Indonesia bans new coal plants and pivots to renewables and carbon markets

Indonesia is shifting towards greater levels of climate action as the country officially announces the government will not approve any new coal plants beyond those already under construction or at the stage of financial close, reported the Straits Times.

Energy and Mineral Resources Ministry director-general Rida Mulyana told a parliamentary hearing on Thursday that the country will offer renewable energy incentives, create carbon pricing mechanisms and introduce a carbon trading system.

“Southeast Asia’s largest economy will gradually shift about 5,200 diesel-powered plants with total capacity of 2 gigawatts to be powered by renewable sources”, reported Bloomberg, though it remains unclear what those renewable sources would be.

“Indonesia’s emissions remain on an upwards trajectory. The effect of COVID-19 is prominent in the short term but it appears Indonesia looks set to miss the opportunity to lock in deep emissions reductions as it recovers from the pandemic”, said Climate Action Tracker, in a recent update of the country’s climate plans that does not incorporate this recent news.

“The government’s National Recovery Programme does not support low-carbon options; instead, it bails out coal-heavy electric utilities. The CAT continues to rate Indonesia “Highly Insufficient””.

The Climate Action Tracker group also found that Indonesia “has the fourth largest coal pipeline with more than 30 GW of coal fired power generation in development (6% of the global share)”.

Indonesia is the world’s largest exporter of thermal coal, and has seen exports boom, particularly with China. “The surge in Chinese demand was supported by an informal ban by Beijing on imports of Australian coal and by unseasonably low temperatures, which lifted heating and power demand”, reported Argus Media.

Reuters also reported that Indonesia’s existing coal plants will be retired in a gradual manner, according to an official from the country’s state-run electric utility Perusahaan Listrik Negara (PLN). The organisation hopes to achieve carbon neutrality by 2060, and the government is targeting 23% energy from renewables by 2025. Reuters reports that the country aims to retire its conventional power plants by 2035, supercritical coal plants by 2040 and ultra supercritical plants by 2056.