A friend of mines: Asia’s coal habit

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Hello and welcome to the Intelligence on Economist Radio. I'm your host Jason Palmer. Every weekday we provide a fresh perspective on the events shap your world. For a while, things in the West African country of Liberia were looking up after a 14 year civil war. International aid poured in and a new president swept to power promising reform. But now both the money and the hope are drying up and cruises to the Caribbean are becoming even less authentic travel experiences. Cruise lines are snapping up property and building literal walled gardens to coddle their passengers who don't even need visas to visit. We ask who's benefiting. First up though, Coal drives Asia and yet the region's passion for the stuff threatens the health of the planet. Despite Asian country signing up to the Paris Agreement on climate change, it's estimated that deadlines for both the construction and the closure of coal fired power stations will be missed by decades. Can all this change in order for.

The climate not to Asia digs up and burns three quarters of the world's coal.

Miranda Johnson is the Economist's Southeast Asia correspondent.

China is the world's largest producer and consumer of coal by an extremely long way and largely as a result, it also emits more carbon dioxide than any other country in the world. India is the second biggest consumer. Japan and South Korea are also big consumers of coal, while Australia and Indonesia are big producers. Southeast Asia was the only region in the world last year in which coal's share of power generation actually grew. So coal is increasingly becoming a truly Asian phenomenon.

And why is that? Why is Asia so reliant on coal?

It's very cheap, and so it's an easy way to develop quickly, and there's plenty of it. Two countries really matter in all of this, and that's India and China because of their massive populations and their massive consumption of coal.

What are the numbers we're talking about?

So India is the biggest builder of new coal fire plants when you look at final investment decisions, and that's partly because it knows that its demand for electricity is probably going to triple between 2012 and 2030. And coal consumption actually increased by 5% last year. So that's an enormous increase. China accounts for about half the coal the world consumes each year. And its appetite does actually seem to be waning. It burned through almost 4 billion tons last year, which is a slight increase on the year before, but that is actually below the peak of 4.24 billion tons in 2020, 2013 that was burned. So coal's share of China's energy mix has actually fallen by about 10 percentage points over the past decade. And this is all coming together in part because China promised that it would peak its emissions under environmental agreements by the year 2030. A lot of analysts actually reckon that it may manage to do that much sooner than 2030.

So what is China doing to meet those environmental commitments?

To clean up, it has invested massively in renewables. China now has about a third of the world's wind turbines and a quarter of its solar panels. Also, it has instigated big national plans to tackle air pollution, which has plagued the country in past years. So in 2013, for example, part of one of these plans gave Beijing five years to reduce its coal consumption by half. In 2017, we saw another initiative where the government actually introduced a carbon trading scheme.

So is a similar dynamic not playing out in India's coal market?

India is a very complicated case. On the one hand, there have been some impressive environmental policies put in place. Shortly after Narendra Modi became Prime minister five years ago, his government announced a plan to quadruple India's renewable energy capacity to 175 gigawatts by 2022. On the other hand, India's Addiction to coal stems partly from government bias. The government owns more than 70% of coal. India, which is the country's giant mining farm. It's actually the largest mining firm in the world, and it produces most of the country's coal. The state owned railways depend on the revenues generated by transporting coal to subsidized passenger tickets. And coal provides hundreds of thousands of jobs, many of them in the poorest states. So it's a difficult picture because the government has an enormous vested interest in seeing the coal industry prosper. Equally, the government is getting increasingly concerned about some of the environmental impacts of coal plants in India, and in particular the huge amount of water that coal plants in India use.

And is environmental awareness a concern in other Asian countries beyond India, in the.

Philippines and in Indonesia, increasingly, we're getting more pushback to coal plants and the damage that they can cause. And renewables offer other advantages over coal as well. In Southeast Asia, the area has many extremely remote areas. The Philippines has more than 7,000 islands, for example. So getting electricity to people who need it, solar can be a better option, for example, than costly grid extensions required to spread coal generated power to them. In other regards, there are advantages to pursuing renewables in Southeast Asia. Malaysia actually has the third largest solar cell industry in the world.

