Are coal power plants the best option to provide electricity? A Climate perspective

The vice minister of Ministry of Environment and Forestry of Indonesia, Alue Dohong, leading the Indonesian delegation at COP 25 Madrid, 2-15 December 2019

The Government of Indonesia will stay committed to the implementation of the Paris Agreement. At least, it is the message that the Indonesian delegate wishes to communicate in the UNFCCC-COP25 in Madrid last December. Despite the critics that the COP 25 is not successful because the world has failed to come to an agreement, especially in article 6 of the Paris Agreement, Indonesia’s vice minister is positive that Indonesia as a country has gained success in the negotiation. One of the evidence he later provided is that Indonesia is among the countries that promote renewable energy as a key mitigation activity in the energy sector to fulfill the NDC[1].

But how does Indonesia contribute to the climate mitigation goal, especially in the energy sector? With the ratification of the Paris Agreement through Law no. 16/2016, Indonesia is committed to limit global warming below 20C. However, is our commitment explained in the Nationally Determined Contribution (NDC) target enough? Let us have a closer look at this document.

The latest report from Intergovernmental Panel on Climate Change (IPCC)[2] states that the commitment to limit global warming below 1.50C means that the world should see a greenhouse gas (GHG) emission peak before 2030 and achieve the net-zero emission by 2050. Indonesia NDC targeted a 29% reduction of GHG emission by 2030 against Business as Usual (BAU) scenario and an additional 12% if there is international support toward mitigation efforts. In numbers, these targets are actually translated into an increase of total GHG emission from 1334 Mton CO2e in 2010 into 2034 and 1784 Mton CO2e in 2030 (without and with international support respectively). The energy sector contributes to 67-71% of the total GHG emission in 2030. Compared to its 2010 level, the energy sector emission grows by three times even if Indonesia achieved its NDC. The power sector shares the highest GHG emission in the energy sector, and the coal power plant is the source of 70% of the power sector GHG emission[3].

A quick assessment by distributing the 1.50C GHG emission limit proportionately to each sector show that Indonesia should limit their GHG emission from coal power plant into 182 Mton CO2e by 2020, 112 Mton CO2e by 2030 and achieve net-zero emission before 2050 (possibly by 2047). On the other hand, the current RUPTL is planning to add 27 GW of coal power plant up to 2028, which will increase the GHG emission from coal power plant from 192 Mton CO2e into 301.3 Mton CO2e[4]. The large gap between 1.50C GHG emission limit with PLN projection for coal power plant emission suggests that, contrary to current RUPTL, Indonesia should not build any new coal power plant and would need to carry out a phase-out plan in the next few years.

GHG emission from coal power plants with moratoria of new coal plant and coal phase out policies (based on 20 years of lifetime) implemented. Source: IESR

GHG emission from coal power plants with moratoria of new coal plant and coal phase-out policies (based on 20 years of lifetime) implemented. Source: IESR

So what is (are) the policy (policies) that can help Indonesia to meet climate goals in the power sector? By using a specific emission factor from IEA, we could estimate a GHG emission from the coal power plant. Using combination of phase-out policy, moratoria on new coal power plant, and efficiency improvement in our model, we found that a combination of moratoria on new coal plant and phase-out strategy (based on 20 years lifetime of coal power plant) are the policy options that could bring Indonesia back on track in achieving the 1.5 C climate target. Consequences of these policies are that PLN has to shut down their oldest coal power plant (Suralaya 1-4 & Paiton 1-2) by 2020. By 2030, PLN has to phase-out 30% of its current capacity while only allowing coal power plant that is currently under construction and has received PPA contract to be built, and by 2048 all coal power plant should not operate anymore[5]

Following through with this policy scenario will require multi-sectoral consideration. In the power sector, the government will have to build a strategy on integrating more renewable energy sources and mitigating economic losses in the coal power plant. It is a major task, as the current power system structure, and the market might not be able to support a quick transition. As a vertically integrated utility and a single off-taker of electricity, PLN would probably bear the majority of the losses. A moratorium on new coal plant would be necessary to cut the possible losses for PLN in the future.

In a broader sense, less coal power plant means less coal is needed. The coal industry, thus, will be impacted, as well as the provinces where this coal industry is located. The coal industry is the backbone of the economy in the four coal-producing provinces: East Kalimantan, South Kalimantan, Central Kalimantan, and South Sumatera. About 35% of GDP in East Kalimantan in 2017 is coming from the coal sector[6]. This is not counting the multiplier effect of the coal industry for other sectors.

