G-20 host Indonesia flaunts climate agenda in coal-fueled Bali
Endowed with a wealth of renewable energy resources, Indonesia has done less to exploit this potential than most countries of its size. Climate activists say the Indonesian government has moved too slowly to divest from fossil fuels and abandon archaic policies that subsidize dirty energy sources. Analysts say Indonesia’s experience illustrates some of the toughest challenges that industrializing economies face when transitioning to green energy.
Fossil fuel projects were stalled a year ago. Now they are making a comeback.
In 2015, after Indonesian President Joko Widodo was elected, he commissioned a series of projects that would generate 35 gigawatts of new energy – most of it from coal-fired power plants. At the time, 16% of the population still lacked access to electricity, and officials were confident that the country’s economic growth would soon drive up energy demand.
When it became clear that Indonesia’s growth was not keeping pace with projections, it was too late. Dozens of new power plants had been commissioned, and more were under construction. The country’s grid has become oversupplied with coal, which accounted for more than half of electricity generation, double what it was a decade ago, according to the Institute for Essential Services Reform, a Indonesian think tank. Renewable energies had no room to develop.
“It’s like excess baggage that the Indonesian government is carrying,” said Jakarta-based energy finance analyst Elrika Hamdi. It is “a mistake of the past” that the country is still paying, she added.
At the same time, regulations governing clean energy have been inconsistent, onerous and often poorly implemented, proponents say, leaving Indonesia behind other industrialized nations such as Vietnam and the Philippines. After a decade of “solar boom”, Vietnam’s installed solar capacity is nearly 80 times that of Indonesia’s despite a third of the potential, according to the International Renewable Energy Agency (IRENA), an intergovernmental organization that helps countries transition to clean energy. .
Although Bali receives enough sunlight to meet many times its electricity needs, its energy needs are almost entirely met by fossil fuel power plants on the island and the neighboring island of Java. Renewable energy accounts for less than 2% of electricity production, according to provincial officials.
In northern Bali, fishermen have campaigned for years against a planned coal-fired power plant expansion, claiming it threatens their livelihoods. “We will accept any power station that does not damage the air, the sea, the water,” said Supriyadi, a fisherman from Celukan Bawang village. “We just don’t want coal.”
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Indonesian leaders, who are lobbying the G-20 for a multi-billion dollar energy transition loan, have often characterized their reliance on fossil fuels as a problem of insufficient funding for alternatives. Coal, abundant in Indonesia, was for decades the cheapest way to electrify the country. Even now, solving the climate crisis cannot replace development needs, said Luhut Binsar Pandjaitan, the Minister of Investment.
“Everything we do, we don’t want to stop our economic growth,” Luhut said in an interview last month from his office in Jakarta. “Even if we do this new program, we should see revenue for the government, for the people of Indonesia.”
But analysts say that view is outdated and that in Indonesia, money is only part of the problem.
“It’s frustrating because technologically, the solutions are there. Economically and financially, there are no more barriers,” said IRENA researcher Nicholas Wagner.
The average amount of solar energy Indonesia receives per square meter is almost double that of some countries in Europe, according to research, and Indonesia has the largest geothermal reserves in the world. These conditions position the country to make one of the most dramatic energy transitions in the world, although it is not currently on track to do so.
Last year the government banned the development of new coal-fired power stations, but said the rule would not affect the 13.8 gigawatts of additional coal-fired power – enough to power 10 Balis — it was already planned. Two months ago, the government announced another round of exceptions to its ban, allowing new coal-fired power plants that support “national strategic projects” such as smelters for battery minerals.
In addition, the government has required since 2009 that all coal mining companies sell a set amount of their output to the public utility company below market value. These regulations, which the World Bank has urged Indonesia to remove, effectively subsidize the price of coal, distorting the energy market away from renewable sources, analysts say.
Even when the government tries to boost clean energy deployment, it sometimes misses the implementation target, said energy finance analyst Hamdi. In 2018, for example, a government order to encourage rooftop solar panels ended up charging more to use them. “On paper,” Hamdi said, “it’s not the same as the reality on the ground.”
Bali has long sought to be energy independent, and locals increasingly believe this goal can dovetail with their ambitions to reach net zero emissions by 2045, 15 years earlier than the rest of Indonesia. . A 2017 study by the Asian Development Bank found that Bali only needed to harness 5% of its renewable energy resources to meet all of its electricity needs.
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But without adequate support from the national government, progress has been glacial, residents say. From 2012 to 2015, the government opened eight small solar farms in Bali, placing them under the care of local authorities. Only four are still functioning, said a provincial representative. The rest has fallen into disuse. Meanwhile, plans are underway to build a new terminal for liquefied natural gas, a type of fossil fuel, in southern Bali.
“We have a big ambition,” said Ida Ayu Dwi Giriantari, a professor at Udayana University in Bali, who wants to see more renewable energy. “But we can’t do it alone.”
Fabby Tumiwa, executive director of the Institute for Essential Services Reform, said while he agrees Indonesia has made slow progress so far, the push for renewable energy is accelerating.
In September, Widodo published a regulation paving the way for the early retirement of coal-fired power plants. And on Monday, the Indonesian utility company, Perusahaan Listrik Negara, announced the closure of the first coal-fired facility ahead of schedule. Tumiwa, a vocal PLN critic in the past, attended the company’s press conference in Bali. “I’m ready to be surprised,” he said.
Not all supporters are so optimistic, especially those in Bali. Most of the more than 600 electric vehicles used for the G-20 were imported from Java and will be sent back after the world leaders leave. It is unclear who will maintain the solar panels installed for the summit – or whether there are plans to help the local government replicate them across the island.
“The real challenge,” said Ida Bagus Setiawan, head of Bali’s energy division, “comes after the summit.”
Winda Charmila in Bali contributed to this report.