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The warming impact of hydrogen has been “overlooked” in projections of climate change, according to authors of the latest “global hydrogen budget”.

The study, published in Nature, is the most comprehensive analysis yet of the global hydrogen cycle, showing how the gas moves between the atmosphere, land and ocean.

Hydrogen has long been recognised as a clean alternative to fossil fuels and an important component of the green energy transition.

However, while hydrogen is not itself a greenhouse gas, rising emissions are “supercharging” the warming effect of methane, the authors say.

Increasing levels of atmospheric hydrogen have led to “indirect” warming of 0.02C over the past decade, the study finds.

The authors say that limiting leaks from future hydrogen fuel projects and rapidly cutting methane emissions will be key to securing benefits from hydrogen as a clean-burning alternative to oil and gas.

The international team of scientists behind the study also produce the annual “global carbon budget”, which saw its 20th edition published last month.

‘Supercharging’ methane

Hydrogen is the lightest and most abundant element in the universe. It is also an explosive gas that contains more energy per unit of weight than fossil fuels.

The gas has long been recognised as a clean alternative to fossil fuels, because it only emits water when burned.

There are many ways to produce hydrogen. It is typically generated in a carbon-intensive process that relies on fossil fuels. However, renewable energy can be used to produce “green hydrogen” with near-zero carbon emissions.

Hydrogen “indirectly” heats the atmosphere through its interactions with other gases. This warming is mainly due to interplay between hydrogen and methane – a potent greenhouse gas that is the second biggest contributor to human-caused global warming after CO2.

This interplay involves molecules in the atmosphere called hydroxyl radicals. These naturally occurring molecules are known as the atmosphere’s “detergents” because they react with certain greenhouse gases, such as methane, converting them into other compounds that do not warm the planet.

Prof Rob Jackson is a scientist at Stanford University and an author on the study. He explains that hydrogen also reacts with hydroxyl radicals, effectively “using up” these detergents and leaving less to react with methane.

This effectively “extends the lifetime” of methane in the atmosphere, Jackson tells Carbon Brief, leading to higher concentrations and greater warming.

There is also a reciprocal effect, where more methane in the atmosphere leads to more hydrogen. This occurs because methane reacts with oxygen in the atmosphere in a process called “oxidation”, which produces hydrogen.

Jackson tells Carbon Brief that interactions between hydrogen and methane have “not really been considered in climate circles”, adding:

“I think people don’t realise that the dominant source of hydrogen in the world today is methane in the atmosphere.”

Overall, the study estimates that increasing levels of hydrogen in the atmosphere led to global warming of 0.02C over 2010-20. This climate impact has been “overlooked”, the researchers say in a press release.

Jackson tells Carbon Brief that although this level of warming “looks fairly small”, it is still “comparable” to the warming caused by emissions of individual countries, such as France.

The hydrogen cycle

The global hydrogen budget brings together a range of observed data and models to quantify sources of hydrogen emissions as well as “sinks”, which absorb the gas from the atmosphere.

The authors find that hydrogen levels in the atmosphere increased from 523 parts per billion (ppb) in 1992 to 543ppb in 2020.

The graphic below shows the main sources (up arrows) and sinks (down arrows) of hydrogen over 2010-20.

Sources and sinks of hydrogen over 2010-20.
Sources and sinks of hydrogen over 2010-20. Source: Ouyang et al (2025).

As the figure shows, the largest single contributor to rising hydrogen emissions over 2010-20 is from the oxidation of human-produced methane. Methane emissions are on the rise due to human activity, such as from the fossil fuel industry, livestock and waste.

According to the study, 56% of atmospheric hydrogen over 2010-20 was caused by the oxidation of methane and non-methane volatile organic compounds (NMVOCs) reacting with oxygen to produce hydrogen.

(NMVOCs are chemicals that are released naturally from vegetation and more rapidly during wildfires. Human-produced emissions of NMVOCs – for example, from oil refineries or car tailpipes – are also on the rise, according to the study.)

The study also points to leakage from industrial hydrogen production as another driver of rising atmospheric hydrogen levels.

Jackson tells Carbon Brief that hydrogen leakage is on the rise “not because manufacturing is getting dirtier, but because we’re making more hydrogen from coal and natural gas”.

Hydrogen can also be produced as an unintentional byproduct from the combustion of fossil fuels. The study finds that these emissions of hydrogen are decreasing.

