Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif has signed the COP26 Coal to Clean Power Transition Statement , Thursday (4/11/2020). This is an important demonstration of Indonesia’s commitment to phase out coal and achieve net zero emissions by 2060 or earlier, with international assistance. However, it’s also important to note that Indonesia only signed three of the four clauses in the statement.
Supposedly, by signing the third clause, the signatory countries should stop the issuance of new permits, new construction and direct government support for new unabated coal-fired power plants . Unbated refers for instance, to PLTU that does not use carbon capture or the like to capture CO2 from exhaust emission sources which are then stored or reused.
At the UN climate summit (COP26) in Glasgow, Scotland, Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif refused to disclose the reasons for the exclusion of the third article to Tirto and Kompas on November 4, 2021. However, he emphasized that there would be no New PLTU in Indonesia. “There will be no new PLTU later. We must use renewable PLT ,” said Arifin. “Otherwise, how do you want to achieve clean emissions?”
Arifin’s commitment is in line with Indonesia’s consideration at COP26 to accelerate the phase out (elimination) of coal until the 2040s. However, there is a condition, namely receiving additional international financial and technical assistance with development partners. Arifin said that later there would be an evaluation of the value of the assets to be phased out .
He also mentioned that the Energy Transition Mechanism (ETM) initiated by the Asian Development Bank (ADB) is one of the schemes that will be pursued. ADB launched the ETM on November 3, 2021, which aims to replace coal-fired power plants in Indonesia with clean energy. Indonesia also estimates that it can stop 9.2 Giga Watt (GW) of PLTU before 2030. “We have time before the phase out, a number of years, so that can be used to gain capital to add new sources of clean energy,” said Arifin.
As another effort, the government has initiated the Friend of Indonesia-Renewable Energy program on December 4, 2021 at COP26 to coordinate international support in accelerating the energy transition process in Indonesia.
Minister of State-Owned Enterprises, Erick Thohir, previously told Tirto and Metro TV at COP26 on November 1, 2021 that Indonesia had signed an agreement with Exxon, an oil producer and retailer from the United States, for a carbon capture initiative .
Similar measures aim to reduce emissions from the energy sector that cause climate change. Director General of Mineral and Coal Ridwan Djamaluddin ESDM in a written statement said coal power plants contributed 35 percent of the 1,262 Giga Tons of CO2 emissions produced in Indonesia.
In line with this, data from the Ministry of Environment and Forestry shows that the energy sector contributed the most to greenhouse gas emissions compared to other sectors during 2000-2019, although there were certain years when the forestry sector and land use followed the contribution of the energy sector.
Historically, Indonesia has been recorded as depending on coal for power generation, since 1971, based on data from the World Bank and the Ministry of Energy and Mineral Resources processed by the Institute of Essential Services Reform (IESR). The percentage of coal in the power generation mix has also increased since 1971.
To Tirto and Kompas at COP26, the Director General of Electricity Rida Mulyana also emphasized that there were no new PLTUs. He said that Indonesia objected to agreeing to the third clause because this clause requires Indonesia to close the PLTU that is being built or which has reached a financial closure agreement with the funds that are ready.
Termination of the power plant will violate the current contract. Rida said that she didn’t want the Karaha Bodas Geothermal Power Plant incident to happen again. The case in 2007 had cost the state up to 300 million US dollars (US) for breach of contract. “If we stop that, with no compensation, the case of the Bodas power plant will be repeated and we are considered as a country that does not honor contracts. That’s so bad, it’s not conducive to investment. And we want to avoid that,” said Rida.
Global Energy Monitor data also shows that China currently dominates ongoing coal financing with a total of 5 projects. The only other funding comes from the Japanese government’s Japanese International Cooperation Agency.
The Executive Director of the IESR called the plan to eliminate coal and the signing of this new statement a “big leap” for Indonesia. He also understands the reason behind not signing the third clause. This is because the parties cannot revoke the permit for a power plant that has completed a power purchase agreement or already has a contract pending a financial agreement.
“If Indonesia agrees to that, it will create contractual problems and I don’t think it will benefit the government,” said Fabby. However, he continues to encourage the government to cancel projects that do not get funding because they have passed the financial agreement period in the contract. Fabby assessed that Indonesia previously tended to accommodate delays in financial agreements for coal-fired power plant projects. He also emphasized public communication regarding the coal removal plan.
According to him, misinformation can lead to “wild” perceptions and opinions which are counterproductive and undermine public trust in the government. In addition, Indonesia must ensure sufficient funding for its coal-fired power plant “early retirement” plan. According to Fabby’s initial calculation, it takes 16 billion to 24 billion US dollars to retire a 12 GigaWatt (GW) coal power plant.
Quotes in a press release from the Ministry of Energy and Mineral Resources, Arifin also said that the removal of 9.2 GW from the power plant would require an investment of 22 billion US dollars. This figure consists of 8 billion US dollars for the termination of the power plant and 14 billion US dollars for the development of renewable energy. “The biggest risk is that we are not compatible with the 1.5-degree pathways in the Paris Agreement if there is no adequate funding,” said Fabby. The Paris Agreement or the Paris Agreement is a legally binding international agreement on climate change that was agreed on December 12, 2015 in Paris, France.
This agreement was adopted by 196 parties, including Indonesia, and entered into force on November 4, 2016. The aim of the agreement is to limit global warming to below 2 degrees Celsius, ideally to 1.5 degrees Celsius, compared to pre-industrial levels, citing the website of the United Nations Framework Convention on Climate Change (UNFCCC).