Global warming and the future of coal in Malaysia

THE recent Intergovernmental Panel on Climate Change (IPCC) report had issued a ‘code red’ status as global warming will breach the 1.5ºC limit before 2050.

The report coincides with the global trend of increasing coal consumption which remains a primary source of carbon emissions.

In 2009, then Prime Minister Datuk Seri Najib Razak pledged to reduce our carbon intensity per gross domestic product (GDP) by 40% by 2020.

However, Malaysia had doubled its coal consumption within the same period.

Ironically, Malaysia was on target to achieve its climate goals by 2020.

This was because Najib had green-washed Malaysia through statistical manipulation by coupling it with a reduction parameter.

Carbon intensity is the measurement of carbon pumped relative to GDP. Malaysia will experience reduction in carbon intensity while increasing its absolute carbon emission provided the economy continues to grow.

Coal consumption in Malaysia

In 2018, Malaysia’s proven coal reserves was about 1,279 million metric tonnes, but Sarawak was the sole coal mining state in Malaysia.

However, 80% of coal mined in Sarawak is used for electricity generation by Sarawak Energy Bhd (SEB).

Semenanjung fully imports the coal it needs for electricity generation and industries.

Mining and consumption of coal is virtually non-existent in Sabah.

Electricity generation consumes 94% all the coal demand in Malaysia with industries such as cement, iron and steel consuming the other 6%.

Since the inception of the Sarawak Corridor of Renewable Energy (SCORE), Sarawak has been pushing coal dependent industries to switch to electricity.

The consumption of coal by industries in Semenanjung remains stable.

Table 1: Consumption of Coal in Malaysia

 

In 2019, Malaysia built the last greenfield coal power plants in Jimah East Power and Balingian in Negeri Sembilan and Sarawak respectively.

The completion of Jimah East Power and Balingian coal power plant will increase coal consumption by an additional 4.3 million and 3.3 million metric tonnes per annum for Semenanjung and Sarawak respectively.

The Najib Razak administration adopted the neo-liberal policy of measuring energy sovereignty in terms of monetary value.

The idea was to import cheap coal but export domestic fossil gas to pocket the monetary surplus.

However, giving up real energy sovereignty will be disastrous. Prior to COVID-19, foreign coal prices increased exponentially hurting the ringgit’s value.

Between 2021-2030, Malaysia could spend nearly RM150 bil to import coal import.

The loss of energy sovereignty is also putting upwards pressure on the electricity tariffs.

This will increase the cost of living through higher electricity bills and cost of goods.

Higher coal consumption had accelerated the climate crisis which is hurting farmers and fish-folk in the form of poor harvests and declining fish stock respectively.

On the other hand, a small group of well-connected domestic and foreign businesses are benefiting from Malaysia’s coal policy.

Beneficiaries of Malaysia’s coal landscape

The primary beneficiaries of Malaysia’s coal landscape can be divided into two categories: state capitalists and private capitalists. State capitalists are basically governments that are profiting from the coal business.

The three main national governments that are benefiting from the domestic coal landscape are Malaysia, China, and Indonesia. Private capitalists benefit in terms of owning the coal power plants and transporting the imported coal.

Putrajaya is benefitting through the profits made from coal powerplants owned by Tenaga Nasional Bhd (TNB). Beijing (PR China) earns profits through China General Nuclear Power Corporation (CGN) which owns Edra Energy.

The 1MDB scandal has caused CGN to take over several existing and new power plants. Jakarta (Indonesia) benefits through coal purchases by TNB from their government-owned mines.

TNB imports the coal needed for power generation in Semenanjung from Indonesia (63%), Australia (22%), Russia (14%) and South Africa (1%).

TNB Fuel Services Sdn Bhd (TNBF), a wholly owned subsidiary of TNB, grants long term shipping contracts to import coal. TNBF offers three types of concessions – two-year contract, 10-year contract and 15-year contract.

Table 2: Financial Beneficiaries of Coal Shipping Concession

 

Moving Forward

Malaysia could conduct fuel-switching from coal to biomass to eliminate the coal usage for electricity generation. Fuel-switching is the process of modifying the coal combustion chamber to generate heat from biomass.

Domestic palm oil produces about 51 million metric tonnes of biomass. The palm biomass can generate over 88 TWh (Terawatt-hour) of electricity which could easily displace coal for electricity generation. – Sept 1, 2021.

 

Sharan Raj is a human rights activist, environmentalist, and infrastructure policy analyst. He is also the central committee member for Parti Sosialis Malaysia (PSM) and State Secretary for PSM Negeri Melaka (PSM Melaka).

Zakri Zulkurnain is an environmentalist with Biro Alam Sekitar & Krisis Iklim (BASKI) under Parti Sosialis Malaysia (PSM). Professionally, he is marine consultant that focuses on sustainable Blue Economy.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.

 

Photo credit: NS Energy

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