The Midweek Essay: Indonesia and the transition from coalPublished by MAC on 2019-07-23
One of the worldâ€™s biggest emitters of greenhouse gases.
Indonesia has, in recent years, become the world's largest exporter of thermal coal.
It's also endeavouring to supply many more tonnes of the black stuff to power industry, and ostensibly improve electricity supply fo numerous comunities.
Will President Joko Widodo be able to withstand such virulent forces ranged against him?
Indonesia’s president signals a transition away from coal power
by Hans Nicholas Jong
16 July 2019
Indonesia’s president has reportedly signaled a major shift in energy policy, saying he wants to “start reducing the use of coal.”
Such a policy would run counter to the administration’s previously stated long-term plans of fueling the country’s growing energy demand with coal, with 39 coal-fired plants under construction and 68 more announced.
Indonesia is one of the world’s biggest emitters of greenhouse gases, and while the main culprit is deforestation and land-use change, the energy sector is poised to overtake it.
Energy policy analysts have welcomed the reported change in stance from the government, noting that Indonesia has long lagged vehind other countries in developing clean power, despite having an abundance of renewable energy sources.
JAKARTA — President Joko Widodo has reportedly expressed his intention to wean Indonesia off coal, in a move that runs counter to his own administration’s stated policy of increasing the country’s reliance on the fossil fuel.
The president made the announcement at a July 8 cabinet meeting, according to Siti Nurbaya Bakar, the minister of environment and forestry.
“[T]he president emphasized that we must develop the energy sector with a focus on renewable energy,” Siti said at a recent event in Jakarta. “Therefore, the president has explicitly asked to ‘start reducing the use of coal.’”
The reported comment comes amid a period of particularly dire air quality in the capital, Jakarta, that’s prompted a citizen lawsuit holding top officials, including the president, liable for the pollution, blamed in part on coal-fired power plants operating near the city. (The lawsuit was filed July 4, four days before the president made his remark; it’s not clear whether the latter was prompted by the former.)
If the administration follows through on the statement with concrete policies to phase out coal use, this could signal the beginning of a transition to renewable energy for Indonesia, the largest energy consumer in South East Asia and one of the biggest consumers of coal in the world, analysts say.
“When I heard about it, I was ecstatic, surprised and filled with hope,” Alin Halimatussadiah, head of the Institute for Economic and Social Research at the state-run University of Indonesia, told Mongabay.
Adhityani Putri, executive director of Yayasan Indonesia Cerah, a local policy and communications nonprofit that advocates for clean energy transition, also welcomed the news.
“This statement represents a significant step forward and one that will put Indonesia in step with the major economies of the world,” she told Mongabay.
Both Alin and Adhityani said a policy shift on coal was long overdue, given that the fossil fuel has for years been falling out of favor by other major economies in favor of increasingly cost-competitive renewable energy.
“We’re left behind as many other countries have committed to phase out coal, while we haven’t said anything about that,” Alin said. “This is the first step, and with the president saying that, that’s a good thing.”
But any meaningful change will have to start with an overhaul of the electricity procurement plan, or RUPTL, by the state-owned utility, PLN. At present, the RUPTL calls for increasing the absolute figure for renewable power generation over the long term, but shrinking its share of the overall energy mix in favor of more coal-fired electricity.
“In the RUPTL document, coal is still dominant, so we haven’t seen [any plan to phase out coal] in any planning document,” Alin said.
Adhityani said the government would need “a comprehensive and just coal phase-out plan that ensures a just transition for all and accelerated deployment of renewables” in the next mid-term national development plan.
The ideal plan would have to offer both fiscal and non-fiscal incentives that would lower the price of renewable power to make it competitive with coal, said Elrika Hamdi, an analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).
“What’s also important is that the policies taken should be consistent and in effect for a long time in order to give assurance to investors and funders,” she added.
With President Widodo recently winning an election that keeps him in office through 2024, an easing of Indonesia’s reliance on coal will help with the country’s carbon dioxide emissions reduction goals, said Siti, the environment minister.
“I welcome that statement with joy because this truly empowers our work,” she said.
Indonesia is currently one of the world’s biggest CO2 emitters, most of it from deforestation and land-use change. However, emissions from the energy sector are poised to dominate in the near future as Indonesia’s demand for electricity continues to rise.
The country’s energy consumption growth is among the fastest in the world, with coal accounting for nearly 60 percent of the energy mix in 2018. Its energy policy therefore has important implications not just for the country’s climate future, but also for global efforts to achieve cuts under the Paris Agreement.
Under current plans, the committed emissions from coal-fired power plants would peak only around 2035, with an eventual phase-out only by 2069; to have a shot at meeting the Paris goals, meanwhile, the Southeast Asian region will need to phase out coal by 2040, analysts agree.
Falling short of the Paris Agreement commitments would be especially disastrous for tropical countries like Indonesia. A new study by the research group Crowther Lab finds that cities in the tropics are likely to see the strongest impacts from climate change, even as they experience smaller changes in average temperature.
