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Indonesia still clinging to coal despite phaseout pledge, new plan shows

A coal-fired power plant. Image courtesy of Benita Welter from Pixabay.

  • The Indonesian government has walked back an earlier pledge to phase out all coal-fired power plants, saying now that it will keep them running but fit them with carbon capture technology.
  • Experts have questioned the technical and financial feasibility of the plan, and called for a swift transition away from the fossil fuel and toward renewable energy.
  • Even so, senior officials and lawmakers have criticized any attempt to give up coal, saying Indonesia shouldn’t blindly follow the growing global trend toward renewables.
  • As part of its plan for “cleaner” coal plants, the government wants to burn more biomass — wood chips — alongside coal, which raises a host of new questions about economic and environmental costs.

JAKARTA — Experts have panned Indonesia’s vision for achieving net-zero carbon dioxide emissions, which consists of continuing to burn coal while hoping that untested carbon capture technology will stop the greenhouse gas from reaching the atmosphere.

The government’s “Long-term Strategy on Low Carbon and Climate Resilience 2050” says coal-fired power plants will still generate a large percentage of the country’s electricity over the next three decades, although it does bring forward the date for achieving carbon neutrality to 2060, a decade earlier than previously announced.

To do so, however, it plans to fit three-quarters of all coal-fired power plants with carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS) technologies.

Experts, however, have questioned the feasibility of such a plan, saying the technology is still prohibitively expensive and largely unproven at such a scale.

“Such technology is still under development despite years of technological investments, and thus far is still hampered by its high cost,” the Jakarta-based Institute for Energy Economics and Financial Analysis (IEEFA) said in a recent report.

And it’s also unclear if the cost of carbon capture could ever compete with the cost of renewable energy, which keeps declining as more countries develop it, the think tank said.

“With the deflationary cost of renewable energy, it remains to be seen whether CCS could ever reach its way to economically operate in countries like Indonesia which hinges on low-cost electricity,” the IEEFA said.

At $4,200 per kilowatt of electricity, the capital expenditure for carbon capture is still high, according to Indonesian policy think tank the Institute for Essential Services Reform (IESR). This will increase the cost to invest in coal-fired power plants by 74%, it says.

Even if the cost of carbon capture declines, it still doesn’t mean burning coal will ever be as environmentally friendly as renewable energy, IESR green economy program manager Lisa Wijayani told Mongabay.

“Emissions from burning coal, even with CCS, must still be higher than renewables,” she said. “By using CCS, the government indirectly keeps pushing for the use of coal. We don’t want that to happen.”

She also questioned how long the government plans to use carbon capture, given that it plans to eventually phase out coal use.

“If the reasoning [behind the use of carbon capture] is because there are still coal-fired power plants operating, until when?” she said. “It means that CCS can only be used as long as coal plants are still operating. This means that CCS is not sustainable. Meanwhile, we’re looking for sustainable energy.”

Fabby Tumiwa, executive director of the IESR, said it appears the government is forcing the use of carbon capture, despite the many uncertainties still surrounding the technology.

“Will coal plants installed with CCS be economically viable or not? And then where will the storage [of the captured carbon] be located?” he said. “It has to be in one geographical formation. Where’s a geographical formation that’s truly safe? How much is the cost? There are so many technical things that have to be discussed, but the long-term strategy insists on using this technology.”

A coal-fired power plant in Batam, Indonesia. Image courtesy of Dj Onces Saputra/Wikimedia Commons.

Coal still in the mix

The long-term strategy paper is the latest in a series of what environmental activists and energy experts say are half-hearted policies to get Indonesia on a path toward net-zero emissions.

An earlier plan to completely phase out coal use by 2055 omitted to mention that more than a hundred new coal-fired power plants were set to come online by then. Even then, the plan received plenty of pushback from senior government officials, lawmakers and businesses.

Under the government’s latest strategy, Indonesia, one of the world’s biggest greenhouse gas emitters, aims to achieve peak emissions by 2030, and reach net-zero by 2060 or sooner. Achieving net-zero emissions by 2050 is crucial to limit global warming to 1.5° Celsius (2.7° Fahrenheit) above pre-industrial levels, as agreed in the Paris climate accords, and avoid the most devastating impacts of climate change, according to a 2019 report. Major emitters such as Japan and South Korea have pledged to achieve net-zero emissions by 2050.