At the same time, natural sources of hydrogen emissions have not shown any increasing or decreasing trend over time, the authors say.

One of the largest natural sources of hydrogen is through “nitrogen fixing” – a chemical process in which nitrogen is converted into ammonia, which releases hydrogen as a byproduct. This process locks down nitrogen into the soil and ocean, where it is used by plants and algae to grow.

Meanwhile, hydrogen sinks have “increased in response to rising atmospheric hydrogen” over the past three decades, the study says.

Nearly three-quarters of the global hydrogen sink comes from hydrogen getting trapped in soil – for example, by microbes taking in hydrogen to use for energy, or hydrogen seeping into the soil through diffusion.

Dr Zutao Ouyang is an assistant professor at the University of Harvard and lead author on the study. He tells Carbon Brief that soil uptake is “the main mechanism removing hydrogen from the atmosphere”, but adds that it also has “the greatest uncertainty” because there is “not much long-term data” on this component of the hydrogen budget.

Mapped

Drawing on data including observational measurements and emissions inventories, the authors map the sources and sinks of hydrogen and their relative strength.

The maps below show the sources (top) and sinks (bottom) over 1990-2020, where darker colours indicate a stronger source or sink.

Sources (top) and sinks (bottom) of hydrogen over 1990-2020.
Sources (top) and sinks (bottom) of hydrogen over 1990-2020. Source: Ouyang et al (2025).

The largest “hotspots” for hydrogen emissions are in “south-east and east Asia”, according to the research. More widely, it says that “tropical regions” contribute about 60% of total hydrogen emissions.

The authors explain that these “hotspots” occur because the oxidation of methane and NMVOCs – processes that happen in the atmosphere and produce hydrogen as a byproduct – happen more quickly at higher temperatures.

They also find that these regions have more vegetation, which leads to higher NMVOC emissions.

For emissions related to human activity, east Asia and North America “contributed the most hydrogen emissions from fossil fuel combustion”, the study says, due to the “intensive fossil fuel use”.

Hydrogen emissions due to nitrogen fixation – when plants draw down nitrogen and release hydrogen as a byproduct – are highest in South America. The report links these emissions to the region’s “extensive cultivation” of crops such as soybeans and peanuts.

Dr Maria Sand is a senior researcher at CICERO and was not involved in the study. She tells Carbon Brief that the paper “provides a valuable and much-needed assessment of the global hydrogen budget”. She adds:

“By better constraining the sources and sinks of hydrogen, this study helps reduce the uncertainty in the climate impact [of hydrogen].”

Dr Nicola Warwick is a researcher at the National Centre for Atmospheric Science and assistant research professor at the University of Cambridge. She tells Carbon Brief that the study “provides an important update to our understanding of the atmospheric hydrogen budget by better constraining the key sources and sinks of hydrogen”.

She adds that better understanding of hydrogen uptake by soil – including how it responds to “climate-driven changes in soil moisture and temperature” – are “essential for reliably assessing the climate impacts of any future changes in hydrogen emissions”.

Study author Jackson tells Carbon Brief that he hopes the study will “prompt people to evaluate some of these emissions and sources and sinks in new ways and new places”.

Hydrogen economy

In the pursuit of net-zero, hydrogen may play an increasingly important role in the global energy system.

There are many ways to produce hydrogen gas. Most hydrogen is currently generated through a process called steam reforming, which brings together fossil gas and steam to produce hydrogen, with CO2 as a by-product.

According to the study, more than 90% of hydrogen produced today uses this “carbon-intensive” method.

However, electricity can be used to split water into hydrogen and oxygen atoms, in a process called electrolysis. If renewable energy is used, hydrogen can be produced and consumed with near-zero carbon emissions.

Hydrogen can be stored, liquified and transported via pipelines, trucks or ships. It can be used to make fertiliser, fuel vehicles, heat homes, generate electricity or drive heavy industry.

This potential hydrogen “economy” is shown in the graphic below. The illustrations, with numbered captions from one to three, show how hydrogen could be made, moved and used

The graphic below, from Carbon Brief’s explainer, illustrates the elements of a potential hydrogen economy.

Hydrogen chart
Source: Carbon Brief (2020).

Jackson tells Carbon Brief that, in his opinion, hydrogen is a “brilliant” choice to replace fossil fuels on-site, for industries such as steel manufacturing. However, he says he is “concerned” about “a hydrogen economy that distributes hydrogen around the world in millions of users”, because there is potential for lots of the gas to leak.

