World leaders recently announced a $20 billion climate deal to help Indonesia phase out coal power. But there are doubts about the deal because – for one thing – the country is planning to build new coal power plants, including in Kalimantan.
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Not far from the white sandy beaches on the island of Borneo, the Indonesian government is building what it calls a “green industrial park”. During the groundbreaking ceremony, the President of Indonesia said that this area of over 40,000 acres will become a green production center using the country’s huge mineral reserves.
Indonesian officials are pursuing a deal with a Chinese battery maker CATL as Elon Musk and Tesla to produce EV batteries there. The idea is that this “green” park will eventually run on solar and hydroelectric power from a nearby river.
But building hydropower infrastructure can take several years. In the meantime, Indonesia plans to build new coal-fired plants to power its “green” park, said Rachmat Kaimuddin, Indonesia’s Deputy Minister of Coordination for Maritime Affairs and Investments. know.
Running green tech plants on top of brand new coal-fired power plants demonstrates Indonesia’s often contrasting push-pull approach to climate change. Now, these contradictions are being called into question as Indonesia emerges as an ambitious test case of a developing nation receiving billions of dollars from industrialized countries to move away from fossil fuels. .
In November 2022, US President Joe Biden, Indonesian President Joko Widodo and other world leaders announced an initial $20 billion deal to help Indonesia abandon coal power. About 60% of the country’s electricity from coal. Limiting global warming requires cutting fossil fuel use, especially coal, The single largest source of carbon dioxide heating the planet.
The deal will rely on loans, subsidies and other financial instruments from countries like the US and Japan, as well as banks like Citigroup and Bank of America, to help Indonesia close factories early. coal power and renewable energy enhancement. Some analysts hope it could be a model for other developing countries to stop using coal-fired electricity.
But Indonesian energy experts and solar executives are much worried about the possible deal “hope kosong” – cliché. They say that despite Indonesia’s renewable aspirations, the country has many coal-friendly policies that this deal may not be able to address, including exemptions from further construction. coal plants.
The deal’s reliability issues could cast doubt on future international efforts to move other countries away from coal, he said. Anissa Suharsono, a Jakarta-based energy analyst at the international research institute for sustainable development. “If the government cares about the international image, they better make sure this image doesn’t fall apart,” she said.
Indonesia gets less than 1% of its energy from solar energy – about 60% from coal. The deal has a goal of doubling the country’s renewables by 2030, but many solar executives are not optimistic, because of coal subsidies and potential loopholes for building more coal plants. .
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A potential loophole to “no new coal”
Emerging economies continue coal use to promote their development. But industrialized countries hope an influx of funding could accelerate the transition to renewable energy. World leaders have invested in a similar project “Justice Energy Transition Partnership” in South Africa. The goal is not only to do transactions in one country at a time, but to create a template for wider adoption around the world, say Camilla Fenning of the E3G energy and climate research group.
Indonesian, largest coal exporter in the world for power generation, has more coal power than it can use. Kaimuddin said Indonesia has made bad predictions about growing electricity demand over the past decade and building too many coal power plants on islands like Java. “And you can’t just say, ‘Sorry, we don’t want to do that anymore’.”
Kaimuddin, who is leading the negotiations, said the $20 billion deal could allow Indonesia to close those coal power plants early without causing much economic damage. “Instead of operating for X number of years, we reduce 5 years, 10 years,” he said.
But there are questions about the pace of Indonesia’s shift away from coal, in part due to a potential loophole that would allow the country to build even more coal plants. “You’re paying this country to shut down some coal power plants while [it’s] Also still building new ones? That makes no sense,” said Suharsono.
Not long before Indonesia signed the agreement, the Indonesian president pledged to stop developing new coal power plants. But new regulations include exemptions construction of coal plants if implemented or associated with national strategic projects such as green park in Indonesia Borneo. “They keep saying ‘no new coal, no new coal, no new coal’,” said Suharsono, “It’s like they put that provision in there to create a loophole.”
According to the country’s plan new industrial park Flora Champenois, coal research analyst at Global Energy Monitor, a climate data organization, said in order to take advantage of the huge reserves of nickel, a key component of batteries and electric vehicles, the exemptions for power plants are needed. New coal will sound the alarm bell. “The nickel industry is booming in Indonesia,” she said, “that can’t be powered by coal to meet climate goals.”
