Malaysia and coal

Malaysia has a small coal mining sector operating from Bintulu, Merit-Pila, Silantek, and Tutoh in the state of Sarawak. The U.S. Geological Survey (USGS), which estimates production in 2008 was 1.05 million tonnes, states that "power-generating plants consumed about 70% of the total supply of coal (domestic production and imports), and the remaining supply was consumed by the cement and iron and steel sectors."

Overview
Sabah is one of 13 states in the federation of Malaysia, and is located at the northern part of Borneo island. The state was until 1963 under British rule and was known as North Borneo. Its capital Kota Kinabalu is located more than two hours by air from Malaysia’s federal capital, Kuala Lumpur. The South China Sea is off the west coast, and the Sulu and Sulawesi (Celebes) seas are off the northern and eastern coasts of Sabah. The population of Sabah is currently over 3 million.

Sabah is home to some of the most unique wildlife species on the planet, such as the Orang Utan, Borneo Pygmy Elephant, Proboscis Monkey and Sumatran Rhinoceros. It also hosts a number of unique plants, including rare Slipper Orchids and Rafflesia. Its seas hold diverse marine species, important for local fisheries and for the export market. Ecotourism, along with diving at world famous islands like Sipadan,are important revenue earners.

The push for development has led to rising demand for electricity as Sabah moves ahead to implement various projects. Some of these projects are based on national plans such as the annual Malaysian Budget. A number of projects, mainly infrastructure based, are on-going including those under the purview of the Sabah Development Corridor blueprint launched in January 2008. After the state-run Sabah Electricity Board (SEB) was taken over by Malaysian utility giant Tenaga Nasional Berhad, there were high hopes that power shortage woes would come to an end. However, the new entity, Sabah Electricity Sdn Bhd which is 80 per cent owned by Tenaga Nasional Berhad with the remaining stake belonging to the Sabah Government, has failed to solve power shortage, especially on Sabah’s east coast.

Coal-fired power plant for Sabah
Reports of Sabah getting a coal-fired power plant date back to 2003 but nothing was done to actually get the project started. In the meantime, the Government spent millions on building the East-West Grid, a transmission line that allows excess power from the west coast to be sent through the grid. Commissioned about two years ago, the grid has not helped in solving power shortage on Sabah’s east coast – mainly in the major towns of Sandakan, Tawau and Lahad Datu.

In 2007, it was announced that a 300-megawatt coal plant would be built in Silam, Lahad Datu. The site for the proposed plant was on the shores of Darvel Bay, an important area for local fishermen and aquaculture. The fact that it was also close to world-renowned Danum Valley drew protests from various groups, including WWF-Malaysia, Malaysian Nature Society and the Sabah Environmental Protection Association. Studies from various organisations, including Universiti Malaysia Sabah, showed that marine resources and waters at the site would be impacted by a coal plant. The Environmental Impact Assessment (EIA) was rejected. Subsequently, the Sabah State Government said no to the project, citing environmental and health concerns.

Sabah Electricity Sdn Bhd then decided to build the plant in Seguntor, Sandakan but the local community fought back through the Save Sandakan campaign. The site was close to yet another world famous site, the Sepilok Orang Utan Rehabilitation Centre at the Kabili-Sepilok Forest Reserve. The plant was once again, rejected.

In September 2009, Malaysian Prime Minister Datuk Seri Najib Razak announced that the plant would be built at Felda Sahabat near Lahad Datu as it is the only way to overcome power shortage in Sabah. The Prime Minister said the site is at an oil palm plantation, and away from communities. The Detailed EIA for the plant came out in late May 2010, following approval of a second Terms of Reference for the assessment.

NGOs form coalition
One month after the announcement, Green SURF (Sabah Unite to Re-Power the Future) was born. It is made up of five NGOs which got together to form a coalition, asking the Government to look for clean energy options. The NGOs are WWF-Malaysia, Land Empowerment Animals People (LEAP), Partners of Community Organisations (PACOS), Sabah Environmental Protection Association and Malaysian Nature Society.