He adds:

“We know that methane leakage is bad. Hydrogen is a smaller molecule than methane. So wherever you have methane and hydrogen together, if methane leaks, hydrogen is likely to leak even more.”

The authors model hydrogen emissions under a range of future warming scenarios over the coming century.

They find that in “low-warming scenarios with high hydrogen usage”, methane emissions are low, limiting the formation of hydrogen via the oxidation of methane. In this instance, changes in atmospheric hydrogen levels depend strongly on leakage.

Meanwhile, in higher-warming scenarios, the authors find that hydrogen use is “relatively low”, but methane emissions remain “largely unmitigated”. In this instance, they find that the additional hydrogen formed through the oxidation of methane can outweigh hydrogen released through leaks.

Overall, the authors suggest that hydrogen could cause additional warming of 0.01-0.05C by the year 2100. Study author Zutao tells Carbon Brief that this additional warming was not included in the climate projections in the last assessment report from the Intergovernmental Panel on Climate Change.

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IEA: Declining coal demand in China set to outweigh Trump’s pro-coal policies

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China’s coal demand is set to drop by 2027, more than cancelling out the effects of the Trump administration’s coal-friendly policies in the US, according to the International Energy Agency (IEA).

Global coal demand is due to grow by 0.5% year-on-year to reach record levels in 2025, according to the latest figures in the IEA’s annual market report.

Yet this will be reversed over the next couple of years, as a faster-than-expected expansion of renewables in key Asian nations and “structural declines” in Europe push coal demand down, the agency says.

While US coal demand is set to continue falling, the decline will be slower than expected last year, due to new federal government efforts to support the fuel. 

However, the IEA’s upward revision of an extra 38m tonnes (Mt) of US coal use in 2027 is dwarfed by an even larger 126Mt downward revision in China’s coal use.

‘Unusual trends’

Coal demand will reach 8,845Mt around the world in 2025. This is slightly (44Mt) higher than the IEA had forecast in its 2024 coal market report.

The agency notes some “unusual regional trends” impacting this growth, including a 37Mt year-on-year increase in US coal demand in 2025 to 516Mt. This is 59Mt (17%) higher than the IEA projected in 2024.

A new suite of measures under the Trump administration have supported the short-term use of coal, including the modernisation of existing coal plants and reopening shuttered ones.

EU coal use declined at a slower pace than expected due to lower wind and hydropower output, according to the IEA. Nevertheless, the bloc “continues its structural decline” in coal demand, driven by renewables expansion, carbon pricing and coal phaseout pledges.

India saw an unexpected dip in coal consumption in 2025, linked to a strong monsoon season that increased hydropower output and curbed electricity demand.

In China, which accounts for more than half of the world’s coal use, coal demand remained roughly unchanged between 2024 and 2025, the IEA says.

Demand drop

In its 2024 market report, the IEA projected a continued increase in global coal demand out to 2027. This was largely driven by China, which was on track to see its demand exceed 5,000Mt each year, up from 4939Mt in 2024.

In its latest forecast, the agency estimates that global coal demand will instead “plateau” in the coming years, “falling slightly by the end of the decade”.

Again, this is largely due to trends in China’s power sector, reflecting the “crowding-out” of coal from the grid by the nation’s “formidable renewables expansion” and “steady growth” of nuclear power.

(By contrast, last year clean-power sources were only expected to meet “most of” China’s rising electricity demand.)

The IEA estimates that China’s coal demand will drop to 4,879Mt by 2027 and continue falling to 4,772Mt by the end of the decade.

The global projection for 2027 is 149Mt (2%) lower than expected last year.

As the chart below shows, while US short-term coal demand is now expected to be higher than the IEA’s previous forecast, the drop in China more than makes up for this.

Coal demand, Mt, in China and the US, including IEA forecasts from the Coal 2024 and Coal 2025 reports (dotted lines).
Coal demand, Mt, in China and the US, including IEA forecasts from the Coal 2024 and Coal 2025 reports (dotted lines). Source: IEA, Carbon Brief analysis.

The projected dip in Chinese coal use is largely attributed to the “rapid expansion” of its renewable-energy capacity, the IEA notes. Renewables are soon set to provide a greater share of China’s electricity than coal, rising to 49% of generation by 2030, according to the report.

