Indonesia’s Solution to Cut Coal Use

Developing countries’ moving away from fossil fuels and transitioning to renewable energy is decisive in the fight against climate change. Despite pledges to meet the net-zero emissions target by 2050, developing countries still consume coal.

IEA Executive Director Fatih Birol says, “Coal is both the single biggest source of CO2 emissions from energy and the single biggest source of electricity generation worldwide, which highlights the harm it is doing to our climate and the huge challenge of replacing it rapidly while ensuring energy security”. There are 90,000 coal-fired power plants worldwide today, representing 2186 gigawatts of capacity, and their ages vary by region (Achieving a swift, 2022).

According to the IEA, reducing emissions will entail a massive scaling up of clean energy generation, combined with improvements in energy efficiency, and stopping adding new coal fire assets into the system. Investments in coal-fired plants have declined in the last decade. However, the ongoing energy crisis can create a readiness to approve coal-fired plants.

Indonesia’s grid and economy rely heavily on coal. The country is the 3^rd largest producer of the dirtiest fossil fuel after India and China.

In the last ten years, electricity produced from coal rose from 49% to 61%, leading to an overcapacity that makes it harder for renewables to complete (Indonesia’s tilt, 2022).

Indonesia’s tilt (2022) mentioned that Indonesia also has 237 coal-fired plants that they can operate for decades if left alone. In East Kalimantan province, known as its coal-mining heartland, 35% of its GDP comes from coal while providing livelihood to 9% of its population (Indonesia’s tilt, 2022).

The figures are higher than China’s coal-mining province of Shanxi, where coal accounts for 12% of its GDP and employs 4% of its population and in Mpumalanga, South Africa’s coal belt at 19% of its GDP and 5% of its people.

The figure reflects Indonesia’s addiction to coal. To make matters worse, Indonesia’s coal mines are controlled by only a handful of family conglomerates that donates generously to political campaigns. The funding of political campaigns from the sector has led to a rise in the number of mining permits, which peaked around election time.

Indonesia’s president Joko Widodo won by promising to challenge the oligarchic system in his country. However, previous efforts by his government to curb coal have failed as coal use continues to rise.

Nevertheless, under his leadership, the country’s aim to transition to renewable energy and meet its climate targets is bolstered by a new deal with Just Energy Transition Partnership (JETP).

During the Partnership for Global Infrastructure and Investment (PGII) event at the G20 Summit, taking place on 15-16 November 2022 in Bali, Mr Widodo announced, “Indonesia is committed to using our energy transition to achieve a green economy”.

The event launched the Just Energy Transition Partnership (JETP) with Indonesia, which promised Indonesia $20 billion in public and financing from abroad over three to five years.

The US, Japan and seven other wealthy countries, namely: Canada, the UK, Denmark, France, Germany, Italy, and Norway, brokered the long-term partnership.

Financing will come from a mix of grants, concessional loans, market-rate loans, guarantees, and private investments to help Indonesia transition from dirty to clean energy and achieve its climate targets.

Indonesia’s end of the deal is to achieve net-zero emissions by 2050. It also aims to peak its emissions by 2030.

Getting to Indonesia’s net zero will mean that the country will expand the share of its renewable energy to two-thirds of its total power generation by 2030, which will involve doubling its current trend of deploying renewables.

This partnership between JETP and Indonesia is the second of its kind after the launch of JETP with South Africa at the COP26 in Glasgow. According to The Economist, the $8.5 billion agreement with South Africa has been slow in its implementation due to the country’s bureaucracy and coal lobby.

However, this deal with Indonesia this time is much more optimistic and robust because of the country’s short-term commitments to reduce its emissions.

Special Presidential Envoy for Climate, John Kerry, commended Indonesia on its commitment to ambitious targets, saying, “The extraordinary partnership we have announced today is aimed squarely at kickstarting serious renewables growth this decade and reducing coal emissions, with Indonesian doubling the pace of renewables. We are firmly committed to working hand-in-hand with our Indonesian partners in accelerating our response to the climate crisis” (United States Supports, 2022).

To learn more about JETP’s partnership with Indonesia, click the sources links below.