- Indonesia plans to stop building new coal-fired plants after 2023, with additional electrical capacity to be generated only from new and renewable sources.
- Development experts and the private sector have welcomed the plan, but some say it’s not ambitious enough since it still entails construction of new coal plants that have already been signed.
- Once these plants are built, they will operate for decades to come, and their emissions will spell disaster for climate change.
- There’s also controversy over what the government considers “new and renewable” energy, in which it lumps solar and wind alongside biomass, nuclear, and gasified coal.
Indonesia’s renewables sector trails far behind its neighbors in Southeast Asia — despite encompassing commonly accepted “renewable” sources such as solar, geothermal and hydro, as well as more controversial “new” sources such as biomass, palm oil-based biofuel, gasified coal, and, theoretically, nuclear. As of 2020, these new and renewable energy sources only made up 11.5% of the country’s power grid. The government expects to generate 23% of the country’s energy from new and renewable sources by 2025.
Coal, of which Indonesia has abundant reserves, makes up almost 40% of the country’s energy mix.
Indonesia could achieve net-zero emissions in 2050 if emissions from power plants are reduced as fast as possible, so the first key is to completely stop building new coal plants at least after 2025. But if possible, before 2025 is better.
Private sector involvement
With the current situation, where the rest of the world is moving toward decarbonizing the economy, the private sector in Indonesia needs to transform. In the past, the government’s programs emphasized on building coal plants, but now it’s different. And thus, companies need to pivot to building renewable power plants.
Companies need to realize there’s no future in fossil fuels, with a growing number of financial institutions announcing they will withdraw funding for coal projects under mounting pressure from consumers and shareholders demanding action on climate change.
South Korea, which had robustly funded overseas coal-fired power plants, including in Indonesia, between 2009 and 2020, recently announced it would end all new financing for overseas coal projects.
Everyone sees that coal plants have no future, so why bother funding coal projects? Because if they fund new coal plants, there’s a potential for them to become stranded assets.
After 2027, solar power plants, including their storage, and wind power plants will generate cheaper electricity compared to coal plants. So if PLN keeps building new coal plants without pause, the potential for those plants to become stranded assets is huge.
The private sector should be involved [in developing renewable energy]. Every time there’s a need to develop new and renewable energy, just invite the private sector. The plan to stop building new coal plants should be seen as an opportunity for the private sector to invest in renewables.
Without the involvement of the private sector, it will be very difficult to develop the renewables sector in Indonesia.
Decades more of burning coal
While imposing a deadline on the construction of new coal plants is an important first step, it isn’t enough for Indonesia to transition away from fossil fuels.
Once these coal plants are built, they will operate for decades to come, which will lock Indonesia into a carbon-intensive economy well beyond the 2023 deadline.
Under the best-case scenario, Indonesia needs to stop building new coal plants from now without waiting to complete the 35,000 MW program and the [7,000 MW] program in order to meet the target of limiting global warming to 1.5° Celsius in 2050.
The large-scale battery storage technology needed to make wind and solar more reliable remains prohibitively expensive. That renders any rapid and large-scale transition from coal to renewables out of reach for now.
Also, the price of solar has dropped so much that one could overbuild the system to provide enough energy, even on cloudy days. And since renewable fuel is free, unlike coal or natural gas, overproduction is not a problem.
Phaseout of old plants
Experts have called for old coal plants, which they say are highly polluting and costly to operate, to be retired early. If we want to be compatible [with our climate target], we need to start phasing out coal from 2029, the sooner the better. We have identified aging power plants that could be phased out before 2030, which have been operating for more than 30 years.
However, the government has so far not announced any plans to phase out old coal plants. It’ll be more complete if PLN also has a phaseout target, so not just stop building new coal plants.
A complete phaseout of all coal plants is only possible 20 to 30 years from now. Even then, the government would need to set regulations in place supporting the phaseout of coal and the development of renewables.
If all [regulations] are in line, the private sector doesn’t mind at all if old coal plants are being shut down. For example, we have old cars from the 1980s with inefficient engines. Current cars are more efficient.
Post time: Aug-19-2021