But coal will continue to power Indonesia until at least that year, according to the long-term strategy paper. Indonesia has become the fossil fuel’s final frontier due to its continued reliance on the commodity, with the country currently ranked as the second-biggest coal producer in the world. Coal-fired power plants emit a third of the country’s emissions and accounted for 59% of the energy mix in 2019; globally, they’re the biggest human-made source of carbon emissions.

By 2050, coal’s share of the energy mix will fall to 38%, while new and renewable energy will go from 16% in 2019 to 43% in 2050.

This projection is based on the most ambitious scenario, with the government saying it’s compatible with the global target of limiting global warming by 1.5°C.

But it’s far from being ambitious, as 38% coal is still significant and not in line with the government’s goal to phase out coal completely by 2055, according to the IESR. It’s also an increase from the initial energy projection in an earlier draft of the long-term strategy, which saw coal making up 34% of Indonesia’s energy in 2050.

“There should be no more coal [in Indonesia] if we want to achieve net-zero emissions,” the IESR’s Lisa said.

Worker holding up a piece of coal in front of a coal firing power plant in the Netherlands. Image by Adrem68/Wikimedia Commons.

Funders pulling out

Calls to phase out coal have intensified in recent years as climate change impacts have grown more severe and more frequent.

This is indicated by an unprecedented surge in climate-related disasters, such as floods, heat waves, storms and wildfires, according to a group of 14,000 scientists in 34 countries.

In a new paper published in the journal BioScience, researchers call these mounting floods, heat waves, storms and wildfires “the consequences of unrelenting business as usual,” and say a global phaseout and eventual permanent ban of fossil fuels is needed.

In March, U.N. Secretary-General António Guterres urged all governments, private companies and local authorities to “end the deadly addiction to coal,” calling the phaseout of the fossil fuel “the single most important step to get in line with the 1.5-degree goal of the Paris Agreement.”

Major financial institutions that previously funded coal mines and plants around the world have also joined the calls to divest. Some, including the Asian Development Bank (ADB), U.K. bank HSBC and insurer Prudential, are working on a plan to speed the retirement of coal-fired power plants in Asia, which accounts for 80% of global coal demand this year.

The plan entails public-private partnerships buying these plants and shutting them far sooner than their usual operating life span.

“The world cannot possibly hit the Paris climate targets unless we accelerate the retirement and replacement of existing coal fired electricity, opening up much larger room in the near term for renewables and storage,” said Don Kanak, chairman of Prudential Insurance Growth Markets. “This is especially true in Asia where existing coal fleets are big and young and will otherwise operate for decades.”

With financial institutions taking the initiative to help the early termination of coal plants, there’s no reason for Indonesia to keep fueling its coal addiction by banking on carbon capture and storage technology, according to Grita Anindarini, program director at the Indonesian Center for Environmental Law (ICEL).

“This [initiative] is an impetus [for Indonesia] to not be adamant on keeping coal-fired power plants burning,” she told Mongabay. “And this is also a call for us to review our energy and electricity planning so that we really have a road map on energy transition through 2050.”

Police officers block climate activists protesting in front of the headquarters of Asian Development Bank during the annual meeting of the board of governors on May 4, 2018. They are calling to stop funding dirty energy sources and start supporting renewable energy in Asia. Image by AC Dimatactac/ICSC

Pushback from industry and officials

Indonesia’s politically powerful coal industry has pushed back against the planned phaseout, saying cheap coal still plays a role in powering the nation’s economy.

“We still need energy from coal that’s cheap to leverage our development or people’s welfare,” said Suryo Eko Hadianto, chief executive of state-owned coal miner PT Bukit Asam. “We’re still committed to the Paris Agreement but it doesn’t mean [we can] recklessly eliminate the resource that we have.”

This view is echoed by parliament’s oversight commission for energy issues. Maman Abdurrahman, the commission’s deputy chairman, said Indonesia shouldn’t jump on the European-led bandwagon of moving away from coal and toward renewable energy.

