Phasing Out Southeast Asia’s Coal: Feasibility And Challenges By 2040

Decarbonizing the global energy sector requires replacing fossil fuel power plants with clean energy sources like solar and wind. For Southeast Asia, the goal of phasing out coal power by 2040 has raised concerns. The region’s coal plants are expected to be relatively young by that time, making their retirement seem challenging. However, by 2040, the average age of these coal plants will be around 28 years, which is not far from the global average retirement age of 36 years. Many plants will be older than 25 years, surpassing the typical length of power purchase agreements (PPAs).

The Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) have suggested that coal power should end by 2040 to keep global warming below 1.5°C. Despite the concerns, data shows that retiring coal plants in Southeast Asia by 2040 is feasible. Most coal plants in the region will be around 28 years old, and nearly 60% will be older than 25 years. This makes it possible to transition to renewable energy even if some plants are relatively young.

In some cases, coal plants as young as 15 years old could be retired profitably by 2030-2035, depending on the right policies and financial conditions. Research indicates that up to 800 coal-fired units in Southeast Asia might be candidates for early retirement. This process involves replacing existing coal PPAs with new renewable energy agreements. Such transitions could be financed without raising wholesale power prices, given the right conditions.

Efforts are already underway to phase out coal in Southeast Asia. Since 2014, proposed coal plant capacity in the region has dropped by 90%, making the coal-to-clean transition more achievable. However, about 15 gigawatts (GW) of coal power is still proposed, and another 15 GW is under construction. Stopping these new projects and placing an immediate ban on new coal proposals could help the region avoid stranded assets and financial losses. By canceling these projects, the amount of coal power capacity under 20 years old could be limited to current levels, reducing the younger coal fleet in 2040.

Additionally, halting funding for expensive coal plant retrofits, which do not significantly cut emissions, will help direct resources toward clean energy transitions. Technologies like 20% co-firing with ammonia, which extend coal plant lifespans without meaningful emission reductions, should be avoided.