Home Business amount US$37 Billion: The Cost of Withdrawing Indonesia’s Coal Fleet | News | Eco-Enterprise

US$37 Billion: The Cost of Withdrawing Indonesia’s Coal Fleet | News | Eco-Enterprise


As the G20 summit of the 20 largest economies approaches, host country Indonesia is under pressure to launch a more aggressive decarbonization plan and reduce its use of coal.

As the world’s largest coal exporter and one of the biggest carbon emittersIndonesia’s role in achieving the global goal of net-zero emissions by 2050 to avoid catastrophic global warming is crucial, but the government is targeting 2060 to achieve net-zero emissions, a timeframe longer than what is necessary to meet global carbon targets.

According to a new study by TransitionZero, a financial analysis nonprofit, it would cost $37 billion to decommission Indonesia’s fleet of 118 coal-fired power plants, helping the Southeast Asian country cut its coal stockpile a decade ahead of schedule, by 2040, and align with global climate goals.

This would save 1.7 billion tons of carbon dioxide, equivalent to almost three years of annual carbon emissions in Indonesia.

Retiring coal-fired power plants would be cheaper than subsidizing coal, which Indonesia spent $10 billion on in a single year, according to last year’s figures, TransitionZero calculated.

Indonesia depends on subsidized coal for power generation and guarantees a fixed fee to power plant owners.

TransitionZero also estimated that coal retirement would be relatively cheap given that the country’s first carbon capture and storage (CCUS) project, BP’s Vorwata CCUS development, is expected to cost $3 billion.

Indonesia gets around 38% of its electricity from coal, which has been growth in the energy mix despite the government’s plan for a sharp reduction to 30% of all energy sources by 2025.

The volume of the country’s coal consumption is expected to increase, due to expected growth in future electricity demand economic growth, the Department of Energy said last year.

Indonesia is expected to announce a coal phase-out plan around the G20 summit in Bali next month, where energy transition will be a key theme.

TransitionZero analyst Jacqueline Tao told Eco-Business that the first retirement of a coal plant in Indonesia would be “the most difficult”, but once the first plant is closed, it will be easier to close some. others.

A “low hanging fruit” for retirement would be coal-fired power plants that serve the Java-Bali power grid, which produces about 50% more power than demand, Tao said.

Last week, the Indonesian national electricity company, PLN, which owns and operates all the transmission and distribution networks in the archipelago, said that aging coal plants and those without carbon capture facilities would be prioritized for retirement.

Speaking to Eco-Business at an event in Jakarta on Tuesday, Edi Srimulyanti, PLN’s director of retail and commerce, said coal withdrawal is a “long-term plan” for the utility. , and that any future energy capacity additions would focus on natural gas, a less polluting fossil fuel than coal.

Just transition?

Retirement from coal-fired power plants will have a cost for the 245 coal-fired power plant workers who operate each plant in Indonesia, which represents 1.3 jobs per megawatt (MW) in a coal-fired plant.

However, TransitionZero analysis suggests that two jobs are created per MW of solar power and five per MW of onshore wind power, which includes project construction and development, as well as ongoing operation and maintenance. .

“While not all coal-fired plant closures will be accompanied by renewable replacement plants, it is fair to say that decarbonizing the power sector will likely result in net job gains at the power plant level,” indicates the report.

Funding for coal retirement projects should include the re-employment and reskilling of former coal workers, the report notes.

Next month, Indonesia is set to be eligible for funding under the Just Energy Transition Partnership, an agreement struck by the European Union and others to help developing countries transition to clean energy during COP26 climate talks last year.