Philippines, Indonesia Join Programs to Phase out Coal-Power Plants

J.C. Gotinga and Ronna Nirmala
Manila and Jakarta
Philippines, Indonesia Join Programs to Phase out Coal-Power Plants Fishermen paddle their boat as smoke rises from chimneys at the Suralaya coal power plant in Cilegon, Indonesia, Sept. 22, 2021.

The Philippines and Indonesia, two of Southeast Asia’s biggest economies, are embarking on efforts to phase out coal-fired electricity plants, including through a pilot project launched by the Asian Development Bank that some environmental activists say favors power companies over victims of climate change. 

Under the so-called Energy Transition Mechanism project, which ADB unveiled last week at the United Nations Climate Change Conference (COP26) in Scotland, the regional inter-governmental agency is looking to accelerate the transition to clean energy in Indonesia and the Philippines mainly, as well as in Vietnam. Led by Indonesia, the three nations were among the top four consumers of coal in Southeast Asia in 2019, according to statistics from the International Energy Agency. 

The ETM will set up two multibillion-dollar funds – one for retiring coal-fired power plants or converting them for other uses, and another for pushing investments in “clean energy,” according to a news release from the Manila-based bank. 

The ETM “has the potential to accelerate the retirement of coal plants by at least 10 to 15 years on average,” Philippine Finance Secretary Carlos Dominguez said.

“The time for debate and merely discussing climate change theories is over. Today, we are focusing on applied solutions and workable programs to quickly reduce greenhouse gas emissions,” Dominguez said at the program’s launch in Glasgow, according to a government statement.

“We have a planet to save and we do not have much time to do it,” said Dominguez, who was heading the Philippine delegation to COP26.

Dominguez said the Philippines was upgrading its Agus-Pulangi hydropower plant on the southern island of Mindanao.

“Mindanao will showcase an Earth-friendly future that can be replicated in other areas in the Philippines – and even countries around the world,” Dominguez said. “Together with the Asian Development Bank, the Philippines is pioneering an innovative model that will set a global standard in transitioning to a cleaner energy future.”

Touted as possibly the world’s largest carbon reduction program, the mechanism is expected to draw from public and private investments to finance “country-specific ETM funds to retire coal power assets on an earlier schedule than if they remained with their current owners,” the ADB said. The Japanese government has donated U.S. $25 million toward the project.

“Speeding up the retirement of coal-fired electricity will increase the demand for clean energy by two to three times, lowering overall energy generation costs in the long run,” the bank said.

In Indonesia, the government-run electricity provider PLN signed a memorandum of understanding with the ADB for public-private financing to speed up efforts to move on from coal, said Erick Thohir, Jakarta’s minister for state-owned enterprises.

“The Ministry welcomes the collaboration of SOEs with various stakeholders which marks the first step toward a just and affordable transition to promote carbon-neutral development,” Thohir said, referring to state-owned enterprises.

Septian Hario Seto, deputy minister for investment and mining at the Coordinating Ministry for Maritime Affairs and Investment, also welcomed the MoU.

“I think this will be a good thing to help us transition to low-emission new and renewable energy,” he said. “This can also make the government think again about building coal-fired power plants because a lot of funding has already been stopped.”

Meanwhile on Nov. 4, a day after the ADB’s announcement, the World Bank’s Climate Investment Funds (CIF) released details of its nearly $2.5 billion Accelerating Coal Transition Investment Program, which aims to wean emerging economies, including Indonesia and the Philippines, off coal power.

“The countries were selected on advice from an independent panel of experts, who assessed country candidates based on potential for transformational change and private sector mobilization, among other metrics,” CIF said in a news release announcing the program.

“Indonesia, with the support from CIF’s Accelerating Coal Transition Investment Program, is committed to reduce and replace our coal power plants with renewables as part of our efforts in energy transition,” said Arifin Tasrif, the Indonesian minister of Energy and Mineral Resources.

Environmentalists react

Some climate activists, however, allege that the ETM’s focus is on “bailing out” coal companies without consulting with communities that have suffered the effects of carbon emissions from coal plants.

“ADB’s coal retirement plan is absurd and off-tangent to effectively address the urgent climate action needed,” Ian Rivera, national coordinator for the Philippine Movement for Climate Justice, told BenarNews in a statement.

The ADB was more interested in helping “perpetrators of the climate crisis” than helping communities, he said.

“The scheme is essentially a bail-out for those who committed the crime of killing the planet,” he said.

Gerry Arances, executive director of the Center for Energy, Ecology and Development in Quezon City, said the project basically rewarded coal financiers who helped create the crisis.

“Coal companies should be made to shoulder their proper part in early closure expenses, including reparative and just transition costs, on top of any penalties that those who incurred complaints or violations are required to pay,” Arances told BenarNews.

Other environmentalists supported the programs despite concerns.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), a green group based in Jakarta, said the programs were practical because old coal plants were expensive to run. Coal-fired power plants supply 65 percent of Indonesia’s electricity needs.

“But a commitment from the government is needed, for example in the form of a presidential regulation on coal transition as a legal framework,” Tumiwa said as he urged the government to prepare for the transition so funding for new and renewable energy could be increased.

Khevin Yu, an energy campaigner at Greenpeace Philippines, also welcomed the efforts but warned that they might lack the necessary safeguards to push coal power-dependent countries to quickly embrace renewable energy.

“We believe that the decommissioning rate should be faster,” said Yu, adding that Manila’s current goal to operate on 50 percent renewable energy by 2040 is a decade too late.

Based on Greenpeace’s estimates, the Philippines should have at least 50 percent renewable energy by 2030.

“That’s the target where the Philippines can contribute to the global target of reducing global warming to 1.5 degrees Celsius,” Yu told BenarNews.

But, he added, the ETM should rule out transition fuels such as natural gas in favor of renewable sources including wind and solar power.

“When the ETM describes ‘clean energy,’ it should be categorically mentioned that it should be renewable energy, not only clean energy,” Yu said. “Since we are in the context of a crisis in which we need to accelerate and make more ambitious commitments, we should go straight to the promotion of renewable energy, and there should be no transition fuels in the process.”

Before the ADB’s announcement at COP26, more than 60 international civil society organizations wrote an open letter criticizing the ETM for its lack of prior consultation with stakeholders other than power companies and governments.

“We urge ADB not to gamble with our lives, the realities of the climate crisis at hand, or the possibility of ending coal in a swift, just, and genuinely transformative manner with a premature buy-out scheme that remains shrouded in uncertainty,” said the Nov. 1 letter signed by Friends of the Earth, Greenpeace Indonesia, Growthwatch India, Indonesian Center for Environmental Law and dozens of other organizations.


Add your comment by filling out the form below in plain text. Comments are approved by a moderator and can be edited in accordance with RFAs Terms of Use. Comments will not appear in real time. RFA is not responsible for the content of the postings. Please, be respectful of others' point of view and stick to the facts.