Several territories around the world are keen on transitioning to sustainable energy models. Coal may have played a major role in industrialization, but centuries of burning coal fuel have inundated the atmosphere with greenhouse gases and altered the planet’s cycle of heating and cooling.
With extreme weather events occurring with frightening regularity, dozens of countries are looking to replace coal with cleaner sources of energy, and coal was among the first dirty fuels to go. However, transitioning from fuels such as coal to clean energy sources, including solar and wind power, requires significant investment in infrastructure.
Indonesia, which plans on retiring its coal-fired power plants over the next 30 years, is struggling to secure the funds it needs to transition away from coal. The southeast Asian country will need an estimated $600 billion to phase out 15 GW of coal-generated power and add the same amount of clean renewable capacity over the next three decades.
Indonesia plans on keeping the coal power plants running for one more decade before transitioning away from fossil fuels over the next two decades, stated state-owned Enterprises Minister Erick Thohir.
Currently the largest economy in southeast Asia, Indonesia is the largest exporter of thermal coal in the world and generates roughly 60% of its electricity with coal. Keen on cutting its reliance on coal for power generation, the Indonesian government has tried to attract backers through investor roadshows in the United Arab Emirates, Europe and Saudi Arabia.
Thohir said that the country is on the hunt for direct investment from wealthier developed countries and doesn’t want to use bond sales to support the transition to clean energy. However, Indonesia has received no responses so far. The country has had a somewhat confusing stance on the future of coal-fired power plants, supporting efforts to phase out coal use during the 2021 COP26 climate summit but failing to back a clause calling for a ban on the financing or construction of coal-fired power plants.
Furthermore, donor countries that have visited the nation are concerned that the current regime isn’t united over the need to end coal use and how the country would achieve its green energy goals. This is probably because coal exports play a major role in Indonesia’s economy, forcing the country to walk a thin line between developing green-energy models and sustaining economic growth. Indonesia could achieve this balance by developing a variety of alternative energy sources and promoting the use of cooking stoves and electric cars, Thohir added.
He then noted that the end goal was to create an energy mix that consisted of electricity, ethanol and plant-based biodiesel.
At the moment, coal is enjoying time in the limelight as a biting energy crisis threatens the major economies around the globe. This crisis has given coal industry players such as Peabody Energy Corporation (NYSE: BTU) a huge market to serve at price levels last seen almost decades back.
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