KUALA LUMPUR: Coal-fired power plants will remain a major part in Asia’s power generation, at least for the time being, as the world is moving towards a greener and more sustainable economy.

       Coal use appeared to be in a long-term decline before the Covid-19 pandemic, but lockdowns around the world and economic upheaval drove an increase in new coal projects in 2020, particularly in China.

       In Asia, the construction of new coal-fired stations is occurring in an overwhelming way, with China accounting for 52% of the 176 gigawatts (GW) of coal capacity under construction in 20 countries last year.

       According to a report published by Global Energy Monitor in April this year, the total coal power capacity in development fell sharply again in 2021, by about 13% to 457GW from 525GW, a record low for new plants under development.

       The number of countries planning new plants also fell to 34 countries from 41 at the beginning of 2021.

       “I am not sure. I would call it much of a transition because a transition would imply that coal usage is declining and gas usage is increasing. However, this isn’t the case.

       “Since 2005, both global coal and natural gas demand have risen globally,” Moody’s Analytics director Chris Lafakis told Bernama.He said in Asia, consumption of both gas and coal have increased, and the percentage of new energy consumption from gas, instead of coal, has lagged the global average with China being a leader within the Asia-Pacific region.

       “Whereas the gas percentage of the combined energy increase has been 55% gas in Asia. For China, it has been 82%. So, even though China’s coal consumption continues to rise, it is rising at a much slower rate than the broader Asian region,” he added.

       Some Asian countries are seen moving away from coal.

       Liquefied natural gas (LNG) is entering the spotlight in Vietnam as the country tries to wean itself off carbon-intensive coal, keeping pace with a growing regional trend that could be tripped up by intensifying competition for the fuel.

       Lafakis said both gas and coal prices would remain elevated for all fossil fuels throughout the year 2022.

       “We expect prices to retreat from current levels to still-elevated levels, but a European Union (EU) ban on Russian energy would actually cause prices to rise. The United States provides a clear indication of the fallout from Russia’s invasion,” he added.

       Lafakis noted that the US natural gas prices have nearly doubled since Russia invaded Ukraine and the United States is exporting more of its gas to Europe to make up for the decline of European imports from Russia, resulting in the United States becoming the world’s leading exporter of LNG in January 2022.

       Meanwhile, SPI Asset Management managing partner Stephen Innes said natural gas prices could fall over the short term as the critical risks seem to have diminished.

       However, he noted that if an alternative cannot be sourced, prices would continue to drive higher over summer as gas suppliers continue to build up reserves for the next winter.

       “On the other hand, news on Sweden and Finland moving closer to the North Atlantic Treaty Organisation membership underscores ongoing risks to the EU geopolitical landscape that should keep a floor on gas prices,” Innes said.

       According to a World Bank’s latest Commodity Markets Outlook report released in April, the war in Ukraine could keep prices at historically high levels through the end of 2024.

       The bank said the increase in energy prices over the past two years has been the largest since the 1973 oil crisis.

       Price increases for food commodities – of which Russia and Ukraine are large producers – and fertilisers, which rely on natural gas as a production input, have been the largest since 2008.

       Lafakis said the potential of food and energy price shocks were there, especially for energy prices.

       He said global oil suppliers would not be able to keep up with growth in global oil demand, keeping prices elevated while food prices have the potential to come down quicker because more agricultural commodities could be planted.

       “Broadly speaking, never underestimate the supply side of the economy. When there is an incentive to make money, high prices send a strong signal to the market for additional investment,” he said.