Fuelling a ‘green’ economy with ‘grey’ energy?


A coal-fired power plant in Indonesia. The substantial emissions associated with battery manufacturing challenges the notion of EVs as an environmental panacea.

THE news of the war spreading to Russia’s border was shocking. Al Jazeera’s latest report states that the Belgorod region has faced intensified attacks since late May.

The Russia-Ukraine war has had far-reaching impacts on every aspect of our lives. Both countries are major exporters of fossil energy and global grain suppliers. Since the war started, the cost of living has been steadily rising, directly affecting ordinary people across the world.

The war has also reshaped the global geopolitical landscape, with Norway serving as a remarkable example. The discovery of oil in Norway in 1969 marked the beginning of the country’s involvement in the oil and gas industry.

Today, Norway is one of the world’s largest oil and gas exporter. However, with the increasing prominence of climate change, Norway maintained a broad political consensus to address the potential climate risks associated with investing in new oil extraction.

Unfortunately, the spike in oil prices following the pandemic and the onset of the war have dampened discussions on phasing out oil and gas production in Norwegian energy policy. Instead, Oslo has been urged to expand its oil and gas production to protect Europe’s energy security.

At the same time, Norway has reaped substantial financial benefits from this approach. The government estimated that oil and gas revenues contributed $125 billion to the country in 2022, approximately $100 billion more than in 2021.

The war has also had implications for the coal export policy of Indonesia, the world’s top thermal coal exporter. In January 2022, the country temporarily banned coal exports to mitigate the risk of power loss and blackouts due to critically low coal supplies at domestic power plants.

However, the invasion of Ukraine by Russia reignited a surge in coal prices, leading Indonesia to resume coal flows to global markets. As reported by Reuters, citing Kpler’s figures, its coal exports reached almost 500 million tonnes in 2022.

Energy paradox in Borneo

Many Malaysians may not be aware of the extent of our country’s heavy reliance on coal. Between 2000 and 2020, Malaysia’s electricity generation from coal has tripled from around 7,700 GWh (about 11%) to over 85,000 GWh (47%) as reported by International Energy Agency (IEA). Most of this coal comes from Borneo, specifically East and South Kalimantan, if we look carefully into the trade data.

Even Sarawak, famous for its hydropower, still relies on coal. It has an available coal power capacity of 1,000 MW in 2019, as reported by Energy Commission in Malaysia Energy Statistics Handbook 2020.

Both Malaysia and Indonesia, heavily dependent on coal, find themselves caught in an energy paradox. Despite their aspirations to develop ‘green’ economies, including several large projects in their Bornean territories, the path to achieving this remains unclear.

North Kalimantan has become the focal point, with President Joko Widodo’s ambition to establish the nation’s largest ‘green’ industrial plant for battery production and electric vehicles, leveraging investments and technologies from Korean and Chinese companies. The solution proposed by Jokowi’s administration involves the construction of mega hydropower plants, with ongoing discussions surrounding the overall sustainability of such projects.

Further to the North, the Malaysian counterpart, Sabah, lacks a clear answer to this dilemma. Recent investments from Korea and China in the Malaysian state primarily focus on ‘green’ industries, encompassing the production of components in EV batteries and solar panels. The Korea Economy Daily reported in January 2021 that “the Malaysian city’s (Kota Kinabalu) large-scale electricity generation facility, required to produce copper foils, and about half an electricity price compared to South Korea led SKC to choose the coastal city.”

However, this seems highly unrealistic considering the recent power shortage issues in Sabah and its limited energy production capacity. According to the same Energy Commission report, the available capacity in Sabah is only 1,235 MW, four times lower than in Sarawak. Per capita, the state’s capacity is about 2.5 times lower than the peninsula’s.

Producing EV batteries and solar panels with coal power?

A worker inspects car batteries at a factory for Xinwangda Electric Vehicle Battery Co Ltd, which makes lithium batteries for electric cars and other uses, in Nanjing, China. – AFP photos

Rowan Atkinson, widely known as ‘M. Bean’ – a comedian with a master’s degree in electrical engineering from Oxford – expressed his disappointment in electric vehicles’ environmental claims in an article published in The Guardian on June 3, 2023.

The article highlights the substantial emissions associated with battery manufacturing, challenging the notion of EVs as an environmental panacea. Constructing new coal power plants in Borneo to manufacture components for batteries, solar panels or any other so-called ‘green’ products will ironically undermine the very essence of ‘green’ industries or economies, turning the whole development plan a comedy reminiscent of Mr Bean but, unfortunately, a disheartening one.

The real challenge for Malaysia and Indonesia, as well as specifically for Borneo, lies in phasing out ‘grey’ energy from the economy for both domestic use and export. For Indonesia, the situationis somewhat similar to the energy paradox faced by Norway. The Nordic country has been utilising hydropower domestically, investing revenues in conservation projects (it is the largest donor for REDD+ of which Central Kalimantan was designated as a major site) while continuing drilling and exporting fossil energy.

The International Monetary Fund (IMF) has proposed a solution to address Norway’s energy paradox, suggesting that the country should more actively use oil and gas revenues to assist other nations in meeting climate change goals.

However, the effectiveness of such a proposal is questionable without a concrete plan to phase out fossil fuels. By no means the climate crisis can be resolved if significant greenhouse gas emissions from burning fossil fuels continue.

While many questions require in-depth technical scrutiny and careful economic considerations, one thing is evident: there is nothing for us to be proud of in developing ‘green’ industries or pursuing similar initiatives if we continue relying on ‘grey’ energy, whether directly or indirectly.

It will likely do more harm than good in both environmental and financial terms.

Dr Goh Chun Sheng is a researcher at Harvard University. He studies sustainable development in Borneo, captivated by the myriad complexities and possibilities it holds.

His book, ‘Transforming Borneo: From Land Exploitation to Sustainable Development”’, was published by ISEAS – Yusof Ishak Institute in Singapore in March 2023.