Southeast Asia has more than doubled in the last decade, with the largest growth in Indonesia and Viet Nam, followed by Malaysia and the Philippines. In 2019, demand in Southeast Asia was 332 Mt, of which 42% was accounted for by Indonesia and 27% by Viet Nam, as in both new coal power plants began commercial operations.
 
In 2020, coal demand in Viet Nam is proving to be resistant due to strong economic growth, which will push coal demand up around 12%. In contrast, coal demand in Indonesia and the Philippines will fall for the first time in several years as a result of Covid-19 outbreak. Overall demand in Southeast Asia is expected to increase only slightly in 2020. In 2021, however, a 7% rebound in coal demand is expected as economies recover.
 
A large portion of demand for coal in Southeast Asia originates in the power sector. Indonesia and Viet Nam in particular, as well as the Philippines, are expanding coal-fired power plant capacity. Viet Nam, however, is rethinking its plans for sizeable coal developments and the Philippines announced a moratorium on the approval of new greenfield coal power projects.
 
Coal technology and funding traditionally come from Japan, Korea and China, but Japanese and Korean investors are increasingly reluctant to commit to coal investments. Additionally, some projects have been delayed due to the pandemic. Coal’s role in the future is therefore becoming more uncertain, and efforts to increase renewable generation and reduced LNG prices are gaining force.
 
Industrial consumption, especially in the steel, cement and smelting sub-sectors, will maintain coal demand growth once the economies recover. In Indonesia, the government has ruled that coal producers investing in downstream activities will receive a waiver on royalties, which will certainly boost coal demand.
Source: COAL 2020, IEA


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