US has opportunity to solve Myanmar’s energy dilemma

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Unable to meet soaring domestic demand for energy, Myanmar’s government is said to have entered preliminary discussions over a deal to buy electricity from China. At the beginning of this month, sources close to the talks told Reuters that three state-owned Chinese companies had submitted proposals outlining how they could help Myanmar fill its widening energy gap, which regularly results in extended blackouts.

The plan is to plug the country into the electricity network that powers Yunnan, a province in southwestern China. But while any such deal could temporarily solve Myanmar’s energy crisis, it would also amount to a major surrender of sovereignty.

Indeed, while many Myanmar residents would undoubtedly welcome a deal resulting in a reliable supply of electricity reaching their homes and businesses, the talks raise serious concerns over China’s growing economic influence.

Officials are also wary of extending China’s power in the region, noting that Beijing has already pushed for access to the strategic deep-sea port of Kyaukpyu in southern Myanmar as part of the One Belt, One Road program.

But what if there’s a better way than jumping into bed with Beijing?

A country in the dark

Only 32% of Myanmar’s 53-million-strong population has access to electricity, and even those who do have power only register annual consumptions of 156 kilowatt-hours on average (compared with 3,900kWh for China and 13,000kWh for the US).

Like most of its neighbors, Myanmar’s government has zeroed in on coal as the most efficient way to address the energy shortfall. Last month, Naypyidaw unveiled plans to build a new US$3 billion coal-fired power plant in the eastern state of Kayin. This plan backfired, as a coalition of activist groups called for the planned plant to be scrapped in favor of developing renewables.

While it is true that Myanmar has much untapped hydropower potential, building dams and managing water throughout the Mekong region is a protracted and immensely complicated task that will require years to resolve – and involve important concessions to Beijing. As for solar and wind, they continue to be simply too expensive to deploy at the scale necessary to power the whole country.

With Myanmar’s demand for electricity rising by 13% every year, the government is quickly running out of time. In the words of Win Htein, one of the top leaders of the National League for Democracy, “If we have to choose between the dilemma of coal and the development of the country, we prioritize the development.”

Enter the US

Ironically, Myanmar’s particular quandary makes a strong case for the Donald Trump administration’s polemical decision to demand that Washington finance “clean coal” projects in developing countries. Removing barriers to the funding of coal projects launched by emerging economies would allow the US to sell more of its coal to developing countries – and build much-needed strategic bridges in regions such as Southeast Asia.

What’s more, Japan – which is Myanmar’s largest supplier of official development assistance – has also jumped into the mix and has offered to help the country build clean-coal plants.

Even if in some Washington quarters coal is frowned upon, a realist approach to the challenges facing developing countries like Myanmar shows that the fuel is still the most effective way to meet their energy needs. That energy-poor Myanmar is now building bridges with a major US rival over its need to increase electricity access serves as a stark reminder of that reality.

While Trump’s Asia policy is a flaming train wreck – toying with striking North Korea, scrapping the Trans-Pacific Partnership, raising doubts about Washington’s commitment to regional security, endangering strategic alliances, threatening shortsighted trade wars – on energy his administration might be on to something. Indeed, seen from a Southeast Asian vantage point, the Trump administration’s announcement to use the so-called Green Climate Fund to provide developing countries with the funds for utilizing coal could act as a major diplomatic driver.

The story goes back to a 2013 World Bank decision to ban the financing of coal power plants, which was encouraged by the administration of US president Barack Obama. While the thinking behind it was that renewables would gain ground, the decision didn’t factor in the fact that for many developing countries solar and wind are too expensive and unreliable to be taken into account.

Since Southeast Asia is not just a developing economy but an export juggernaut, electricity prices are of major concern for energy-intensive industries that would have a hard time accommodating higher renewable prices. This explains why, despite having signed the Paris climate deal, Indonesia, India, Japan, Malaysia, the Philippines, South Korea, Thailand, Taiwan and Vietnam are all planning either to upgrade their coal power plants or to build new ones.

To varying degrees, these countries are compelled by booming populations, low rates of access to electricity and political pressures to take concrete action. Shunned by Western constraints, many have turned to Beijing for coal technology – but, as Pakistan found out, Chinese-financed coal plants are being built using severely outdated technology.

And this is where Trump’s energy plans come in: His administration is trying to boost the export of US clean-coal technology – such as supercritical and ultra-supercritical plants – that could be an avenue to counter China’s dominance again.

Next, Washington is seeking to reverse the World Bank’s course by using its voting power to push for international banks to open funds for the promotion of carbon-based energy plants abroad.

Not only would countries such as Myanmar benefit from an alternative financing channel to the China-controlled Asian Infrastructure Investment Bank – and its $250 billion war chest for infrastructure projects – US technology is more advanced than what Beijing has on offer.

China has understood that the best way to patch relations with its Southeast Asian neighbors is by providing assistance that the West won’t – and building coal power plants ranks close to the top of the list. The Trump administration’s bid to loosen World Bank financing conditions for fossil fuels would deal a major blow to Beijing, and could restore some of Washington’s clout in the region.