Report Launching and Discussion – Retirement Plan and Financing Needs for Accelerated and Just Coal Power Phase Out in Indonesia
During the COP26 in Glasgow, the government of Indonesia signed the Global Coal to Clean Power Transition Statement, in which the government will consider an accelerated coal phase-out in the 2040s with financing and technical assistance from other countries. In the following days, the Minister of Energy and Mineral Resources, H.E. Arifin Tasrif, announced the possibility of phasing-out 9.2 GW of coal power plants by the 2030s, 5.5 GW will be retired early and about 40% or around 3.7 GW will be phased out and substituted with renewables. The possibility of phasing out some of the coal plant units and replacing them with renewables would help to put Indonesia back on track with the Paris Agreement goal. The same relevant argument could be viewed against the coal power plants in the pipeline.
The coal to renewables transition would impact wide stakeholders, therefore the just element in the coal retirement should always be highlighted and accommodated. The direct impact would be the workers in the coal plants, the owner of the plants, and the supply chain supporting the operation of the coal plants including the fuel supply industry. On the flip side, there is also benefit for the stakeholders, i.e. as some of the coal plants in Indonesia are also located near communities, there would be no more impact of coal plants pollution for these communities.
It is also important to understand the required investment for the renewable replacement capacities. Securing the project and needed financing would help accommodate the coal to renewables transition in the country. The scale of investment required for this project depends on some factors: type and capacity of renewable plants, type of contract related to the coal assets that are being replaced, investment risks associated with this particular investment, and the bankability of projects.
Institute for Essential Services Reform, in collaboration with the Center for the Global Sustainability University of Maryland and supported by Bloomberg Philanthropies, has assessed existing and pipeline coal power plants and determined retirement priority using a multi-criteria framework under a 1.5 0C compatible emission pathway for Indonesia. Further analysis is done to determine what are the cost and benefit of the early coal retirement scenario from the economic, social, and environmental aspects, for a wider stakeholder. A study report launching and discussion session are held to disseminate the report’s key findings and recommendations to the Indonesian stakeholder.