|Source: UN Environment Programme (UNEP)|
Signatories of the agreement, made at the COP26 climate conference, committed to shun investments in new coal plants at home and abroad, and phase out coal-fuelled power generation in the 2030s in richer countries, and the 2040s for poorer nations, the British government announced.
Vietnam is showing its strong commitment to cut carbon by announcing clear commitments to phase out coal power, although an energy supply crisis is showing how difficult it will be to end dependence on fossil fuels.
The biggest coal financiers, such as China, Japan, South Korea, and India, however, decided not to join the new deal.
China was responsible for about 54 per cent of global coal consumption in 2020, while India used 11.6 per cent, according to BP's 2021 world energy statistical review. The United States, which also did not join the pledge, consumed 6.1 per cent.
Nevertheless, UK business secretary Kwasi Kwarteng insisted that the end of coal was in sight. "The world is moving in the right direction, standing ready to seal coal's fate and embrace the environmental and economic benefits of building a future that is powered by clean energy," he said at the summit.
To meet the goals of the Paris Agreement to limit global temperature rises to 1.5oC, the global transition to clean power needs to progress 4-6 times faster than at present, noted the UK government's press release on the deal. "With coal being the single largest contributor to climate change, phasing it out and delivering a rapid, inclusive transition to clean energy is essential if the world is to keep 1.5oC alive," it added.
However, the statement is likely to increase pressure for governments to take action as increasing costs of natural gas and shortages of coal have led to significant spikes in the price of electricity.
According to a new United Nations Environment Programme report named "The Gathering Storm", the finance needed to implement adaptation plans is still far short.
It said the costs are likely to be on the higher end of an estimated $140-300 billion per year by 2030 and $280-500 billion per year by 2050 for developing countries only. Meanwhile, climate finance flowing to developing countries for mitigation and adaptation planning and implementation reached $79.6 billion in 2019.
Estimated adaptation costs in developing countries are 5-10 times greater than current public adaptation finance flows, and the adaptation finance gap is widening because the opportunity to use pandemic recovery stimulus packages to back adaptation finance and implementation is being missed, the report added.
Richard Folland, policy and government affairs advisor at the Carbon Tracker Initiative think tank, noted at a roundtable on the sidelines of COP26 that there is a disparity when it comes to capacity to limit coal in both a policy and financial sense across the world.
"Our analysis shows that by 2025, 74 per cent of the US coal fleet will be uncompetitive – but some Eastern European markets are still very reliant on coal, and five Asian countries are still going to be responsible for 80 per cent of the world's planned new coal plants," Folland said.
Coal power plants account for over 32 per cent of total power capacity in Vietnam and have played an important role in ensuring its energy security.
Minister of Industry and Trade Nguyen Hong Dien said that Vietnam is to gradually eliminate plants that have been operating for many years with outdated technology.
Nguy Thi Khanh-Executive director GreenID
The change in value in the past warns of huge risks to the economic system if more electricity is further developed. Coal prices are actually higher than the 2045 forecast given in the draft Power Development Plan VIII (PDP8). If the share of more electricity continues to increase, as higher prices continue to escalate, pressure will be put on power plants.
In addition to global financial institutions, in the past year, an increasing number of multinational corporations have made commitments to carbon-neutral targets due to pressure to reduce greenhouse gas emissions in supply chains.
While aiming to become a modern developed country and attracting more large foreign corporations to set up production bases in Vietnam, it is very important to ensure a power source that is safe, reliable, and green.
NICOLAS LEONG-Energy business director North and Southeast Asia Wärtsilä Corporation
It is delightful to see the commitments from many nations to combat climate change in the COP26 summit, and Vietnam is not an exception. Nevertheless, 30GW of coal plants is still included in the draft PDP8. More than half of these projects have not received financing yet and have a high chance of not being able to materialise.
With advanced modelling capability, Wärtsilä has shown an alternative path towards a greener power system for Vietnam with lower system costs and emissions, using the combination of renewables and flexible gas ICE power plants.
Once COP26 is over, it will be time to make a proper roadmap and establish the right implementation plan to make the goals happen. For example, starting with PDP8, we recommend following three steps: the feasibility of new coal plants should be re-evaluated, renewable energy should be prioritised, and gas flexibility should be added to the grid.
We are looking forward to supporting the Vietnamese market with our flexible gas solutions and learning from other geographies in terms of modelling and system planning.
Sean Huang-Development manager Copenhagen Offshore Partners
We are happy to see the Vietnamese government is taking action to fight climate change. While the nation is moving away from coal, we believe offshore wind could become a pillar in Vietnam's energy mix and help it achieve the goal for net zero and transition to sustainable development.
We hope to see more offshore wind projects joining the energy mix and a plan to build a resilient grid system that could sustain more renewable energies in the coming decades.
As an early mover of offshore wind projects globally, we have been working with governments in designing and troubleshooting regulation issues to ensure successful deployment.
We would be delighted to see more collaboration between the Vietnamese government and experienced developers to share international experiences for designing regulations, industry mobilisations, and also technology transfer.
By Nguyen Thu
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