The study, looking at 520 major cities worldwide, finds that Jakarta will be among those facing “unprecedented” climate shifts by 2050, including changes in rainfall patterns that will lead to more severe flooding and droughts. It also predicts a mean annual temperature rise by then of 1.7 degrees Celsius (3.1 degrees Fahrenheit), with a rise in maximum temperatures of 3.1 degrees Celsius (5.6 degrees Fahrenheit).
Switching more of Indonesia’s power generation from coal to renewable energy sources could be key to achieving the country’s emissions reduction goals, said Ruandha Agung Sugardiman, the environment ministry’s climate change chief.
Indonesia has set itself the target of cutting its emissions by 29 percent from the business-as-usual scenario by 2030, or 41 percent with international assistance.
Ruandha said there was more room for emissions cuts in the energy sector than in the land-use and forestry sectors. Under the current target, emissions in the latter sectors needs to go down by 70 percent, including through scaling back deforestation rate and boosting reforestation; the energy sector, meanwhile, only needs to achieve a 19 percent emissions reduction.
“It’s very clear that the energy sector could be much more ambitious [in reducing emissions],” Ruandha said. “That’s in line with what the president is saying that we need to phase out coal. And this is supported by the energy and mineral resources minister, who will change our energy pattern.”
Ruandha has been tasked by Siti with studying the possibility of Indonesia setting an even more ambitious emissions cut goal of 45 percent to help rein in global heating.
“In recent events, including the G20 meeting, actually there’s a hope for each countries to set a target up to 45 percent,” the minister said. “I’ve asked the director-general [of climate change] to do some calculations, even though for us to meet the 41 percent target is already tough.”
Siti added that she’d begun discussions with the energy minister, Ignasius Jonan, on steps to cut back on coal use and advance renewable energy during last month’s G20 summit in Japan.
More coal-fired plants
That a transition away from coal is even being discussed at the highest levels of government marks a major change in tone from longstanding energy policies that have relied on an abundance of cheap and available coal. In fact, Indonesia’s coal reserves have made it one of the world’s biggest exporters of the commodity over the course of the last 15 years.
Policies by successive governments have helped; coal-fired power plants receive hefty subsidies, and there are no carbon disincentives to encourage investment in renewable energy. The reliance on coal hasn’t shown any sign of easing in recent years. Thirty-nine coal-fired power plants are under construction, and 68 have been announced, which will maintain coal’s dominance of the energy mix at nearly 55 percent by 2025. Three of the six new plants expected to go online this year will be fired by coal; the other three are small-capacity facilities powered by gas, hydro and solar, respectively.
Over the 40 to 50 years that each plant will be in operation, it will have a devastating impact on local populations and ecosystems, activists say, polluting the air and water, and churning huge volumes of CO2 into the atmosphere.
“Promising to burn massive quantities of low quality Indonesian coal may have kept some voters warm, but Indonesians will be paying a very high price for their love affair with coal,” says a report by the IEEFA. “And the younger generation will be stuck with limited options to fix a rigid system.”
This heavy reliance on coal comes at the cost of growing Indonesia’s renewable energy sector, with its adoption trailing far behind most countries and short of the country’s true potential, according to a new report by the management consulting firm A.T. Kearney.
The government expects to generate 23 percent of the country’s energy from renewable sources by 2025. To date, however, renewables account for just 12 percent of the total energy mix. That proportion isn’t expected to increase by 2025.
“While many countries are taking rapid strides to adopt renewable energy for power generation, the progress in Indonesia has been rather slow,” said Alessandro Gazzini, a partner at A.T. Kearney and co-author of the report. “However, the country has significant potential in renewables, including in solar and wind, and hence the stage is set for the country to leapfrog over the next few years if the policy is given a hard look.”
Growing public awareness
Public awareness has been growing recently about the negative impacts of the coal industry, especially during the presidential election campaign that ended in April. At various points in the campaign, Widodo and his rival, Prabowo Subianto, came under scrutiny for their lack of commitment to new, greener energy technologies. The business ties between the candidates, their political allies and the coal industry were also highlighted in a documentary called “Sexy Killers.”
The documentary, viewed more than 24 million times on YouTube since it was uploaded days before the April 17 election, also highlighted the devastating impact of coal mines and power plants to local communities, including lush forests being razed in the search for more coal, and coral reefs being wrecked by coal barges.
Residents living near the massive power plants in Java and Bali also pay a price. The film shows many of them being evicted to make room for the plants, while those who refuse to leave have to deal with the constant pollution.
The film drew the ire of local officials, who scrambled to shut down public screenings and even accused the filmmakers of spreading “hate speech” against both candidates.
Alin said it was possible Widodo had had a change of heart after the recent intense public spotlight on the coal industry, as well as the shifting global trend to renewables.
“We may never know what’s inside the head of the government, but if we see recent events where the public responded to various information circulating [about the impact of the coal industry] through social media, it’s possible that the government is reacting to that,” she said. “Or the government might also be reacting to global pressure.”