So in the places where coal fired plants are still being built, where the demand is still high, where the projections are still for more building, who's financing.

It, we're starting to see a splitting of private investors from ones which have links to the state. A new report from the center for Financial Accountability, which is an Indian think tank, just revealed that private lending to coal fired power plants in India actually declined by 90% last year. So some of the uncertainty around coal, some of these tricky questions around environmental impacts, is obviously starting to make investors somewhat nervous. On the other hand, even if the private sector were to wash its hands of coal altogether, that wouldn't necessarily determine the demise of the fossil fuel, because in both China and India, the biggest banks are state owned and their lending decisions are as much a function of government policy as of expected returns. And if the governments of China and India want to keep the lights on, want to keep promoting development, they may keep funneling money towards coal, despite the risks that other investors are recognizing.

So how to square this tension with, for example, China, which says it wants to have a big renewables industry where demand is already falling, and state banks proclivity to fund these kinds of projects?

That's a really good question, Jason, and it's one that I think Chinese policymakers are facing increasingly on the one hand, China has helped UN efforts, particularly around getting the Paris deal signed, and then on the other, it keeps helping to build and finance coal plants around the world outside of China in particular. And reconciling those two things is going to be tricky. What we do know is that there are certain inflection points that investors look at when they're considering energy projects, and one of them is the moment at which building new renewables is cheaper than building many types of new coal plants. And in countries such as India, we've already reached that point, and the economics will bear themselves out.

Miranda, thank you very much for joining us.

Thanks, Jason.

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The small West African country of Liberia has been through a lot. It suffered an on and off 14 civil war that killed about a quarter of a million people, almost a tenth of the population, and the conflict wiped out 90% of the economy. But eventually the fighting stopped, catalyzed by a women's group pressuring the president into attending peace talks. A hopeful era was dawning. In 2005, Liberians elected a new president, Ellen Sirleaf Johnson. She spoke at Harvard University in 2011.

We are proud that Liberian children are back in school, preparing themselves to play a positive role in the new Liberian Society. Our 7 year olds do not hear guns and do not have to run. They can smile again.

International resources were pouring in to help the fragile state. Lots of aid, money and a UN mission keeping the peace at a cost of $500 million a year. But since the UN pulled out and the country was gripped by an Ebola epidemic, that hard won peace and stability have started to look a bit wobbly.

So as new crises have emerged across the Middle east and Africa, the world has largely lost interest in Liberia.

Will Brown reports for the Economist from West Africa.

From 2010 to 2017, aid money per person in Liberia has fallen by about two thirds. This withdrawal of aid has created crisis now. So the new president, the footballing star, George Weir, came in on a wave of good hope about 18 months ago. It was an amazing moment. It was the first peaceful, democratic transfer of power for Liberia since the Second World War. But things have not been looking good. People seem pretty angry with how George Weir and those powerful individuals around him are managing the country.

In what way? I mean, when you speak to people about this, what sorts of things are they saying?

Well, officials in the capital, Monrovia, will tell you one thing, but if you really want to know what's going on, I think you need to get out into the rural areas. I drove to Gabanga, a town in northern Liberia. I went to a tea house. The mood was really sour, but, you.

Know, things are very, very difficult.

I spoke to teachers, social workers, students and people who sell farming equipment, and they said their businesses were failing.

We saw metamachines during the past 12 years, but just this year we saw less machine.

And food prices had almost doubled in the last few months and that crime and hard drug use was getting worse. So I spoke to one social worker who told me that the local hospital could barely afford to do routine tests.

So things are not very well for us as ordinary librarian citizens.

Okay, yeah, things are not going well at all. And is it getting worse? Do you think so?

Yeah, it's getting even bad.

It will get worse than what it is now.

It's getting worse over the last year. Two years, yes.

But the last five, six months is a degenerated to nothing.