On the national level, Indonesia would also have to diversify its economies so as not to rely on coal export to balance the trade deficit. The government should identify key potential industry/sector to be developed in the near futures, which could replace the possibly declining coal export revenue. It is a significant task for the government and Indonesia to pave a way that could minimize adverse impacts from such a plan. Ultimately, the decision will be in the hand of the government and has to be made soon.




[3] Analyzed from GHG Emission Inventory MEMR

[4] PLN RUPTL 2019/2028

[5] IESR Discussion paper 2019

[6] IESR Study report 2019

Indonesia ‘must stop building new coal plants by 2020’ to meet climate goals

2 December 2019

JAKARTA — Indonesia must stop building new coal-fired power plants by 2020 if it wants to do its part to cap global warming under the targets of the Paris climate agreement, new analysis shows.

The country is one of the few still actively planning and constructing new plants, putting it on a trajectory to miss its climate commitments, aimed at limiting global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels and achieving net-zero greenhouse gas emissions by 2050.

In an analysis of four scenarios, carried out by the Institute for Essential Services Reform (IESR), a Jakarta-based think tank, only one would see Indonesia contribute to those goals — and it starts with scrapping the dozens of coal-fired power plants being built or planned.

Achieving that goal, the IESR says, “would require that there are fewer coal plants installed capacity in Indonesia,” including “no more coal plants … built after 2020.”

“The 1.5 [degree] scenario would even need 2 gigawatts less of coal plant installed capacity from current existing capacity by 2020, meaning coal plant phase-out should happen this year,” it adds.

That scenario sees burning of coal phased out altogether by 2048 and the country’s total emissions peak by 2028 at 274 million tons of carbon dioxide equivalent (CO2e) before declining to zero by 2048.

A second, less stringent, scenario projects capping global warming at 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels. It too would require stopping building new coal-fired power plants by 2020.

The other scenarios are less ambitious in scope, such as retiring coal plants older than 30 years, and improving the efficiency of existing plants. But these scenarios would mean Indonesia falling short of its climate commitments and contributing to a global temperature rise of 2 to 3 degrees Celsius (3.6 to 5.4 degrees Fahrenheit).

And even then, said IESR executive director Fabby Tumiwa, “we still won’t reach net-zero emissions” by 2050.

The Cilacap coal power plant is located near a port for local fishermen. Image by Tommy Apriando/Mongabay-Indonesia.

Coal building spree

A landmark report by the Intergovernmental Panel on Climate Change (IPCC) last year warned that the world had until 2030 to cap global warming at 1.5 degrees Celsius to avoid catastrophic climate change impacts. In practice, this means global greenhouse gas emissions will have to drop by half over the next 10 years and reach net-zero around mid-century.

Much of Indonesia’s emissions to date have come from deforestation and land use change, particularly the burning of carbon-rich peatlands to make way for plantations of oil palm, pulpwood, and rubber. But under the current administration’s ambitious energy push, emissions from electricity generation are poised to dominate.

The country’s energy consumption growth is among the fastest in the world, and the government is relying mostly on coal-fired plants to feed that demand. In 2018, coal accounted for 60 percent of Indonesia’s energy mix.

Under the government’s latest electricity procurement plan, the installed capacity of coal plants in the country is expected to nearly double over the next decade from the current 28 gigawatts. Thirty-nine coal-fired power plants are currently under construction, and 68 have been announced, which will maintain coal’s dominance of the energy mix at nearly 55 percent by 2025.

Of six new power plants expected to go online this year, three are fired by coal. (The other three are small-capacity facilities powered by natural gas, hydro and solar, respectively.)

This trajectory risks trapping Indonesia in a high-carbon economy, says the IESR’s Fabby, because once a coal plant is built, it can remain in operation for up to 50 years.

“If we build fossil fuel infrastructure today, the emissions for the next half a century will be locked,” he said. “It’s estimated that our emissions from power plants will be at 700 to 800 million tons of CO2 in 2030.”

Coal spill from July 2018 along a beach in Indonesia’s Aceh province in Sumatra. Image by Junaidi Hanafiah/Mongabay-Indonesia.

Regional outlier

Indonesia’s coal plant building spree makes the country an outlier in Southeast Asia, where governments are increasingly taking a stand against the fossil fuel. Recent analysis by the Global Energy Monitor (GEM) identifies Indonesia as the only country in the region to build new coal energy infrastructure in the first half of 2019.

Thailand in January removed two major coal plants, the 800-megawatt Krabi and 2,200 MW Thepa facilities, from its energy development plan. It also shelved the 3,200 MW Thap Sakae project due to community resistance. The country’s plan also reduces the share of coal in the energy mix from 25 percent envisaged in the previous plan to just 12 percent.