The Chinese government has set an ambition of peaking coal use before 2030. 

While the IEA’s data suggests this goal will be met, the agency stresses that several factors “could turn the slight drop into a small increase”.

These include higher electricity demand, an increase in coal-to-chemicals projects and fluctuations in renewable-energy output due to weather conditions and other factors.

Meanwhile, India remains a “key driver of global coal demand”, but the new report also downgrades estimates for the nation’s future coal growth. The IEA forecasts that Indian coal demand will be 1,383Mt in 2027 – 39Mt (3%) lower than last year’s forecast.

This comes as a growing share of India’s electricity mix is provided by low-carbon power sources, with coal’s share set to decline from 70% in 2025 to 60% by 2030, according to the IEA.

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Cropped 17 December 2025: ‘Deadly’ Asia floods; Boosting London’s water birds; UN headwinds

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We handpick and explain the most important stories at the intersection of climate, land, food and nature over the past fortnight.

This is an online version of Carbon Brief’s fortnightly Cropped email newsletter. Subscribe for free here. This is the last edition of Cropped for 2025. The newsletter will return on 14 January 2026.

Key developments

UN talks face headwinds

GLOBAL OUTLOOK: A major new report calling for joint action on climate change and biodiversity was published this month at the UN Environment Assembly talks in Nairobi, Kenya, the Associated Press reported. The newswire said that more than 300 scientists from 83 countries contributed to the latest UN Environment Programme (UNEP) global environment outlook report.

‘SHARP DIVISIONS’: However, for the first time ever, countries failed to agree on a “summary for policymakers” to be published alongside the outlook, according to Agence France-Presse. It said that “sharp divisions” prevented countries reaching consensus on the high-level political summary, with “major oil producers Saudi Arabia and the US oppos[ing] references to phasing out fossil fuels”. The newswire added that UNEP chief Inger Andersen called the lack of a summary “regrettable”, but said the “integrity of the report” remained.

NEW AGREEMENTS: Separate to the report, negotiators in Nairobi were also tasked with agreeing on 15 resolutions and two decisions on a wide range of environmental topics, from plastics to the impact of artificial intelligence, forcing them to “work throughout the day and into the night” towards the end of the summit, according to the Earth Negotiations Bulletin (ENB). In the end, countries adopted 11 resolutions, including on protecting coral reefs from climate change, the global management of wildfires and the preservation of glaciers, a second ENB report said.

TURKISH INFLUENCE: Climate Home News reported that Turkey, the country co-hosting the COP31 climate summit next year alongside Australia, “sought to weaken language on climate change in several draft resolutions” being discussed at the talks. The publication said that the nation, often working alongside Saudi Arabia, “pushed to dilute wording on the climate crisis, the science of melting glaciers and the role of young and Indigenous people”. A separate Climate Home News story said that countries agreed to a first-of-its-kind resolution on addressing the environmental effects of AI, but failed to include a reference to examining its “life cycle” impacts.

‘Deadly’ Asia floods

‘NOT NORMAL’: Climate change made the rainfall behind the “deadly” floods and landslides in parts of south Asia earlier this month more likely to occur and more intense, a World Weather Attribution study covered by the Hindustan Times found. Deforestation and rapid urbanisation also contributed to the extreme flooding that killed more than 1,600 people in several countries, including Sri Lanka, Malaysia and Thailand, the newspaper said. The Guardian noted that while monsoon rains often bring flooding, scientists said this level of intensity was “not normal”.

FOREST LOSS: Mongabay looked at how deforestation contributed to the “catastrophic” impacts from Cyclone Senyar, which caused floods and landslides in Sumatra, Indonesia. The outlet said that “decades of deforestation, mining, plantations and peat drainage left watersheds unable to absorb intense rainfall”. Indonesian environmental group WALHI told the Associated Press that deforestation “stripped away natural defences that once absorbed rainfall and stabilised soil”. Gus Irawan Pasaribu, a local government leader in Tapanuli, told Reuters: “If our forests were well-preserved…it would not have been this terrible.”

NATURE IMPACTS: A separate Mongabay article reported on the “extensive” damage caused by Cyclone Ditwah to Sri Lanka’s “biodiversity-rich” central highlands earlier this month. The outlet said that initial assessments have shown disastrous impacts of flooding and landslides in places such as the Knuckles mountain range, a “Unesco-listed biodiversity hotspot”. Meanwhile, the floods that hit Indonesia were an “extinction-level disturbance” for the Tapanuli orangutan – the world’s rarest great ape, scientists told the Guardian.