I asked him what would happen, what he thought would happen if the situation carried on like this.

Oh, there going to be a uprising. This country.

There's going to be an uprising.

Yeah, uprising.

Because the hungry man is an angry man.

I can't get food. Look next year.

So. So what's gone wrong? What has George Weah done as president that has. Has tipped the economy in this bad direction?

So when he was elected, he promised to help the poor and crack down on corruption. But neither of these two things have happened. The poor are suffering, inflation has hit about 28%, and the government's actions haven't really helped things. The country has been wracked by several huge corruption scandals since Mr. Weir took office. So since coming to power, Mr. Weir has built about 50 houses for himself on a compound in Monrovia. I Waited outside the compound for about an hour, and I saw Mr. Weir driving in in this huge, sparkly, brand new SUV convoy. Now, Mr. Weir says that he's paid for these buildings with his own money that he earned during his football stardom days. But you can't tell because he hasn't publicly declared his assets. And a lot of people are pretty skeptical about his footballing claim.

But some of this might well have been outside his control. I mean, how much of the economic trouble that the country is experiencing did Mr. Weah inherit?

So the economy was doing pretty well under the early years. She grew the government's budget, got rid of crippling international debt, and from 2010 to 2014, and the country had a GDP growth of about 6 to 8%. But there's two huge shocks which rocked Liberia. First, a few years ago, the Ebola virus swept across Guinea, Sierra Leone and Liberia and killed about 11,000 people across the region. This scared off investors, created a recession, and then in 2018, a huge UN peacekeeping mission in Liberia finally packed up and left. The mission, obviously, was there to help stabilize the country, but it created problems when it left because at its height, it was costing about $500 million a year. So when it leaves, like any big industry leaving, it creates problems for the local economy.

There are these bad circumstances and bad governance, it seems, and people are getting poorer. Is the unrest just a matter of talk in tea houses, or do you think something more drastic is in the offing?

Well, there have been several huge peaceful demonstrations over the last few months. First couple, and the government's response to them has not been great. George Weah publicly said that no one should expect to be able to insult the president and walk the streets freely. And at one of the recent planned protests, the protests were banned and people who did show up were arrested.

And I suppose with a dark history of civil war, the question is how volatile the situation really is. Do you think there's a risk of return to violence here?

Well, I think that's a natural question to ask, but we need to be very careful when answering it. Liberia is not heading back to conflict, but a lot of people I spoke to, rich and poor alike, were very concerned about the potential for serious unrest and potentially violence if things don't change radically and quickly. One of the people I spoke to was Anson Meyerman, who is the head of Transparency International in Liberia.

Things are not okay.

And the perception out there about corruption.

Has been extremely negative since the government took over.

I asked directly if things could go back to the bad old Days, there's some possibility of relapse. Relapse in terms of, you know, going back to conflict.

If things continue to proceed as they are, I might not say within the next six months, but if concrete effort are not made, if the right actions.

Are not taken, addressing or attempting to.

Address the challenges we have, I wonder.

If there's something sort of broader we can learn from the situation in Liberia and the way countries like it are helped by the international community. This story of there being a huge international effort and expenditure to stabilize things and then at the end of the story, everybody packs up and goes, then things go south. Is there a kind of a lesson in terms of models of development? Is there something that could have been done differently, should have been done differently?

Look, I think one of the big problems here is justice. Sierra Leone was affected by Liberia's civil war. It had its own civil war off the back of Liberia's conflict. And it's had a very different attitude to post conflict justice. No one has ever been prosecuted in Liberia itself. But in Sierra Leone, several of the war criminals have been prosecuted. So in Liberia, what you have today is bad. People who were very powerful in the civil war are still very powerful today. And a few of them are even in government. As one activist told me, the decision makers are the warlords. And I think until that's changed, this kind of parasitic government will limit Liberia's full potential.

So you think it's just a matter of bringing those war criminals to justice then, and then Liberia would be on the right track?