“Don’t let us be a country that’s careless and compulsively imitates [Europe in developing] renewables,” he said. “[Just] because Europe has already moved with the issue of zero carbon, we shouldn’t hastily use renewables without thinking about our energy security. That’s not wise for our country.”

The National Energy Council (DEN), a government body tasked with designing the country’s long-term energy policy, also warned against moving away from coal.

“For us, Indonesia, [we] shouldn’t be too ambitious and in a rush [to phase out coal],” DEN commissioner Herman Darnel Ibrahim said.

He said that unlike Europe, where electricity demand has already peaked, Indonesia still needs to grow its economy.

“Europe, U.K., have peaked before [Indonesia],” he said. “We haven’t peaked because our economy is still growing. Our energy consumption and GDP are still below the global average. So don’t transition too fast because it can pose a threat to [our] energy security.”

Indonesia will eventually have to make the transition, Herman added, but only once there’s a reliable supply of renewable energy.

“The coal phaseout needs to happen after there’s a guarantee of renewable energy and there are already contracts [signed for renewables],” he said.

Finance Minister Sri Mulyani Indrawati said coal-fired power plants can’t be retired at will without legal and financial ramifications.

“When the U.S. asked for our leadership commitment for net-zero emissions, [Indonesia] still has many long-term contracts for coal,” she said during a recent virtual seminar. “If we terminate [these plants], we can be sued because the contracts are with us.”

Proponents of the coal industry also say renewable energy sources like solar and wind have an intermittency problem, where they aren’t sufficiently reliable to provide a steady supply of power. The government notes this in its long-term strategy paper, adding that coal will still be needed for a “continuous stable power supply system.”

But experts have pointed out that the problem of intermittency becomes less of a factor the more renewable capacity is built. And since solar prices have dropped significantly, operators can overbuild the system to provide enough energy even on cloudy days.

In Indonesia, the only country in Asia that sits on the equator, intermittency in solar is even less of a problem as there’s very little seasonal or daily variations in solar output, the IESR said in a recent report. In fact, Indonesia could generate 100% of its electricity from renewable energy. And if it can achieve that by 2045, it can become a net-zero carbon emitter by 2050, according to the IESR.

Wood pellets in a production center in Germany. Wood pellets are made from compressed organic matter collectively called “biomass.” While they can be made from logging and milling leftovers, industry critics warn whole trees are often used in their production. Image courtesy of Greenpeace.

From burning coal to burning wood

Complicating the Indonesian government’s reluctance to move away from coal is its idea of what constitutes “new and renewable” energy sources. Among these is biomass: wood chips or oil palm kernels or any other solid biological waste product that can be burned to generate heat.

In 2020, the state-owned power utility, PLN, began throwing biomass into the coal mix in some of its power plants, in a process known as cofiring. The government claims these cofiring plants, coupled with carbon capture and storage, will have negative emissions, which means they’ll absorb more emissions than they emit.

By 2050, cofiring is expected to provide 23 gigawatts of electricity, or 8% of total generation, according to the long-term strategy, up from 2.7 GW targeted by PLN.

To achieve this, the government would have to create a large-scale biomass industry across the country, according to the IEEFA — essentially, an entirely new business of chopping down trees for firewood.

Even PLN’s 2.7 GW cofiring target would call for up to 16 million metric tons of biomass per year over the next 10 years, according to an analysis by the IEEFA.

“To place things into context, a back-of-the-envelope calculation suggests that to reach the [23 GW] target, Indonesia needs to build more than 1.4 billion ton/year of biomass capacity by 2060, more than two hundred times the biomass capacity of US — the world’s largest exporter of wood pellet biomass,” the IEEFA said in its report.

The IEEFA said policymakers might not have grasped the scale of the ambition and the social-environmental impacts of such a plan. It also questioned the economic feasibility of biomass power plants, given the much lower price of coal.

“The claim that biomass could be obtained at a price lower than coal is a commendable ambition,” the think tank said, “but it has generally not been possible in other countries which implement cofiring based on careful selection of biomass.”


Banner image: A coal-fired power plant. Image courtesy of Benita Welter/Pixabay.


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