Green SURF wants the coal plant to be stopped as it goes against the Malaysian Government’s commitments pledged at international and national platforms. The Prime Minister had in Copenhagen announced that Malaysia would cut its carbon emissions intensity by 40 per cent by 2020 compared to 2005 levels. Prior to that, in announcing the Budget for 2010, the Prime Minister said the Government is setting up a RM1.5 billion fund to promote green energy. The proposed plant itself is reported to cost RM1.7 billion.

Green SURF commissioned University of California, Berkeley, Professor of Energy, Daniel M. Kammen, to carry out a study on power options for the state. In his report titled “Clean Energy Options for Sabah: An Analysis of Resource Availability and Cost,” Prof Kammen said Sabah stands to gain from using clean energy as it is a premium product. The study found that 42 of the 117 palm oil processing mills in the state are large enough to collectively produce 380MW, compared to the 30MW produced now under the Small Renewable Energy Projects (SREP).

Another study independently written by researchers at the Tunku Abdul Rahman University found that there are a number of alternative clean solutions to generate electricity. The study is called “Meeting Energy Demand in a Developing Economy Without Damaging the Environment – A Case Study in Sabah, Malaysia, from Technical, Environmental and Economic Perspectives.”

Green SURF has embarked on an online petition campaign and also has a following on Facebook and Twitter. It is encouraging Malaysians and anyone else concerned about the power plant to write to the Prime Minister at his blog at www.1malaysia.com.my. It has also conducted fact-finding missions to the latest site for the plant with other concerned groups, including SaveSandakan. Recently, Sabah Environmental Protection Association president Wong Tack spoke on the possibility of legal action (http://www.freemalaysiatoday.com/fmt-english/politics/sabah-and-sarawak/5954-sabah-groups-to-seek-injunction-against-coal-plant-).

Alternative Energy Options
Renowned “Blue Ocean” strategy guru Professor W. Chan Kim who was in the state last year suggested that Sabah take advantage of its rainforests and natural resources by promoting itself as a “garden for the world.” He was quoted as saying that “Rather than exploit the natural resources God has given us, we need to conserve them and attract the world to us and make more income, raise the people’s standard of living and eradicate poverty.”

With 1.4 million hectares planted with oil palm in Sabah, it also stands to gain from biomass power which is in line with Malaysia’s National Green Technology Policy that emphasizes the need to tap into renewable resources. In March, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said the Malaysian Palm Oil Board was studying ways to speed up the palm oil industry’s involvement in renewable energy.

According to a United Nations report, the total annual greenhouse gases (GHG) emission from Malaysia in 2006 was about 188 million tonnes of carbon dioxide equivalent. There is potential for 10 per cent reduction in GHG emissions for the country from trapping methane from palm oil mills. If this is convertible to carbon credits, and assuming at a value of RM30 per tonne, this translates to a value of over RM500 million a year in carbon credits. Methane is a GHG with 23 times the global warming potential of carbon dioxide and using it as a fuel for gas engines for electricity will reduce the palm oil industry’s carbon footprint.

Gas and petroleum from waters off Sabah’s west coast are very minimally being used for electrification. A 300MW gas-fired power plant in Kimanis is at early stages of construction. With Sabah Electricity Sdn Bhd’s insistence that the East-West grid cannot be relied on fully to send excess power from the west coast to the east, there have been calls to build a pipeline from the west coast to the east coast over 200 kilometres away, but the Government and national oil and gas company, Petronas are unwilling to do so. However, there are questions over the Malaysian government’s decision to build a 500 kilometre pipeline to send gas from offshore Sabah to the Liquefied Natural Gas plant in Bintulu, Sarawak (a neighbouring state). This gas will be processed for the export market, including for energy needs in countries like Japan.