Spotlight

Building a bird sanctuary at a London reservoir

In this Spotlight, Carbon Brief visits a radical conservation project aiming to reverse a decline in water birds at a Victorian reservoir in north London.

“I’d recommend bringing wellies! It’s very muddy.”

Those were the instructions of Ben MacMillan, an ecologist at the Canal & River Trust, a charity responsible for looking after the UK’s waterways, including canals, reservoirs and towpaths.

On a damp and grey Tuesday morning, he guided Carbon Brief round the back of a playing fields car park in Hendon, north London, past a metal fence reading “no entry” and across ground covered by several inches of mud to the unlikely site of a radical new conservation effort.

The site is at a degraded wetlands on the northern edge of the Welsh Harp reservoir, a large human-made lake capable of holding 400 Olympic-sized swimming pools of water, first established by the Victorians in the 1830s.

In the 1950s, the reservoir was declared one of the UK’s “sites of special scientific interest”, due to its ability to host an unusually large number of species, including breeding waterbirds, such as silvery-grey common terns and elegant great-crested grebes.

Despite the designation, little was done to protect the site from various threats, including the spread of invasive species, increasing urbanisation and pollution from major roads. The reservoir is bordered on one side by the M1, the main motorway from London to northern England, and by the North Circular, part of central London’s busy ring-road, on another.

In the 1980s, a conservation project led by ecologist Leo Batten transformed the site to create new refuges for breeding birds.

However, for the past 40 years, the reservoir has fallen into “mismanagement”, according to MacMillan – with devastating consequences for its wildlife.

In 2022, just two tern chicks were successfully fledged at the reservoir, compared to 44 in 2000, MacMillan said. Great-crested grebe nests have also dropped from 55 in 1987 to 27 in 2022.

Redesigning the landscape

The dramatic decline has spurred the start of a new £400m restoration project, called “wings on water”, which began in October 2025 and will continue for the next three years.

Headed by MacMillan, the project is making radical changes to the landscape of the site in order to create new habitats and breeding spots for its water birds.

MacMillan has contracted the services of restoration specialists Ebsford Environmental, who have used diggers to create a network of channels across the site.

Channels dug for wildlife at the Welsh Harp reservoir in London. Credit: Ben MacMillan
Channels dug for wildlife at the Welsh Harp reservoir in London. Credit: Ben MacMillan

These channels have uncovered a series of islands that can offer birds a safe place to breed, away from predators such as urban foxes and mink, MacMillan said.

As well as dredging the landscape, MacMillan also plans to introduce new micro-ecosystems, such as wildflower meadows, that will eventually form a “patchwork” capable of supporting a wide range of species.

“It’s all about creating a diversity of habitat,” he said. “It might take five or 10 years to develop, but eventually we’ll end up with an amazing complex mosaic of habitats.”

While MacMillan is “very happy” with the progress being made, the project has some issues to contend with.

One of the recently dug channels is contaminated by toxic silt, poisoned by the runoff of petrol from the nearby major roads. If the petrol seeps out of the silt, it could coat the feathers of birds, negatively affecting their health, MacMillan said.

Ninja turtle legacy

The site is also home to a number of invasive species, each with their own impacts.

One animal causing a particular nuisance are red-eared terrapins, a type of omnivorous shelled reptile, similar in appearance to a turtle, that are native to the US.

“They link back to the 1990s Teenage Mutant Ninja Turtle craze,” MacMillan explained. “People bought loads of them. Then they thought: ‘Oh, these are getting a bit big now’ – and decided to release them in their local park.”

Terrapins have a life span of around 40 years, meaning many released on a whim 30 years ago have now established themselves in waterway habitats across the UK.

While terrapins feed on plants, they have also been seen taking chicks and eggs from nesting birds, MacMillan said:

“In an ideal world, we would move them on. But in practice, it’s very difficult to actually catch them.”

As well as restoring the site for the good of birds, the project also aims to improve access to nature for the local community.

The team plans to install a new boardwalk and viewing platform for the public, which they aim to open next year.

“It should provide a really nice space for people to take a walk in a green space, while being able to spot some breeding birds, in a very urbanised area,” MacMillan said.

