Indonesia Plans to Build Coal Plants Despite Multibillion Deal for Clean Energy Transition

Indonesia plans to continue building coal plants, despite its multibillion dollar deal to transition to the use of clean energy. The deal, called the Just Energy Transition Partnership (JEPT), was signed last month at the G20 summit with the G7 group of industrialized nations, including Norway and Denmark.

Data from 2019 shows that Indonesia was the fifth largest emitter of greenhouse gases globally, trailing behind China, India, the United States and the European Union as a whole. Experts believe that the country’s emissions mainly come from deforestation and coal burning, which generates more than 60% of Indonesia’s electricity.

Indonesia’s primary objective, under the deal, was to cap its carbon dioxide emissions from the energy sector by 2030, seven years earlier than its initial target. The country also aimed to generate more than 30% of its power from renewable sources by 2030.

Activists argue that building new fossil fuel-powered plants may cause the deal to collapse before anything is actualized. They believe that not setting a clear deadline for when Indonesia will put a stop to the construction of new coal plants will make it hard to decarbonize the country’s electricity system and, in turn, increase the partnership‘s risk of failure.

The country’s government plans to allow new plants with a total capacity of 13 GW to be built. The plan to do so is stipulated in Indonesia’s 2021–2030 energy plan.

Earlier this year, President Joko Widodo issued a regulation that permitted the construction of captive coal plants, which would not feed into the grid but only supply specific industries with power.

This move does not align with the partnership, as reiterated in a joint statement made by JEPT partners, who revealed that they plan to hinder the development of these coal plants. In the statement, the partners also highlight that the energy partnership is dependent on no construction of coal plants, where zero-emissions, affordable, timely and reliable alternatives are available.

They also request that a strategy to avoid new coal plants be developed, one which can identify investments in various renewable energies as alternatives to the fossil fuel. Furthermore, the donor group emphasized that if a certain captive coal plant project set in Borneo, Indonesia, made headway, the deal would be withdrawn.

It is expected that as Indonesia’s economy grows, emissions from its power sector will continue to increase. At the moment, the country has the largest economy in southeast Asia and the 17th largest globally, based on nominal GDP.

The continuing sanctioning of new coal plants by Indonesia shows just how the demand for energy is at the moment, and coal producers such as Arch Resources Inc. (NYSE: ARCH) are having to work double time to satisfy the orders intended to see different countries through this winter and possibly beyond.

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