Return of king coalTuesday, 10 December 2013FIRST it ditched its...

Return of king coal
Tuesday, 10 December 2013
FIRST it ditched its greenhouse gas reduction targets, and now Japan’s shift towards increased coal use may actually result in the country’s natural gas imports dipping for the first time in four years. By Gomati Jagadeesan
Japan is not alone in its renewed reliance on coal.
As the country grapples with an energy crisis with all of its nuclear power plants offline, the Shinzo Abe government has shed its GHG reduction targets under the Kyoto Protocol, and utilities are resorting to using record amounts of thermal coal for power needs.
The increased reliance on coal is amply evident as traditional gas monopolies such as Tokyo Gas – Japan’s largest city gas supplier – is looking to capitalise on the resurgence of coal use and invest in coal fired power plant and gain market share.
Japan last month cut its GHG emissions targets as it burned more coal and its LNG imports reached record highs after the Fukushima-Daiichi power plant meltdown in 2011. The nation’s utilities used almost 16% more coal leading up to October this year compared with last year.
The country is set to commission two coal-fired power plants this month that will have a total capacity of 1600 megawatts.
Indeed, Japan may not be the only Asian country that might be finding coal more alluring. As prices of LNG in Asia still continue to be oil-linked, many South East Asian end users are looking to burn more coal.
Presently coal contributes about one-third of South East Asia’s energy needs, with gas accounting for nearly 44%, the International Energy Agency estimates.
However, with power generation capacity in the region expected to rise more than 50% in 10 years, more than half of it is likely to be met by coal-fired generation, while gas is likely to contribute only about 25%.
While South Korea and China have contributed to higher winter spot LNG demand, imports in Japan have stayed relatively flat. LNG imports have fallen 1% in the first 10 months of this year while demand has fallen 1.8%.
Japan is not alone in reducing LNG imports. Smaller LNG importers such as Thailand have also cut down LNG consumption. Only 30% of the country’s 5 million tonne per annum LNG terminal is being used.
More recent converts to LNG imports are also looking to broaden their energy mix, with higher reliance on coal. Malaysia is set to build five coal-fired power plants, while Indonesia is also mulling coal fired generation as it bolsters domestic coal use in the wake of declining demand from China.
According to consultancy Wood Mackenzie, the 15 gigawatts of gas-fired power plants that are likely to come online in South East Asia in the next five year, will have a capacity factor of 70%, while the 20GW of coal-fired generation will run at 100% capacity.
With gas-fired power costs, on a per megawatt basis, also almost double that of coal-fired generation, coal’s triumph seems assured.