Key Considerations for Phasing out Coal in Asia

In this article we breakdown the challenges faced when phasing out coal from your operations and supply chain in Asia, and what companies should be aware of.  We consider the options currently available, with a focus on Vietnam, and map out some of the key recommendations for making the transition to biomass.

Why is Coal Phase-Out an important topic?

Coal is used abundantly across scopes 1, 2 and 3 of most companies’ emissions footprints. Industries with high thermal energy demand – including cement, food & beverage, apparel & footwear manufacturing – inevitably have a high proportion of emissions from burning fossil fuels. To deliver on GHG reduction commitments, many industries and corporates have committed to phasing out coal by 2025 or 2030, for example, the UNFCCC Fashion Charter for Climate Action has more than 100 brands and some major suppliers committed to phasing out coal by 2030.  For those companies that have not made specific coal phase-out pledges but have made commitments to Science Based Targets, coal phase-out often presents a big lever in efforts to close the emissions gap to target.

Key challenges:

The possible options for phasing out coal are country, region, and site specific.

Different markets have different infrastructures in place for alternative fuel supplies, as well as geographical considerations relating to fuel availability. For example, a country might have an established natural gas infrastructure, or perhaps they have a big agricultural industry where there is an abundance of waste for biomass production. Furthermore, as far as coal phase-out technologies are concerned, market experience and the presence of local players to support distribution of technologies such as electric boilers, is important to consider. On a consumer side, depending on the thermal demand of the individual site, certain options for phasing out coal might not be technically or economically feasible.

Thermal demands cannot always be met by certain technologies

For processes requiring high temperatures for extended periods of time, options for companies to transition away from coal may be limited. Solar thermal and heat pumps can offer an attractive alternative thanks to the relieved burden of fuel sourcing. However, the thermal output for certain heat processes don’t always reach the higher temperatures that are required, in which case operational changes or hybrid solutions would need to be made. Electric boilers can offer a highly efficient solution, but technology costs increase significantly with boiler capacity.

Many technologies are still under development or not yet commercially viable.

While there are promising technologies on the horizon and in the early stages of pilot, there can be risks to being an early adopter. Technology costs can be high without established industry players or vendors, and the stakes can also be high without established networks and experts to provide technical and operational support.

In the case of fuel switch, security of fuel supply and technology compatibility are vital

Understanding how combustion technology needs to be adjusted to take up alternative fuel before transitioning is a clear first step, while securing a long-term fuel supply is also important. For example, to substitute coal with biomass, companies need to have reliable access to specific types of biomasses that are available locally and can be delivered quickly to the location. Having a clear understanding of the fuel types that can replace coal enables companies to make suitable technology adjustments or investments to produce the required thermal output.

What are the main alternatives?  

Our table below summarises key features of alternative thermal technologies that can be used to replace coal, based on what is currently available across Asia:

In focus: Transitioning to Biomass in Vietnam

In line with our mission to accelerate corporate transition to renewable energy, we took a closer look at biomass transitioning in Vietnam as it represents a viable option that a wide range of industries can leverage immediately to reduce their dependence on coal.

In general, there are possibilities for fuel switch with combustion or small-scale electric boilers. LNG is not widely available for industrial users as LNG pipeline infrastructure is limited to certain locations and application.

Electric boilers are mainly suitable and affordable for companies with small thermal demand. Large-scale electric boilers become very costly with limited local service providers.

The high availability of biomass in Vietnam makes it the most commercially viable option currently for coal phase out in this part of the world. Biomass pricing is becoming more competitive against coal, although it does fluctuate due to seasonal availability and is subject to annual market demand. We took a closer look at some of the opportunities and challenges of substituting coal for biomass in the country.

Opportunities for substituting coal for biomass in Vietnam:
  • The price of Biomass is becoming more competitive due to increasing coal and fossil fuel prices.
  • There exists established experience and vendor networks from biomass usage in food and beverage, cement, and apparel sectors.
  • There is still un-deployed biomass capacity in Vietnam, however this requires substantial market development and investment in terms of logistics infrastructure, vendor network expansion etc. Stable and long-term demand would be required to initiate such a movement for the biomass sector.


Challenges of substituting coal for biomass in Vietnam:
  • Lack of updated and validated data on biomass available on a regional level. Having a good understanding of the local availability of biomass and access to local vendor networks are important factors for factories looking to make a decision on a permanent fuel switch and combustion technology adjustment. There is not yet a local database for biomass sourcing in Vietnam.
  • Emissions reduction: transportation cost is a significant component in biomass pricing, and it also contributes to a factory’s emissions level. Local biomass sources are preferred to reduce cost, emissions, and risk of production disruption.
  • Financing capacity: investment is required for technology adjustments or new equipment. It is important for factories to build a business case from such an investment.
  • Impact on boiler efficiency due to fuel switch: due to differences in fuel characteristics, such as calorific value, moisture content, and size, it is crucial to monitor boiler efficiency and thermal outputs during the fuel transition process and apply suitable technical adjustments.
  • Biomass supply vs. demand: biomass in Vietnam has been mainly used by a small number of big consumers and for export. New buyers need to show long term business potential and sufficient demand to work with biomass vendors.
  • Lack of regulation and practice on biomass sustainability – it is vital that a transition to biomass does not contribute to deforestation or a crisis in food security. There is currently no regulation or standard in Vietnam on sustainable biomass sourcing. With sustainability being a multi-disciplinary topic, it requires local expertise and a sophisticated approach to address this question, and factories will require clear guidance and support to fulfil this requirement.

Practical steps to identify what Thermal Technologies are available to you:

Where to go from here?

Coal phase out is a complex transition process that requires proper investigation and preparation. At act renewable, we support companies in diligently assessing the available options that fit their situation best. If you are looking for help with the transition planning and implementation process, connect with our team to discover more.

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