Commentary: JAKARTA – Renewable Energy Sells, but Who’s Buying?

The Indonesian government will be offering four new coal-fired power plant projects to investors at the Belt and Road Initiative forum in Beijing on April 25-27. Let’s be clear about this, these are controversial projects that will prevent Indonesia from achieving its carbon emission reduction targets.

The first project is the construction of a power plant to power the Tanah Kuning-Mangkupadi industrial area in North Kalimantan.

Building the coal-fired power plant will be counterproductive to the government’s effort to reduce greenhouse gas emissions which includes, for example, constructing six hydroelectric power plants at Kayan River in North Kalimantan that can produce 9,000 megawatts of electricity.

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Construction at the first 900-megawatt capacity hydroelectric power plant at Kayan River has already started and is set for completion in 2022.

For the government to argue that constructing a coal-fired power plant takes up less time than building a hydroelectric plant reflects a lack of willingness to pursue low-carbon development.

The government already had to issue new permits to lease and use forest area to be able to build the hydropower plant. Building a coal-fired power plant at the same time will cause more environmental damages – not least from coal mining – and additional greenhouse gases.

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The second and third projects to be offered at the Belt and Road Initiative meeting are the 2 x 100 megawatt Kalselteng 3 mine mouth power plant and the 2 x 100 megawatt Kalselteng 4 power plant.

Both plants are likely to be built in West Kotawaringin, a district of Central Kalimantan.

The plants are expected to produce one million tons of carbon dioxide emissions in their first year of operation.

In 2016, a total of 44,726 hectares of forest were destroyed in Central Kalimantan. Building the mine mouth power plants will only increase deforestation rate in the province.

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This is while an electricity supply business plan by state utility company Perusahaan Listrik Negara (PLN) has already identified potential renewable energy sources in the province, especially water.

Developing even a limited-capacity hydropower plant will help preserve forests in Central Kalimantan, instead of building the mine mount coal power plants.

The government’s fourth project is the Bali Celukan Bawang Expansion coal-fired power plant, which will have a capacity of 2 x 350 megawatts.

There is already an existing coal-fired power plant in the area, which has copped a lot of criticism from local fishermen and environmental activists.

Their protest received international attention because the plant is in Bali, Indonesia’s No. 1 one tourist destination.

Even the Bali governor has urged the government to stop using coal in Celukan Bawang.

Again, building these four coal-fired power plants will make it extra hard for Indonesia to reduce its greenhouse gas emissions.

Indonesia is already expected not to be able to meet its greenhouse gas emission reduction target of 26 percent by 2020.

The target means wiping out 0.038 gigatons of carbon dioxide from the energy sector – a difficult thing to do since the number of coal-fired power plants in the country has actually been on the rise since 2006, when the government launched its first “fast track” electricity program, which has its sequel in President Joko “Jokowi” Widodo’s 35,000-megawatt program.

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Cheaper Sells, but Who’s Buying?

Investment costs in solar technology in Asia fell 45 percent from $3,915 per kilowatt in 2012 to $2,134 per kilowatt in 2016.

The cost of wind power technology also fell 11 percent in the same period. This trend of falling technology costs is expected to continue.

But fewer renewable energy plants will be built in the next five to 10 years – even when they cost less – due to the dominance of coal-fired power plants that have an average lifespan of 25 years.

And this is also despite rising costs of electricity coming from coal-fired power plants.

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According to the 2019 Low-Carbon Development Initiatives report by the National Development Planning Agency (Bappenas), electricity from coal-fired power plants costs 12 US cents per kilowatt hour, compared with electricity from solar power plants, which costs 9 US cents per kilowatt hour, if the cost of air pollution from carbon dioxide emissions is taken into account.

China has already begun to reduce carbon emissions in Beijing, Tianjin, Shanghai, Chongqing, Shenzhen and in the provinces of Guangdong and Hubei. These regions produce 30 percent of the country’s carbon emissions.

China’s National Energy Administration also announced in August 2017 that it would cut 150 gigawatts from its consumption of electricity from coal-fired power plants by 2020.

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This means that offering coal-fired power plant projects to Chinese investors can backfire. It will make it look like Indonesia is trying to sell an old technology that China is abandoning already.

The government should use the Belt and Road Initiative forum to mobilize support for Indonesia’s transition to renewable energy instead of harking back to the energy system of the last century.

Indonesia should create more collaborations with international investors to develop renewable technologies and boost the level of domestic components in the electricity industry.

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In one of the government’s few success stories, it has attracted foreign investment in the construction of an electric vehicle battery factory in Morowali, Central Sulawesi.

The Morowali project proves Indonesia can increase its renewable energy capacity, although there is still a lot of homework to do, such as stopping nickel mining on small islands and coastal areas, improving labor welfare, supporting agriculture communities and providing more non-coal electricity for smelters.

Doing all this homework would allow the government to avoid highly ironic cases such as still using electricity from a coal-fired power plant for its electric vehicle battery factory in Morowali, which was purposely built to reduce greenhouse gas emissions and pollution.

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This is the type of irony that should not occur again in the Tanah Kuning-Mangkupadi industrial area.

International leadership and a real commitment to low-carbon development can be realized by excluding coal-fired power plants from the agenda at the Belt and Road Initiative forum.

This will be good news for the health of many Indonesians, for the country’s economy – by providing jobs in the low carbon sector, and for our planet.

Pius Ginting is coordinator of the Association of People’s Emancipation and Ecological Action (AEER), an environmental organization working toward transition to a renewable and democratic energy system.