There is also a site in Tawau with the potential to produce 67MW from geothermal energy. Solar energy has been studied as an alternative but found to be relatively expensive (although costs may come down in the future), while energy from wind is seen as not feasible for the state. Hydropower is used for power generation, but Prof Kammen has suggested that more research is needed to look at potential hydropower sites as available data dates back to the mid 1980s.

Green SURF is also concerned about reports that independent power producers (IPPs) which hold negotiated contracts with Tenaga National Berhad, are not operating at full capacities, leading to power shortage. Recently, Minister in the Prime Minister’s Department Idris Jala said the government would do its best to renegotiate contracts for IPPs, a sector that has come under fire.

Saying No to Coal
The state of Sabah is Malaysia’s representative in the six-nation Coral Triangle Initiative. Sabah’s northern to eastern coasts are part of the Coral Triangle and the site for the proposed plant on Dent Peninsular, is listed as “globally significant” for its marine resources. The Coral Triangle itself is home to 76 per cent of all known coral species worldwide and 37 per cent of coral reef fish species, making it an important zone for food security. This is despite the fact that the Coral Triangle only covers one per cent of the earth’s surface. Over 150 million people live in the region, including 100 million who stay along coasts.

In May 2009, the Malaysian Prime Minister, who attended the Coral Triangle Initiative Summit in Indonesia, joined leaders from the region to sign a statement that focused on protecting reefs and food security. Najib Razak subsequently announced the Prime Scientific Sailing Expedition in territorial waters within the Sulu and Sulawesi seas off Sabah to find out the potential of what the region has to offer to communities and eco-tourism. In October 2009, Science, Technology and Innovation Minister Datuk Dr Maximus Ongkili, said the 52-day expedition found many untapped resources and new marine species that could create spin-offs. He was quoted as saying that “we need to reduce haphazard coastal and marine planning practices and instead employ adaptive measures to reduce impacts of multi-hazards caused by climate change and rising sea levels.”

A summary report called “The Coral Triangle and Climate Change: Ecosystems, People and Societies at Risk” warns that rising sea levels and death of corals from warmer waters will cause food sources for coastal communities in the Coral Triangle to go down by half by 2050. According to the report, a rapidly changing climate is projected to cause Sabah, the Philippines and parts of Indonesia to be hard hit by increasingly intense rainfall that alternates with long and severe drought, following change in precipitation and soaring temperatures by 2050. The 34-page report written by WWF Australia and the University of Queensland investigated conclusions of over 300 scientific studies and consulted more than 20 experts.

Swansea University Professor Dr Rory Walsh who spoke at the Sabah Foundation-organised Borneo International Conference revealed that the biodiversity rich Danum Valley has seen a hike of 0.4 degrees Celcius in three decades and Kota Kinabalu has seen an increase of 0.9 degrees Celcius in mean annual temperature since the 1960s. Walsh said annual rainfall in Danum Valley has risen by 19 per cent in the last 11 years, and recent changes appear to conform to some extent with global warming predictions.

At another seminar in Kota Kinabalu, it was revealed that montane moths are under threat of extinction due to global warming. Universiti Kebangsaan Malaysia Emeritus Professor in Botany and Biodiversity, Datuk Dr Latiff Mohamad, said studies show moth species are moving up Mount Kinabalu because of changes in climate and temperature.

Sabah officials reject plant
On August 19, 2010, Sabah state environment minister Masidi Manjun rejected plans for a coal-fired power plant being built in Malaysian Borneo, due to environmental concerns. Manjun reportedly said proponents of the project now have the choice to either drop the controversial power project or launch an appeal to conduct another environmental assessment study.

The 300-megawatt plant would face the Coral Triangle, which is one of the world’s most biodiverse marine environments. The area, which spans the seas around East Timor, Indonesia, Malaysia, Papua New Guinea, the Philippines, and the Solomon Islands, is home to 75 percent of all known coral species. Environmentalists immediately hailed the decision. Opposition was led by Green Surf, a coalition of groups including the Malaysian Nature Society, which said the plant would displace villagers and threaten endangered species including orangutans and Bornean rhinos. Spokesman Wong Tack said that proponents of the project, which national energy provider Tenaga Nasional has a stake, should scrap it altogether.