Kaimuddin’s office notes that new coal plants linked to strategic projects must close by 2050 and reduce emissions by 35% over 10 years through technology or carbon offsets. Experts say yes there’s no good way to know if carbon offset really works. And The International Energy Agency recently reaffirmed that in order to keep warming below 1.5 degrees Celsius and avoid the worst effects of climate change, there must be “no further development of unabated coal-fired power plants”.
John Kerry, the United States’ special presidential envoy for climate, said in an emailed statement, “Indonesia makes these commitments not only to combat the climate crisis but also to transform and develop the economy. their economy, and the Equity Transition Partnership focused on supporting Indonesia’s aspirations.”
Analysts say Indonesia’s political elite has a connection to coal
Overshadowing Indonesia’s energy transition is the link between the country’s political base and the coal industry, says Putra Adhigunaanalyst at the Institute of Energy Economics and Financial Analysis, a nonprofit consulting organization.
Green park plans to build new coal plants is a project of coal billionaire Garibaldi Thohirhas an older brother, Erick Thohir, who is Minister of State Enterprises. And the official who ran the deal to phase out coal, Luhut Pandjaitan, Coordinating Minister for Maritime Affairs and Investment, also has coal assets. “Indonesians are concerned there may be a political conflict of interest about which coal plants are closed, which are still operating and which are newly built,” said Adhikuna.
Luhut Pandjaitan’s office said in an email that “transparency and accountability continue to be key components of Indonesia’s decarbonization efforts.” His deputy minister, Kaimuddin, added: “Pak Luhut is my direct supervisor, and I can say so far he is very, very supportive of this decarbonisation process and not once has he suggested it. access, you know, ‘What about my property?’ or whatever.”
US Treasury Secretary Janet Yellen meets Luhut Pandjaitan, Indonesia’s Coordinating Minister for Maritime Affairs and Investment, in September 2022. Pandjaitan is working on a deal for Indonesia to phase out coal. He himself also has coal assets.
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Indonesia’s solar industry fears the nation won’t meet its target
The new deal to phase out coal includes an ambitious goal: At least 34% of Indonesia’s energy comes from renewable sources by 2030. Now just about 12% of the grid comes from renewable energymainly hydroelectric and geothermal. less than 1 percent Indonesia’s electricity comes from solar energy. The idea is part of the $20 billion that could help build Indonesia’s renewable sector.
But NPR spoke to half a dozen Indonesian renewable energy executives and investors, who worry that the country won’t really ease the hurdles that in recent years have made so many solar energy available. weather and wind are not put into operation.
Josh Ching, CEO of Solar, an Indonesian solar company. While the Indonesian government says it wants to promote renewables, Ching says that also creates obstacles to them being profitable.
For example, the country has price caps keep coal prices artificially lowspeak Fabby Tumiwa, executive director of the Essential Services Reform Institute think tank and president of the Indonesian Solar Association. That makes things difficult for renewable energy producers – in much of the country – to sell electricity. lower than average price for electricity. “That makes renewables really very, very difficult,” says Tumiwa, “They can’t compete in a state of really subsidized coal.”
ONE statements of world leaders Indonesia says it will gradually reduce domestic coal subsidies, but Adhikuna says it’s unclear what that means, especially as the country continues to find new ways to invest in domestic coal. Last year Indonesia and a Company based in Pennsylvania start building a $2.3 billion facility to turn coal into cooking gas, in addition to having high emissions, is expensive and claim benefits, Tumiwa said.
“It’s really important to track the gradual decline of coal power in the traditional sense, but also in the emerging technology sense,” says Champenois, “There’s no such thing as clean coal.”
International banks still finance Indonesia’s new coal plants
As Indonesia and its international partners conclude the first phase of the deal, Adhiguna says the government needs to start disclosing more details to the public, such as the criteria surrounding the plant which coal is decommissioned and which new factories are built.
Ultimately, Suharsono says that the strongest message from the international community to help get Indonesia out of coal is that international banks are committed to doing so. does not fund any new coal development in the country. “If you want to send a message, you want us to stop using coal, stop funding us.”
