CIREBON, Indonesia: For more than a decade, the fishermen in Kanci village, on the outskirts of the industrial city of Cirebon, have seen their catch of mussels, shrimp and fish decline. More worryingly, they have seen cases of respiratory illness rise, particularly among children and the elderly.
The culprit, residents suspect, is the 660 megawatt coal-fired power plant nearby, whose towering chimney has been spewing thick plumes of smoke 24/7 since it became operational in 2012.
“The power plant is killing us slowly,” a Kanci resident, Mr Sarjum, told CNA.
The 44-year-old said he had to leave his fishing days behind two years after the plant began operating; the sea had become too polluted with waste discharged from the plant, as well as slurry leaking from the steady stream of coal barges docking at the plant’s jetty.
Mr Sarjum, who like many Indonesians goes by one name, now works as a welder at a metal workshop. Other fishermen in his village have also looked for work elsewhere.
Indonesia has been touting the early retirement of the two power plants as a sign of its commitment to slash carbon emissions — a plan showcased in a document it is submitting to countries that have pledged a total of US$20 billion for its decarbonisation efforts.
The document, the Comprehensive Investment and Policy Plan (CIPP) for Indonesia’s Just Energy Transition Partnership (JETP), was officially launched on Nov 21 and outlines Indonesia’s ambition to become net-zero, which means it has to absorb as much carbon as it emits, by 2060.
NEW, BIGGER COAL PLANT RAISES QUESTIONS
The planned early retirement of Cirebon 1 should have been good news for nearby residents, except another bigger coal-fired power plant, the 1,000 megawatt Cirebon 2, began commercial operations in May this year.
This, analysts say, calls into doubt whether the world’s fifth biggest coal producer will be able to keep its pledge of becoming net-zero by 2060.
Pundits pointed out that Indonesia will never reach this goal without retiring all 234 of its coal-fired power plants, and halting the 14 with a combined capacity of 19.8 gigawatts in the pipeline.
Mr Erick Thohir, Indonesia’s acting coordinating minister for maritime and investment said the Cirata solar farm currently occupies just 5 per cent of the dam’s surface and there are plans to quadruple the farm’s capacity.
“Indonesia is making a lot of infrastructure investment to combat air pollution. We will continue to push green energy as part of our short-, medium- and long-term solution,” Mr Erick said at the JETP document launch.
Similar solar farms, floating or otherwise, are being built across the country, including a 1,000 megawatt farm on Bengkalis Island in the Malacca Strait, just off Sumatra.
Indonesia should focus on renewable energy to meet its future electricity needs, argued Mr Putra Adhiguna of the US-based think tank, Institute for Energy Economics and Financial Analysis (IEEFA).
“Our electricity system is currently too reliant on coal-fired power plants, which already creates an oversupply and in turn creates a disincentive for our electricity provider, PLN, to add more capacity,” he said, referring to Indonesia’s state-owned firm, Perusahaan Listrik Negara.
Another factor “hindering Indonesia’s energy transition efforts”, he said, is the price cap on coal.
Depending on its quality, Indonesia’s energy and mineral resources ministry caps the price of coal for electricity production at US$70 per tonne. The PLN estimates that this year, Indonesia would need 161 million tonnes of coal to feed its power plants.
The coal price cap makes it difficult for renewable energy to compete. In some countries, the levelised cost of solar energy over a 25- to 30-year life cycle is cheaper than fossil fuels, but that is not the case yet in Indonesia because of the artificial price ceiling for coal.
According to the Jakarta-based think tank Institute for Essential Services Reform (IESR), the levelised cost of electricity from solar is 5.79 US cents per kilowatt hour, while that from coal is 5.68 US cents, making it the cheapest source of energy in the country.
As a show of good faith, Indonesia’s finance ministry agreed to finance the early retirement of the two power plants in Cirebon and Pelabuhan Ratu under its Energy Transition Mechanism (ETM) scheme.
The plants were chosen because their operators volunteered, and not because they are the highest emitters.
But Indonesia should adopt a different approach and prioritise ageing power plants, since newer ones might be costly to refinance, said Mdm Farah Vianda, IESR’s sustainable financing coordinator. “Mind you … JETP is a loan that we need to pay back. So we need to plan (the retirement) carefully,” she said.
Cirebon 1’s operator said it joined the ETM scheme because its shareholders are committed to achieving net-zero emissions. “The commitment varies. Some (shareholders) by 2050; some earlier, some later. But all are committed towards that goal,” Mr Joseph Pangalila, vice-president of PT Cirebon Electric Power.
After 2050, Mr Darmawan said, the plants which are still fit to run will be mandated to use less pollutive energy sources like natural gas, biomass or green hydrogen, which is hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity.
Energy and Mineral Resources Minister Arifin Tasrif said Indonesia is preparing a law on renewable energy which would make this conversion mandatory. “This law will provide assurance that we intend (to make) new and renewable energy a priority,” he said at the Nov 21 JETP document launch.
MORE INCENTIVES, CARBON TAX NEEDED?
Analysts said Indonesia should introduce policies to incentivise power plants to volunteer for the early retirement programme.
It could remove the price cap on coal, which is the main reason why the levelised cost of renewable energy is currently higher than coal.
But power plants which exceed this cap can also buy carbon credits from other plants which have not used up their allotted quotas, in a process known as carbon trading.
Indonesia launched the country’s first carbon trading market in September.
But carbon trading is not a solution to the climate crisis, said Mr Leonard of Greenpeace. “Everyone should work together to lower their emission, (instead of) trading allotted quotas so less environmentally friendly businesses can pollute more than they should,” he said
Analysts also criticised the leeway given to industries under Indonesia’s net-zero emission efforts.
For example, the proposed cap for off-grid power plants, which generate electricity for limited areas like mines, refineries and factories, is set to 1,900 tonnes of carbon dioxide per megawatt hour.
In addition, the JETP investment proposal does not include efforts to decarbonise hundreds of these industrial-level coal-fired power plants.
This could mean the country misses out on potential economic opportunities. “For example, the United States’ Inflation Reduction Act makes it difficult for Indonesia’s nickel to enter the US’s electric vehicle supply chain because our nickel is mined in an environmentally bad way and coal-fired power plants are used to power its production,” said Mr Bhima.