Instead, Thailand is making a major pivot toward clean energy, announcing an ambitious plan to build the world’s largest floating solar farms to power Southeast Asia’s second-largest economy.

In the Philippines, which faces a similar challenge to Indonesia of meeting fast-growing demand for cheap electricity, President Rodrigo Duterte recently called on his department of energy to fast-track the development of renewable energy and reduce dependence on coal. In practice, however, the government still hasn’t issued an executive mandate that would compel the energy department to change its coal-dependent roadmap. And in October, Duterte inaugurated the country’s 21st coal-fired power plant.

And while the region as a whole is home to three of the world’s top 10 biggest networks of planned coal power plants, construction of new plants in Southeast Asia has actually fallen dramatically since peaking at 12,920 MW new installed capacity in 2016, according to the GEM. In 2018, only 2,744 MW of new coal-fired capacity entered into construction.

Christine Shearer, the director of the GEM’s coal program, said coal had become increasingly less attractive for investors in Southeast Asia.

“Coal power is facing something of a perfect storm,” she said. “Communities are rejecting it due to the high levels of pollution, renewable energy technology is undercutting it in terms of quality and cost, and financial institutions are backing away fast, making funding an increasing challenge for coal proponents.”

A worker walking by rows of solar panels at the Kayubihi Power Plant in Bangli, Bali. The Kayubihi Power Plant is the only solar-powered plant operating in Bali out of a total of three plants. Image by Anton Muhajir/Mongabay Indonesia.

Lack of renewable-friendly policies

While the IESR analysis makes clear that Indonesia must begin phasing out coal power as soon as possible if it wants to contribute to the global climate effort, Fabby said doing so will be challenging without a clear exit strategy. He noted that coal mining is an industry that generates significant revenue and jobs for several provinces.

“Of course coal power plants can’t just be closed down, because there’s going to be economic and financial consequences,” Fabby said. “We need energy transition. We also need to anticipate the economic consequences that might happen.”

While the government plans to increase the share of renewables in the energy mix from 7 percent at present to 23 percent by 2025, progress has been sluggish. There are currently no carbon disincentives to encourage investment in renewable energy, while coal-fired power plants continue to receive hefty subsidies.

The government has hitched its renewable wagon to biofuel made with palm oil — a controversial decision, given the deforestation attendant in the production of much of the country’s palm oil.

Fabby pointed to a key omission in the renewable transition for Indonesia, the only country in Asia that lies on the equator: solar power, which remains largely unexploited.

“What we need is the political will,” he said. “For example, Vietnam, in a matter of 12 months they built 4.5 GW of solar. Countries like Vietnam can do it. The key is for the government [in Indonesia] to have the political will, feed-in tariffs and [attractive] prices so that investors can enter.”

Vietnam has turned into a solar power champion in the region, hitting its solar target six years early thanks to the government’s feed-in tariff that ensures a price of 9.35 U.S. cents per kilowatt-hour — thereby giving producers a financial incentive to invest in the sector.

As a result, Vietnam is experiencing a solar boom, with energy consultant Wood Mackenzie predicting the country’s installed solar capacity will reach 5.5 GW by the end of 2019, representing 44 percent of the total for Southeast Asia.

Last year, Vietnam’s installed solar capacity was just 0.134 GW.

Indonesia can also look to India’s transition as an example, said Lauri Myllyvirta, the lead analyst at the Centre for Research on Energy and Clean Air (CREA). Both countries share similar demographics and a reliance on coal in their energy mix. India, however, has had greater success developing its renewables and easing away from coal, thanks to competitive auctions, according to Myllyvirta.

“So you make renewable energy providers compete for the lowest price and scale up the industry to bring down cost,” he said.

But with no policies in place in Indonesia to bring down the cost of renewables, development of clean energy alternatives will remain expensive, he said.

“If I drink a cup of coffee or eat rice in Australia, the cost is 10 times more expensive [than in Indonesia],” Myllyvirta said. “But if I want to build a solar PV, it’s more expensive in Indonesia. So we can see that the condition [for renewables] in Indonesia isn’t optimal yet. And this isn’t caused by geographical condition, because Indonesia has a lot of sun.”

Kuntoro Mangkusubroto, a former energy adviser to the Indonesian government and now head of the IESR-affiliated Indonesia Clean Energy Forum (ICEF), agreed that Indonesia risked being left behind in the global transition from coal to renewables without a drastic change in its policies.

“There needs to be a regulation that’s revolutionary,” he said as quoted by local media. “In a short time, coal will become the enemy of the world. Yet Indonesia still depends on coal for its power plants. This has to change immediately.”

