The progress of recent CO2 reduction targets for U.S. industry, as well as restrictions on the amount of natural gas exported, is puzzling in light of the continued expansion of fossil fuel production capacity by various Asian nations.
Vietnam, along with the majority of Asian countries, is again jumping on fossil fuels…
Vietnam, like the majority of Asian countries, is once again embracing fossil fuels, especially coal.
On the other hand, it is not at all surprising that all these countries have backed away from the big promises made at international climate conferences to reduce CO2 emissions.
Vietnam’s projected gross domestic product (GDP) growth rate for 2024 is 5.8%, the sixth highest in Asia.
Among the largest contributors to GDP is the industrial sector (38%), particularly manufacturing.
S&P Global noted significant improvement in Vietnam’s manufacturing sector in the fourth quarter of 2023, and expects Vietnam to perform well this year.
In 2023, coal produced more than 40% of the country’s electricity, while abundant hydropower reserves contributed about 30%.
Natural gas contributed about 10%.
However, hydro production is expected to decline in 2024 due to low rainfall.
At the same time, natural gas-fired power generation is being affected by forecasts of the next natural gas price hike.
Bloomberg reports that state-owned PetroVietnam Gas “recently decided not to buy natural gas in June due to high prices”.
So to meet electricity demand, the heavy workload will now have to come from coal.
The country is urging miners to maximize production before demand peaks in the summer months.
The country’s prime minister has also called for increased exploration, indicating an interest in relying on coal in the medium to long term.
Vietnam’s decision was inevitable.
Vietnam cannot continue to risk a huge gap between supply and demand every time hydropower plants dry up or gas prices spike.
The growth rate of electricity demand from expanding industries is increasing at a good rate, and energy security is critical to maintaining the positive trend in the manufacturing sector.
A similar pattern across Asia
A similar phenomenon is occurring across Asia.
China, the world’s largest consumer of coal, reported an increase in consumption in 2024.
Earlier this year, reports showed the construction of dozens of new plants in China.
In 2023, the country accounted for 95% of the world’s new coal-fired power plant construction.
China has 1,142 plants in operation, five times the number in the United States.
India, another major player in the Asian energy market, has also seen an increase in coal imports and production, as well as increased infrastructure spending, with an expected upswing in demand for steel and coal-based commodity production.
The United States is also a major source of coal imports for all Asian countries.
In this regard S&P Global recently stated :
“U.S. metallurgical coal exports have experienced growth in recent years, driven by Asian demand.
Potential growth in seaborne volumes depends on the expansion of blast furnace steel and met coke production in India, China and Southeast Asia”.
New mines such as Arch Resource’s Leer South and Allegheny Met’s Longview, led by AMCI, POSCO and Itochu, will help meet Asian demand.
The progress of recent CO2 emission reduction targets for U.S. industry, as well as restrictions on the amount of natural gas exported, is puzzling in light of the continued expansion of fossil fuel production capacity by various Asian nations.
The quality of life for millions of Americans could be drastically reduced for virtually no environmental benefit.
That of Asians, on the other hand, would improve substantially.