No, I think it's more complicated than that. But there are several things that the international community could do. One major thing would be to provide experienced advisors to the government in some to say that Mr. Weir is very receptive to foreign opinion and that could help the country develop sustainable governance structures. So there's one more thing which really stares you in the face when you're driving around Liberia and it's agriculture. A lot of the fields around Liberia aren't being cultivated. Before the civil war, the country used to export food. If you want food stability and economic growth, I think that really needs to change. So if the international community is looking at Liberia and, and thinking what could do to help, I think real investment in agriculture is one, is one potential avenue.

Will, thank you very much for joining us.

Good talking, Jason. Thanks.

Of the 30 million people taking cruises this year, a third will visit the Caribbean. With pale sand and clear waters, the islands are enticing to tourists. And it's getting ever easier for them to hop off the boat and visit.

Cruise ship companies are making deals with Caribbean countries to open exclusive resorts that are not subject to customs or immigration control.

Stephanie Dark Taylor writes about the Caribbean for the Economist.

Passengers on the cruise ships can visit these resorts without passports, and often they use US Dollars or other currency like euros, rather than the local currency like the Haitian gourd. And then those who are not employed by the cruise companies are often barred entry from these facilities.

So what are these facilities like?

They're marketed as private destinations, and they really are. They're totally shut off from the local villages and surrounding countryside, often with barbed wire fences. So in Haiti, Labadie, which is leased by Royal Caribbean, really looks like a prison, except there are floating bouncy castles and jet skis and steel drum music pumping from these massive ships.

So from the outside, you say it looks like a prison, but what's it like inside these resorts? They sound completely invented, with no sense of the country they're in.

Well, I would say it's an idealized version of the country. All of the good parts and none of the challenges. So one expatriate I spoke to in Labadie runs excursions to a mock Haitian mountain village he built under contract from Royal Caribbean, complete with a voodoo show as well as a kitchen show where they make peanut butter and grind coffee beans. But the advantage for these companies is that they keep the customers and all their money in one place. The seclusion of the resort also helps with passengers who might be nervous about visiting a foreign country, especially Haiti.

Otherwise, well, it's clear what's good for the cruise lines. What about for the locals, for the countries that are hosting these facilities? Is there a downside?

Well, one academic I spoke to, Dr. Ross Klein of the Memorial University of Newfoundland, says that these countries are basically giving away parcels of land to keep the companies on side. There is so much revenue coming in from these cruise companies that a lot of the countries don't have that much bargaining power. They can't do without these deals. Governments which demand too much find that ships will go elsewhere. Like in the instance of Antigua, whose government issued what is essentially an apology after Carnival Cruises pulled out of the deal. There are also significant environmental problems. Cruise liners are dumping treated waste into Caribbean waters, which seriously impacts the reefs and marine life.

So would you go as far as saying that these cruise companies are exploiting these local economies?

It's difficult to say. The governments are getting a lot out of it. The deals generate a lot of cash. For instance, in Haiti, every passenger pays the state a $12 surcharge. And in 2019, there will be over 700,000 passengers. There's also a significant number of jobs and Royal Caribbean, also in Haiti, have contributed to a local school and waterworks for the village. I spoke with one of the first mates on the Royal Caribbean yacht Rodman. He says he's pleased with the job and doesn't mind if the guests are clueless if they ask questions. It's nice for him to tell them about his culture, but it doesn't bother him if they don't ask questions.

Well, what about what the passengers get out of it? Did it look like fun to you? Is it the sort of thing that you'd want to do with your holiday time?

Well, for the passengers, I think that it's a nice break. I mean, what they're doing is they're looking for a holiday, a break from the drudgery of, you know, North American winter. And they certainly are getting that. And they don't have to think too much about where they're going. And I think people are fine with that.

Stephanie, thank you very much for joining us.

Thank you very much, Jason. It's been a pleasure.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple podcasts and you can subscribe to the economist@exterator.com radio. Offer 12 issues for $12 or 12 pounds. See you back here tomorrow.