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Global Brands Say Future Orders at Risk Given Cambodia’s Increasing Coal Power

FILE - Employees work at a factory supplier of the H&M brand in Kandal province, Cambodia, on December 12, 2018.
FILE - Employees work at a factory supplier of the H&M brand in Kandal province, Cambodia, on December 12, 2018.

Major global brands have raised serious concerns over Cambodia’s embrace of coal power plants, which they say is out of step with their environmental commitments and could risk future investments.

The brands, who source garments and footwear from Cambodia, sent the letter to Economy Minister Aun Pornmoniroth on August 11, warning of Cambodia’s proposed increase in coal power generations, instead of asking the country to rethink its energy strategies to adopt renewable sources of energy.

The six brands, H&M, Adidas, Puma and Gap, Nike, and Specialized, said they have committed to environmental commitments and that continued investment in coal energy could negatively impact Cambodia’s prospects of attracting future investment.

“Electricity decisions made today will lock Cambodia into a future that appears to be the opposite of global and regional trends and less attractive to our industry,” read the letter.

“Countries that today prioritize [renewable energy] and a green future will avoid wasting money on outdated technologies that will soon be obsolete and expensive.”

The letter said recent legislation had punished early adopters of renewable energies, low projections for the future generation, and lack of innovation in grid technologies, pointing to countries like Vietnam which had more aggressively adopted solar energy.

Ulrika Isaksson, a spokesperson for H&M, said environmental sustainability was now a key requirement to continue as a core source of its products.

“Following the same logic, sourcing countries that continue to see coal as a viable energy source going forward take the risk of losing out on future investments,” she said in an email.

Additionally, she said the lack of initiatives in developing the garment sector in Cambodia and the loss of trade privileges to the European Union was “problematic.”

The letter comes amid the novel coronavirus pandemic which had severely hit the garment sector, where more than 150,000 workers have lost their jobs and hundreds of factories have shut down or suspended operations. Additionally, starting Thursday, Cambodia will face a partial suspension of trade privileges to the European Union, after a year-long investigation period from the EU Commission that determined the country had failed to address systemic rights violations.

A solar panel farm in Kampong Speu province, Cambodia, June 2020. (Sun Narin/VOA Khmer
A solar panel farm in Kampong Speu province, Cambodia, June 2020. (Sun Narin/VOA Khmer

Cambodia has three existing coal power plants in Sihanoukville. The government last week granted 169 hectares of land in the Botum Sakor National Park for developing a 700MW plant. Another 265 MW coal plant is under development in Oddar Meanchey province and is expected to be online by 2024, according to the Energy Ministry.

Energy Ministry statistics show that Cambodia’s annual energy output is 3,382MW: over 30 percent was generated from hydropower, some 30 percent from coal-fired plants, 25 percent in imports from Thailand, Vietnam, and Laos, seven percent from biomass and five percent with renewable energy.

The Ministry of Mines and Energy has said it wants to quadruple its current installed solar power output, but, at the same time has continued to seek investment in coal-fired plants and hydropower dams on smaller tributaries. The ministry has committed to not build dams along the mainstream of the Mekong River.

Victor Jona, a spokesperson at the Ministry of Mines and Energy, defended Cambodia’s attempt to diversify its energy sources, adding that the country was generating 180MW from solar power, around 5 percent of the total power mix, which was expected to rise by an additional 270MW in the future. An 80MW wind power plant was being considered at Bokor Mountain in Kampot province, he said.

He said the use of coal power plants was regulated and that the ministry would mitigate environmental damage.

“All projects will have to be assessed for environmental impacts by the Environment Ministry. The pollution level from those plants is under set standards,” he added.

The spokesman acknowledged the concerns of global brands, but questioned the potential for increasing solar and energy power.

“We have sun during the day time, but not at night, right? There is a lot of wind in the rainy season, but less in the dry season. Therefore, we have to find stable energy [combination],” he said.

“Compared to ASEAN, our country has very little coal plant energy compared to other countries,” he added.

A health center uses solar panels for their electricity usage in Stung Treng province, Cambodia, June 2020 (Sun Narin/VOA Khmer)
A health center uses solar panels for their electricity usage in Stung Treng province, Cambodia, June 2020 (Sun Narin/VOA Khmer)

In a press conference titled “climate change and its impacts on Cambodia,” Neth Pheaktra, a secretary of state at the Environment Ministry, said Cambodia sees coal plants as an “economic benefit” to ensure Cambodia’s energy security.

“The Environment Ministry’s experts also do environmental impact assessment about the impacts of the project,” he said.

“There are concrete and tough measures in managing the impact,” he said, adding that the authorities will manage the dust from the burning coal to ensure that it will not affect the environment.

Courtney Weatherby, a research analyst with the Stimson Center’s Southeast Asia and Energy, Water, & Sustainability programs, said Cambodia’s announcements of new coal plants in recent years was a surprise for observers because it went against recent international energy investment trends.

“Globally speaking, investment in coal has slowed drastically: new coal power plant investments dropped 75% over the last three years, and in 2018 for the first time the number of coal plants being retired globally outnumbered the new coal plants coming online,” she said in an email.

She said Cambodia had high potential to substantially increase its solar production, especially given that costs had fallen significantly in recent years and there was a little economic hurdle to embracing renewable energy.

“Cambodia has significant solar potential: estimates start around 8,000 MW of solar energy,” she said. “That is more than four times the total installed power generation capacity in Cambodia today, and compares to an estimated 10,000 MW of total hydropower potential in Cambodia.”