Column: IEA call to end fossil fuels likely to fall on deaf ears in Asia

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A farmer drives a truck loaded with corn past Huaneng's Pingliang coal-fired power plant in the Kongtong District of Pingliang, Gansu province, China, September 19, 2020. REUTERS/Thomas Peter

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LAUNCESTON, Australia, May 20 (Reuters) - It is probably just ironic coincidence, but the same day the International Energy Agency (IEA) called on the world to end fossil fuel investments, the Australian government announced plans for a new, $460 million natural gas-fired power plant.

The stark contrast between the two announcements is, however, emblematic of the challenges the world faces in transitioning from fossil fuel energy to cleaner renewables as efforts to combat climate change become more urgent and widespread across the globe.

The IEA's report on the pathway to net zero carbon emissions by 2050, released on May 18, warned that investment in oil, natural gas and coal projects must come to an end if the target has any chance of being reached. read more

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There's no doubt that this is a major call, and a substantive shift from prior IEA positions, but the main question is whether the IEA's goal is even remotely achievable.

Certainly there is evidence and hope that the massive switch in energy sources needed for net zero emissions could be possible in parts of the developed world, most likely Europe and North America.

But the key to the success of the IEA's goal to net zero is Asia, and here the agency's proposed pathway faces its biggest challenges, and most likely failures.

It is easy to pick on Australia as an example of the challenge Asia is going to face in weaning itself off fossil fuels, and the cheap path to economic growth they have provided so far.

Australia's conservative government has, in some ways, become the poster boy for recalcitrance on climate change actions, with its oft-stated support of fossil fuels and policy designed to encourage their development and use.

Federal Energy Minister Angus Taylor said on May 18 that his government would use its wholly-owned Snowy Hydro company to build a A$600 million ($464 million), 660-megawatt gas-fired power plant at Kurri Kurri, a regional area north of the country's biggest city of Sydney.

The justification is that private power companies haven't acted to replace retiring coal-fired units and the gas generator is needed to keep electricity supplies stable.

This position has been challenged by Australia's private electricity companies, government regulators and politicians across the spectrum, including some within Taylor's ruling Liberal Party.

Even if the necessity of back-up generation is accepted, which it isn't by all parties, renewable solutions such as wind, solar and battery storage probably provide better value for money, the same, if not more, reliability and zero-carbon emissions once operating.

What appears to be at play in Australia is an energy market being driven by political objectives, rather than one where best policy and practice are implemented.

The current federal government of Prime Minister Scott Morrison has made no secret of its support for fossil fuels, natural gas in particular, while several state governments, including those controlled by Morrison's party, favour renewables, as do most of the country's private generators and electricity retailers.


In some ways Australia is the canary in the coal mine when it comes to broader energy policy in the region.

China, the world's biggest coal miner, importer and consumer, shows little sign of weaning itself off the polluting fuel, continuing a massive build-out of coal-fired power, with 88.1 gigawatts currently under construction, equal to about half of the global total.

Japan, India and other countries across Asia are still building coal-fired generators, albeit at ever-slowing rates, but these assets will still likely run for decades to come given most are designed to operate for at least 40 years.

The message to stop natural gas developments is also likely to fall on largely deaf ears in Asia, given the region is currently planning to construct more infrastructure to produce, transport and use liquefied natural gas (LNG).

LNG is viewed by countries such as Japan, China and South Korea as critical to their future energy needs, and even if these countries do actually try to achieve their net zero emissions goals, LNG is likely to remain part of their energy mix for decades to come.

The IEA's pathway foresees a massive switch to renewable electricity for future energy use as the way to end reliance on fossil fuels.

However, in Asia this looks currently unrealistic, especially given the opposition of many of the governments in the region, even those who have committed to net zero targets.

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Editing by Muralikumar Anantharaman

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Clyde Russell is Asia Commodities and Energy Columnist at Reuters. He has been a journalist and editor for 33 years covering everything from wars in Africa to the resources boom and its current struggles. Born in Glasgow, he has lived in Johannesburg, Sydney, Singapore and now splits his time between Tasmania and Asia. He writes about trends in commodity and energy markets, with a particular focus on China. Before becoming a financial journalist in 1996, Clyde covered civil wars in Angola, Mozambique and other African hotspots for Agence-France Presse.