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Asia to reach peak coal by mid-2020s
PEAK coal is in sight in Asia - the region long seen as the main demand centre for the commodity - as solar and wind power will become so cheap that they will undercut coal plants by the mid-2020s, declared Bloomberg New Energy Finance (BNEF).
In China, coal consumption will peak in 2026, though at a level a fifth higher than today.
In India, new construction of coal plants will start to slow after a significant expansion of over 40 gigawatts of new coal plants in the next five years, said the clean energy research unit of Bloomberg in its latest annual energy outlook.
For both countries, solar energy will become cheaper than electricity from new coal plants in the next three to four years, said Ashish Sethia, BNEF Asia-Pacific lead analyst for power and gas.
Globally, coal-fired power generation will also peak in 2026.
Only a third, or 35 per cent, of new coal power plants being planned will ever get built as wind and solar energy become cheaper than even existing coal plants in some countries by 2030, BNEF warned.
This means some 369 gigawatts of projects could be cancelled. It will also result in global demand for thermal coal in 2040 being 15 per cent lower than it was last year.
"Basically what that is showing us is that clean energy is now breaking the link between economic growth and emissions," Mr Sethia told The Business Times in a phone interview.
"Traditionally the view has been that to grow a developing country you'll have to keep growing the emissions. But clean energy is getting systematically cheaper and so it's now looking possible for developing countries to choose an alternative pathway and do clean development."
In Asia-Pacific, coal-fired power generation will reach a high in 2028 as more coal plants will be retired than added. But coal will remain the main fuel for the region's power supply, responsible for 34 per cent of its electricity in 2040, said BNEF.
Despite the decline in coal, appetite for energy will remain voracious in Asia-Pacific, with China and India alone requiring US$4 trillion in investments.
China is expected to account for 28 per cent and India, 11 per cent, of the US$10.2 trillion that will be invested in new power generation capacity worldwide till 2040, according to BNEF estimates.
Some US$7.4 trillion, or 72 per cent, will go to renewables, with solar taking US$2.8 trillion and wind US$3.3 trillion.
Asia-Pacific will receive investments of about US$4.8 trillion. A third of this will go to solar, just under a third to wind, 18 per cent to nuclear and 10 per cent to coal and gas, said BNEF.
Renewable energy will account for 61 per cent of the world's installed power generation capacity by 2040 - a notch higher than the firm's estimate of 56 per cent last year.
Residential solar systems will become a force to reckon with in the future. BNEF expects rooftop photovoltaic systems to account for as much as 24 per cent of electricity generation in Australia, 20 per cent in Brazil, 15 per cent in Germany, 12 per cent in Japan and 5 per cent in US and India.
Despite the bullish projections on renewable energy which will help the world's power sector emissions to reach a peak in 2026, BNEF said the rate of decline in emissions is still not enough to prevent climate change. "A further US$5.3 trillion investment in 3.9 terawatts of zero-carbon capacity will be needed to place the power sector on a two-degree Celsius trajectory," it said.