News and views

NATURE CASH: The ‘Cali Fund’ – which could generate billions of dollars each year for conservation – recently received its first donation of just $1,000, Carbon Brief reported. On 19 November, nine months after the fund launched, UK start-up TierraViva AI put forward the contribution. The company’s chief executive told Carbon Brief that this was an “ice-breaker” aimed to encourage others to pay in. One expert described the contribution as a good “first step”, but said it is now “time for larger actors to step forward”. Large companies in sectors such as pharmaceutical, cosmetic, biotechnology, agribusiness and technology could contribute to the fund.

FARMING LOSSES: UK crop farmers lost more than £800m in 2025 due to poor harvests and “record heat and drought”, the Guardian reported, based on analysis from the Energy and Climate Intelligence Unit (ECIU). Farmers recorded one of the worst harvests on record this year, with production of wheat, oats, spring and winter barley and oilseed rape dropping 20% below the 10-year average. Three of the five worst harvests have occurred since 2020, the newspaper added, quoting the ECIU’s Tom Lancaster: “The evidence suggests that climate impacts are what’s actually driving issues of profitability.” Meanwhile, BBC News reported that the UK government “roll[ed] back” certain nature protection requirements for housing developers in England.

CLIMATE FINANCE: Biodiversity, conservation and anti-desertification programmes in Africa have struggled to fill a “funding vacuum” since the US froze its development aid earlier this year, according to Mongabay. Experts and observers told the outlet they are “increasingly concerned” about the funding gap that “neither Europe nor billionaire philanthropists seem ready to fill”. Amhed Moustapha Mfokeu, a Cameroonian expert in climate finance, told Mongabay that the closure of the US Agency for International Development (USAID) “created a significant gap in funding for climate-related projects”.

SAVING SOILS: Around 70% of countries do not prioritise soil restoration in their national climate plans, a new report covered by EFEVerde found. The report, from the International Union for the Conservation of Nature’s world commission on environmental law and other groups, said that healthier soils can absorb more carbon and help to limit global warming, the outlet noted. Praveena Sridhar from the Save Soil movement wrote in Earth.org that the recent COP30 climate talks in Brazil “regarded [soils] as a sub-component of the agricultural machine, instead of the foundation to agriculture and many other components of terrestrial life”.

TRADE DEAL: The European parliament voted in favour of including measures to “protect European farmers” in a potential trade deal with South American countries, Bloomberg reported. The outlet said the EU is “rushing” this week to finalise the Mercosur deal, which has been negotiated over the past 25 years and aims to boost trade between the EU and Argentina, Brazil, Uruguay and Paraguay. Reuters reported that France and Italy want to delay the vote, with France trying to “form a blocking minority” against the agreement.

XMAS CHEER: Christmas tree farmers in Canada are adapting to climate change impacts such as warmer weather, CBC News reported. Michael Cormack, who owns a tree farm near Toronto, told the outlet: “This year in July, we were averaging over 29C. So we had trees from two to three years ago that just died…Four years ago, we had a tornado here that wiped out a bunch of our stuff.” The outlet also addressed the age-old question of whether a real or artificial christmas tree is more “eco-friendly”, with one tree researcher saying that a real tree bought from a “local farmer” tends to be a lower-emission choice, or re-using an artificial tree for a long time.

Watch, read, listen

KOLAHOI GLACIER: A retreating glacier in Kashmir is “transforming landscapes and communities”, the Guardian said.

FISHY: DeSmog investigated accusations that the world’s largest salmon producer has wielded a “charm offensive” in the Scottish Highlands to distract from its “noisy” and “polluting” fish farms.

LIVING UNDER THREAT: The Associated Press reported on the “steep risks” environmental activists face in Colombia – the “deadliest country in the world” for environmental defenders.

BAMBOO BARRIER: Rivercane – a species of bamboo – could help protect the southern US from future floods, Grist reported.

New science

In the diary

Cropped is researched and written by Dr Giuliana Viglione, Aruna Chandrasekhar, Daisy Dunne, Orla Dwyer and Yanine Quiroz. Ayesha Tandon also contributed to this issue. Please send tips and feedback to cropped@carbonbrief.org

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Indonesia and Vietnam set for surge in coal use this decade despite transition deals

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Despite multi-billion-dollar energy transition deals agreed with wealthy nations and development banks in 2022, coal use in Indonesia and Vietnam will continue to grow until at least 2030, the International Energy Agency (IEA) forecasts.