Note: This article is adapted from an article published on Nov. 10, 2019, at our Indonesian website:


Artikel Asli

Clean Energy Poses Challenge to Coal-Reliant Indonesia

Stefanno Reinard Sulaiman
The Jakarta Post
Jakarta   /   Wed, April 17, 2019   /  08:01 am

The government, which is highly dependent on coal for power generation, will be facing challenges from consumers as more and more people are shifting to clean energy, an energy expert says.

Fabby Tumiwa, the executive director of local energy think tank the Institute for Essential Service Reform (IESR), made the statement after the institute published a report titled “Indonesia’s Coal Dynamics: Toward a Just Energy Transition” recently.

In its report, the IESR concludes that two types of renewable energy will be cheaper than coal-generated electricity by 2030 and wind power will be on par with coal by 2050.

“For example, the price of solar photovoltaic [PV] electricity in 2030 will stand at 4.69 US cents per kilowatt hours [kWh], while the price of coal will stand at 5.15 to 5.25 US cents per kWh,” he said.

“In other words, PLN [the state electricity firm] will lose customers soon even though the demand is growing.”

PLN’s latest 10-year electricity plan, which is called the electricity procurement plan (RUPTL), for the  2019 to 2028 period states that projected electricity consumption growth this year will stand at 6.4 percent, which is 0.46 percent lower than its previous plan.

Even though the procurement plan has been revised, it is still being seen as “too ambitious”, because a calculation from a global energy think tank, the Institute for Energy Economics and Financial Analysis (IEEFA), recorded that the average demand growth in the last five years (2013 to 2018) stood at only 4.6 percent.

Aside from losing customers, Fabby said, PLN also faced another problem related to its coal-fired power plants (PLTU) — assets that could not be operated optimally due to an electricity oversupply.

“In Indonesia, we calculated that in 10 years from now there will be an overcapacity of 13.3 gigawatts (GW) on the Java-Bali power grid with the total investment standing at US$12.7 billion,” he said, referring to a recent study by the IESR, Monash University Malaysia Campus and German energy think tank Agora Energiewende.

In its latest plan, PLN is also still heavily reliant on coal as the projection share in its electricity energy mix in 2025 will stand at 54.6 percent or 0.2 percent higher than the previous plan, while renewable energy remains at 23 percent.

It is contrary to the global movement to phase out coal, especially in Europe and even some Asian giants like China and India, which have slashed their coal consumption, including in the electricity sector.

“This is a [downward] trend [of phasing out coal power plants] that should have been anticipated by our government, especially in line with the agreement to cut greenhouse gas emissions to below 2 percent,” he said, adding that to reach that climate goal, Indonesia had to stop building new PLTUs starting next year.

A recent report from the International Energy Agency (IEA) stated that global coal demand will only increase slightly from this year until 2023, with China’s coal demand to decrease 2.8 percent from 2.7 billion tons to 2.6 billion tons in 2023 due to air pollution concerns.

China was Indonesia’s biggest coal export market with an annual output of around 110 to 120 million tons or around a 25 percent share of Indonesia’s export market, according to the Indonesian Coal Mining Association (APBI).

Meanwhile, India — Indonesia’s second biggest market — is predicted to cut coal imports from Indonesia due to higher domestic coal production because the IEA predicted that India’s coal import volume would be down 13.4 percent from total consumption in 2022 and 2023.

Therefore, the IEA predicted that coal exports from Indonesia would decrease 15.7 percent by 2023. It is well-known that 80 percent of Indonesia’s coal production is for the export market.

The APBI’s executive director, Hendra Sinadia, said the possibilities to expand coal exports, especially to Asian countries, were still wide open as some of the markets were only beginning to operate their PLTUs, which could last 25 to 30 years.

“Vietnam is currently developing massive PLTUs, of which 100 percent of the coal is from us. So, the government should have a perspective on the political side before taking any decision on cutting coal exports,” he said.

Hendra is criticizing one of the plans to cut coal exports gradually in the General Planning for National Energy (RUEN), which stipulates that Indonesia is committed to stopping coal exports no later than 2046.

The Energy and Mineral Resources Ministry’s mineral business supervision director, Muhammad Wafid, confirmed the coal export-termination plan by 2046, saying the government had been pushing since 2009 for an increase in domestic coal consumption.

“We still absorb coal for the electricity sector, but we are also pushing for a diversification program for coal, such as transforming it into gas as a substitute for liquefied petroleum gas [LPG],” he said, referring to a type of fuel called dimethyl ether.

The program was started last year by state coal miner PT Bukit Asam and state energy holding company Pertamina, which inked a partnership deal with United States-based chemical firm Air Products and Chemicals Inc. for coal gasification.

This Article originally Published at The Jakarta Post