Indonesia clings to coal despite green economy outlook
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JAKARTA – Even though Indonesia is receiving cautious praise from some green groups for its ambitious plans to reduce carbon emissions, the world’s largest exporter of thermal coal is showing no signs of weaning itself off the polluting fuel anytime soon.
Indonesia, the eighth largest emitter of carbon, recently advanced its goal of net zero emissions from 2070 to 2060 or earlier, ahead of the United Nations Climate Change Conference in Glasgow in November, and joined a Global Methane Pledge led by the United States.
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It also plans to halt the commissioning of new coal-fired power plants and phase out coal for electricity by 2056 as part of a new, greener, long-term economic vision.
But – like other coal producers like Australia and India – Indonesia is wondering how to balance its environmental goals with the cost of unplugging an industry that has generated $ 38 billion in export revenue over the years. first seven months of 2021.
“We are phasing out coal-fired power plants. But if you ask if we are closing mines, we have the coal and there are other options for use, â€Dadan Kusdiana, head of renewable energy at the Ministry of Energy, told Reuters.
The UN climate change report warned that global warming was dangerously on the verge of getting out of hand in what has been described as “a death knell for coal and fossil fuels.”
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Yet Indonesia is exploring ways to continue to consume and extract value from coal using carbon capture and storage (CCS) technology, although environmentalists say CCS has not been proven successful. and is expensive.
CARBON GASIFICATION
With nearly 39 billion tonnes of reserves, coal remains the economic backbone of parts of Indonesia and miners are among the biggest taxpayers.
The government encouraged miners to invest in the production of dimethyl ether (DME) from coal. Under new laws passed in 2020, it no longer requires them to pay royalties to the government on such processes, and their mining permits can be extended.
He introduced DME as a substitute for imported liquefied petroleum gas and a raw material for chemicals and fertilizers.
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To make DME you have to burn coal, so it has to be paired with CCS to be environmentally friendly, Dadan said.
However, if Indonesia can adopt CCS more widely and at lower cost, the technology could also be applied to coal-fired power plants, expanding their use, he said.
“It seems like a win-win decision to accommodate all parties, as they dare not completely and firmly shut down the coal,†said Egi Suarga of World Resources Institute Indonesia.
He said that while the use of CCS technology is feasible, there is a risk of leakage when trying to capture emissions from the combustion and mining of coal.
SAVE THE PRICE
Coal-fired power generation is Indonesia’s second largest source of emissions after deforestation, contributing 35% of its 1,262 gigatonnes of CO2 equivalent per year, according to government data.
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Indonesia consumes around 130 million tonnes of coal per year to power 60% of its 73 gigawatt (GW) electrical capacity and exports around three times that amount.
Renewable sources like solar, hydropower and geothermal only make up 11% of its energy mix, although experts say Indonesia has 400 GW of renewable potential.
The government has pledged to increase the share of renewables to 23% by 2025. Nonetheless, data from the IEEFA energy think tank shows that around 16 GW of new coal-fired power generation capacity are expected to be in service between 2021 and 2030.
“Because all the demand in Java and Bali has been met by coal, and there is even an oversupply, which is effectively killing renewables,” said Adhityani Putri, executive director of the Indonesia Cerah Foundation.
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Coal-fired power remains the cheapest option, costing around 600 rupees (4.22 US cents) per kilowatt hour (kWh) last year, compared to gas at around 1,600 rupees per kWh and geothermal energy at 1,100. Rupees per kWh, according to utility data.
Cerah and other environmental groups have campaigned to withdraw coal-fired power plants prematurely, but officials said this could result in fines for breach of contract with independent power producers.
Meanwhile, coal prices have hit all-time highs this year, helping Indonesia to post record exports and a trade surplus in August. The government has raised its coal production target for 2021 from 14% to 625 million tonnes to be collected.
On the other hand, parliament is considering a government-proposed carbon tax, and Indonesia has ambitious plans to use its nickel reserves to become a production hub for batteries and electric vehicles.
As an archipelago, Indonesia is aware of its vulnerability to climate change, but policies must take into account economic developments, including the future of coal and the jobs it provides, said Finance Minister Sri Mulyani Indrawati.
“If you don’t think about that stuff people could get lost in all of these transitions and it could turn into a social issue,” she told Reuters, citing how the anger over the closure of the mines in American coal created “populist” voters. ($ 1 = 14,227,000 rupees)
(Additional reporting by Bernadette Christina Munthe; Editing by Ed Davies and Gerry Doyle)
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