In its annual coal report, the Paris-based agency estimates that coal use will rise 4.5% a year between 2025 and 2030 in Southeast Asia, with Indonesia, Vietnam and the Philippines largely responsible for the increase. Coal-heavy India is also set for a 3.3% rise this decade.

Growth in these nations will offset large declines in coal use in developed countries and a smaller fall in China, the IEA said, causing global coal demand to plateau and edge down only slightly by 2030.

For this year, the report finds that global coal demand is set to rise by 0.5%, reaching a record 8.85 billion tonnes. In the US, higher natural gas prices and policy measures slowing the retirement of coal plants lifted consumption, which had been on a downward trend for the previous 15 years, it notes.

Big banks’ lending to coal backers undermines Indonesia’s green plans

When burned, coal’s planet-heating emissions are far larger than other fossil fuels like oil and gas. Quickly reducing the use of coal is critical to meet climate goals, experts say, and countries agreed to phase it down at the COP26 climate summit in Glasgow in 2021.

A group of donor nations launched Just Energy Transition Partnerships (JETPs) in 2021 and 2022 to help accelerate a transition away from coal in key countries like South Africa, Vietnam and Indonesia.

But responding to a question from Climate Home News, Keisuke Sadamori, the IEA’s director of energy markets and security, told a press briefing this week that the JETPs in Indonesia and Vietnam had so far failed to “bend the curve”.

Fabby Tumiwa, head of the Institute for Essential Services Reform (IESR) who advised the Indonesian government on the JETP deal, said the country’s JETP is “stalling” partly because the wealthy country partners have not funded the early retirement of coal-fired power plants.

A draft Indonesian energy plan seen by Climate Home News in August 2023 said Indonesia would retire a sixth of its coal-fired power plant capacity by 2030.

But, after a row over finance with rich nations, that target was dropped from the final version published later that year. Instead, the plan said Indonesia would start shutting down coal plants before their scheduled closure no earlier than 2035.

Tumiwa told Climate Home News that the lack of international funding for early retirement has made it harder for JETP partner countries – including Germany, Japan and the UK – to ask Indonesia to stop building new coal-fired power plants.

    Even beyond 2030, early closures look in doubt. Recently, PLN cancelled a plan to shut down the Cirebon-1 coal-fired power plant seven years early in 2035, citing the high cost of compensating the plant’s owner – despite promised financial support from the Asian Development Bank under its Energy Transition Mechanism.

    Think-tank IESR argues that the health benefits from shutting down the polluting plant early would outweigh the financial costs, and that keeping the plant open is a sign that the government’s commitment to the energy transition is weakening.

    Indonesia’s Chief Economic Minister Airlangga Hartarto said earlier this month that the Cirebon-1 plant is less polluting than others in Indonesia so it would be better to shut down those dirtier, older facilities first.

    “Captive” coal growing

    Tumiwa said another flaw in the JETP was its focus on coal power stations that provide electricity to the grid rather than “captive” coal power plants which directly power nearby industrial facilities including nickel and aluminium smelters.

    By the time those working on the JETP realised that captive coal accounted for a significant chunk of capacity, it was too late to change the JETP’s design, Tumiwa said.

    The IEA report said that coal use in Indonesia and Vietnam will rise mainly because of expanding electricity demand driven by economic and population growth. In Indonesia, in particular, the use of coal in industries like nickel and aluminium is increasing, the report added. In Vietnam, the power-hungry manufacturing sector has driven the surge in coal consumption.

    In both countries, JETP funding for clean energy has trickled in only slowly. Indonesia’s JETP, which promised to mobilise $20 billion by 2027, has delivered $3 billion so far, mostly as concessional loans. Japan has been by far the largest donor, providing almost $2 billion. In Vietnam, only three projects have progressed to funding arrangements, totaling less than $1 billion.

    The IEA report said discussions have “intensified” in Indonesia around energy security, affordability and orderly transition pathways. The country has large reserves of relatively cheap coal and the country’s state-owned electricity company PLN has encouraged investment in coal mining and transportation.

    Vietnam has also watered down its plans to shut coal plants and has imprisoned environmental campaigners. In May, European governments announced loans for a transmission line and two hydropower plants under the JETP, but no plans for early coal plant closures.

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