Insight - Crossing the great decarbonisation river


Since Malaysia and many developing South-East Asian countries remain heavily reliant on coal and natural gas as fuel sources, we need to think about how to cross the great decarbonisation river.

IN September 2021, at the unveiling of the 12th Malaysia Plan, Prime Minister Datuk Seri Ismail Sabri Yaakob announced Malaysia’s commitment to become carbon neutral as early as 2050. To substantially decarbonise the Malaysian economy, the power sector has a crucial role to play.

In Malaysia, natural gas and coal contribute to more than 80% of the power generation mix.

The government targets renewable energy (RE) to constitute 31% of installed power generation capacity in 2025 and 40% in 2035.

Note that these numbers are expressed in terms of installed capacity, which is the maximum output of electricity from a generator can produce under ideal conditions. There is a crucial difference between a fossil fuel or nuclear power plant and a RE power plant powered by sun or wind in that the latter are intermittent suppliers of electricity because the sun is not always shining and the wind is not always blowing.

Coal reality

Solar, hydro, biomass and biogas offer a greener energy future but are unlikely to be enough to completely decarbonise the grid in the near term.

By 2030, around 1250 gigawatt of coal power plants worldwide that are currently in operation or under construction, could not only still be in service, but could also still have a remaining lifetime of at least 20 years.

Largely because of this concern over stranded assets, world leaders who met at the 2021 United Nations Climate Change Conference in Glasgow only pledged to phase down, instead of to completely phase out, coal.

Since Malaysia and many developing South-East Asian countries remain heavily reliant on coal and natural gas as fuel sources, we need to think about how to cross the great decarbonisation river.

Stepping stones

Having a bridge to cross a river is nice, but stepping stones will get us across too.

The “stepping stones” vocabulary captures the complexity and that some technologies – such as co-firing coal and ammonia – are certainly undesirable long term (i.e. decades), but might be very helpful as stepping stones, keeping the lights on with power stations we have got, whilst phasing out the coal and building other power plants.

In October 2021, IHI Corp launched a feasibility study with Petronas Gas & New Energy Sdn Bhd to assess technology for co-firing ammonia at coal power stations in Malaysia and evaluate technologies and economics across the entire supply chain, including producing green ammonia from RE sources and blue ammonia from natural gas.

Japan’s Ministry of Economy, Trade and Industry selected this initiative as a grant recipient under its financial year 2021 programme of feasibility studies on the overseas deployment of high-quality infrastructure.

In February 2021, Japan’s largest power generation company Jera signed a memorandum of understanding with Petronas to use RE to produce green ammonia, which would be used in an experiment of mixing coal and ammonia as fuel in a thermal power plant in Japan.

Three months later, Jera announced a four-year test project aimed at an eventual ammonia co-firing rate of 20% from 2024 with only minor adjustments to a coal power plant.

Simultaneously, the Japanese government announced a public-private investment loan facility of up to US$10bil (RM42bil) to accelerate decarbonisation in Asean countries.

One of the key initiatives is the adoption of ammonia co-firing technology in coal-fired plants.

As ammonia does not emit CO2 when burned and is easily handled by liquefaction, it is a viable alternative fuel in thermal power generation.

Co-firing green ammonia at commercial coal-fired plants can reduce carbon emissions and mitigate their risk of becoming stranded assets before their average life span of almost 50 years is up.

Therefore, green ammonia can be part of Malaysia’s move to reach net-zero carbon emissions.

It may not be the final answer, but it is significant progress in the right direction. This develops determined action in the right direction on the one hand, and on the other buys time for the adoption of new carbon-free fuels that could emerge in the future.

Using ammonia as fuel raises concerns that the emission of nitrogen oxides – pollutants that react to form smog and acid rain - would increase. The good news is that in March 2021, the Japanese engineering corporation IHI unveiled a coal power station ammonia co-firing burner that suppresses nitrogen oxides while stabilising combustion.

Economics

What is the near-term global relevance of this stepping stone?

Co-firing with a 20% share of low carbon ammonia could reduce the six gigatonnes (Gt) CO2 emissions per annum of coal power plants worldwide by 1.2 Gt.

Reaching a 20% blending share would result in an annual ammonia demand of 670 million tonnes, which is more than three times today’s global ammonia production.

The relevance for Malaysia is that Sarawak has immense hydro resources to produce green hydrogen, which is a building block for green ammonia.

Posco, Lotte Chemical, Sarawak Economic Development Corp (SEDC) Energy, and Samsung Engineering have set out in October 2021 to develop a green hydrogen and ammonia project in Bintulu.

The project is expected to produce 7,000 tonnes per annum of green hydrogen, 600,000 tonnes per annum of blue ammonia, 630,000 tonnes per annum of green ammonia, and 460,000 tonnes per annum of green methanol.

In November 2021, SEDC Energy also entered into partnership with Australian companies H2X and Thales New Energy to develop a 1.3 GW hydrogen export facility powered by hydroelectricity in Samalaju.

The plant is expected to produce 170,000 tonnes per annum of liquid green hydrogen or 970,000 tonnes per annum of green ammonia.

Consider also the case of Vietnam which has a coastline of more than 3,000 km and located in the monsoonal climate zone.

The country’s excellent wind resource has attracted global investment interest.

However, due to insufficient grid infrastructure, solar and wind farms in Vietnam have faced power grid curtailment as RE buildouts expand.

Instead of letting curtailment affect the bankability of RE projects, the RE that cannot be absorbed by the grid can be directed to produce green hydrogen and green ammonia.Hydrogen is a fantastic candidate fuel for storing renewable energy generated from solar and wind for use at a future time. The difficulty with hydrogen is that it is difficult to store and transport.

Using a hydrogen carrier like ammonia allows us to store and transport hydrogen derived from renewable sources in bulk.

Green hydrogen, which is produced by splitting water using electricity generated from low-carbon sources, can enable deep decarbonisation of transportation, industry and power. Malaysia and Asean countries should use our advantage in RE generation to develop higher value new green industries and supply chains, and not rest on the laurels of exporting green hydrogen and green ammonia. The cost of green hydrogen is set to decline rapidly.

The Indian conglomerate Reliance Industries has just signed a deal with wind power pioneer Stiesdal to mass- produce an ultra-low-cost electrolyser that would bring hydrogen energy to under US$1 (RM4.20) per kg within a decade.

Developing thinking

What can Malaysia and other Asean countries learn from Japan’s ambition to create a global supply chain of ammonia for use as fuel, and their aim to increase Japan’s annual ammonia fuel demand to three million tonnes by 2030, up from zero now?

The stepping stone used earlier is a reminder that when we try to solve a complex problem, it is helpful to have various options live in the mix.

This approach ensures that we have got some resilience against emerging unknowns and can adapt and edit our policy as we go along.

That resilience obviously costs money, but nobody has a perfect crystal ball and can tell you which single path will create the world-saving bridge.

That is dreamland. We are in the real world, and pragmatism requires a great deal of “suck it and see”.

This essay gives a model for getting people to develop decarbonisation pathways for discussion.

What we have done here is not so much make a numerical model as develop a logic model in words and quantity-type numbers, setting out the elements that are happening and need continued attention in a technology roadmap concerning moving away from coal.

This kind of logic model is what is needed for discussion.

It covers what the practitioners and politicians are doing, what the engineering is offering, and what the economics might look like.

It is important to shape the discussions in this way.

Leong Yuen Yoong is professor at the Jeffrey Sachs Centre on Sustainable Development, Sunway University. Michael James Platts is with the Cambridge Institute for Sustainability Leadership, University of Cambridge. The views expressed here are the writers’ own.

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