The plant is the latest energy project to stir controversy in Borneo. The vast Bakun dam in neighbouring Sarawak which saw swathes of rainforest cleared and thousands of indigenous people displaced also drew intense criticism.

On February 16, 2011, the Chief Minister of Sabah announced that plans for a new coal fired powered plant will be scrapped in favor of renewable energy. In a press statement, the Minister announced: "The Prime Minister understands that one of Sabah's greatest assets is its natural attractions and still somewhat pristine environment. While Sabah needs to increase power supply to meet increasing development, the state cannot afford to put its natural environment at risk. As a responsible government, it is paramount that we put priority on protecting our environment for the well-being of the people. We must also protect the environment especially since its one of biggest tourism draw in the Sabah."

New Economic Model
On 31st March 2010, the Malaysian government released the New Economic Model report calling on the nation to embrace a leadership role in green technology. The National Economic Advisory Council (NEAC) warns that Malaysia could face irreparable environmental damage and global sanctions if its natural resources are mismanaged.

Also in March 2010, Energy, Green Technology and Water Minister Datuk Peter Chin said Malaysia intends to be one of the leaders in green technology, at least within Asean, and looks to green technology as a new growth area for the economy. It was this same minister who the same month said biomass was not economically feasible in solving power woes in Sabah.

On 27th April 2010, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said World Bank and International Finance Corp officials will discuss with Malaysia on developing a syariah-compliant US$200 million fund. The Islamic Fund for Green Technology will be the first of its kind in Asia.

In May 2010, the Prime Minister through his blog www.1malaysia.com.my said Malaysia’s fuel mix for power was leaning too much in favour of natural gas and coal. He wants this imbalance to be corrected as Malaysia pushes forward in becoming a low carbon economy.

SCORE
The Sarawak Corridor of Renewable Energy (SCORE) is one of the five regional development corridors being developed throughout the country. SCORE is a major initiative undertaken to "transform Sarawak into a developed State by the year 2020." The core of the Corridor is its energy resources (28,000 MW), particularly hydropower (20,000 MW), coal (5,000 MW), and others (3,000 MW).

Coal resources
The USGS states that Malaysia has "coal resources of 1.7 billion metric tons (Gt), of which 274 Mt was measured, 347 Mt was indicated, and 1.1 Gt was inferred. About 1.4 Gt of the country’s resource is located in Sarawak."

Power Stations
The USGS states that "despite Malaysia’s position as a natural gas exporter, Tenaga Nasional Berhad planned to decrease the use of natural gas at its powerplants to 49% from 72% and to shift to the use of coal because of a shortage in the supply of natural gas in the domestic market. In 2008, the State government of Sabah decided to cease the construction of a 300-megawatt coal-fired powerplant in Lahad Datu on Borneo Island to meet an increased electricity demand in the State of Sabah because the proposed plant would be located near the protected rainforest area. Coal consumption was expected to increase to 19.5 Mt in 2010 and, because domestic coal could not meet the demand, the country was expected to increase coal imports to fill the gap. Most imported coal was from Australia, China, and Indonesia."

As of mid-2010, the Sabah Electricity Sdn Bhd is lobbying for approval of Lahad Datu once more.

Coal-fired power stations financed by international public investment institutions
Coal-fired power stations financed by international public investment institutions include:
 * Manjung power station

Citizen Groups

 * Aliran
 * Sahabat Alam Malaysia
 * LEAP (Land Empowerment Animals People)
 * Third World Network

Related SourceWatch articles

 * Sabah Electricity Sdn Bhd

External resources

 * Daniel Kammen et al, "Clean Energy Options for Sabah an analysis of resource availability and cost," Renewable & Appropriate Energy Laboratory, University of California Berkeley, March 2010