Research group: Despite China’s pledge to scrap coal-powered plants, Indonesia projects possible

Dandy Koswaraputra
Research group: Despite China’s pledge to scrap coal-powered plants, Indonesia projects possible The Celukan Bawang 2 coal-fired power plant supplies electricity in Buleleng, Bali, Oct. 29, 2020.

Chinaʼs pledge last year to end financing for coal-powered projects overseas has resulted in 15 plants being shelved or canceled and could potentially put an end to 32 others, according to an analysis released by a Finland-based energy research group on Friday. 

Still, a potential loophole in interpreting the pledge means that 18 plants including some in Indonesia could proceed because they have secured financing and permits or are linked to China’s Belt and Road Initiative, according to the study by the Center for Research on Energy and Clean Air (CREA). It said Jakarta considers those projects to be a priority. 

“China’s ‘no new coal overseas’ policy has already had a significant impact on coal power construction,” CREA said in its report issued on Earth Day.

“Since September 2021, CREA found that approximately 12.8 gigawatts (15 plants) of China-backed overseas coal projects were shelved or canceled, following revised energy policies in host countries and withdrawals of Chinese firms,” it said.

Included are projects planned for Indonesia, Vietnam, Turkey, Kenya, Iran, Ivory Coast and Zimbabwe, according to the study.

In a speech to the United Nations General Assembly in September, Chinese President Xi Jinping announced that Beijing would not build new coal-fire projects abroad as part of efforts to deal with climate change.

However, 18 projects, which amount to 19.2 gigawatts, “remain in a grey area of the pledge and could still go ahead,” CREA said.

Of that amount, 11.2 gigawatts “are projects that have secured financing and the necessary permits but have yet to enter into construction,” the report said.

“Another 8 gigawatts are proposed captive coal projects linked to BRI nickel and steel complexes in Indonesia and considered a government priority.”

According to the report, two new China-backed power plants are likely to go ahead in Indonesia because of a potential loophole that allows construction and equipment contracts on existing BRI projects to be interpreted as exemptions.

On Feb. 14, Tianjin Electric Power Construction Co. signed an agreement to construct a power plant to support nickel ore smelter on Obi Island in North Maluku province, CREA said.

A second project calls for the expansion of the existing steam-powered plant providing power for steel and nickel processing at the Morowali Industrial Park in Central Sulawesi province.

Throughout Indonesia, a total of six coal projects are likely to move ahead because the government considers them “electricity supply for business and personal interest,” it said.

Officials at the Ministry of Energy and Mineral Resources did not immediately respond to BenarNews requests for comment on Friday.

In January 2020, a spokesman for PT PLN, the state-run power company, said energy sector investors were interested in coal-fired power plant because of lower costs and better returns on investment.

“We’re just talking about the target of fulfilling electricity. In Java, the number of electricity users is huge and we want to avoid another power deficit,” PLN spokesman Dwi Suryo Abdullah told BenarNews at the time.

Greenpeace supports report

Leonard Simanjuntak, the director of Greenpeace in Indonesia, welcomed CREA’s findings.

“We appreciate the development because as the largest coal financier, the decision taken by China last year will have a significant impact on the energy transition process toward renewable energy globally,” Leonard told BenarNews.

Still, Leonard regrets that some projects are scheduled to continue.

“Exceptions such as those in Sulawesi and North Maluku will set a bad precedent. We need a truly green Belt and Road Initiative, without coal and other fossil fuels,” Leonard said.

He called on China to persuade Indonesia to use renewable sources of electricity and energy for national priority projects.

“This should be a turning point for the Indonesian government, amid criticism that national priority projects that are being built in many places threaten the environment,” Leonard said.

Indonesia has set a goal of reducing its greenhouse-gas emissions by 29 percent by 2030. The government said the energy sector now accounts for nearly half of the country’s emissions.

In 2019, Indonesia was the top exporter of coal for power generation, supplying 40 percent of the world’s markets, according to the Observatory of Economic Complexity.

Southeast Asia’s largest and most populous country is the eighth most polluting one in the world with 2 percent of global greenhouse-gas emissions to its name, according to the World Resources Institute.

Indonesia draws 60 percent of its own energy supply from coal, but aims to switch to renewable sources supplying 85 percent of its energy needs by 2060.


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