CIREBUNA, Indonesia, Sept 25 (Askume) – A G7-backed plan to shut coal-fired power plants in emerging markets has been further delayed after an Indonesian power plant scheduled to shut before a July deadline failed to reach an agreement. It would be the first factory to be shut under the plan.
The anti-coal effort is supported by the Just Energy Transition Partnership with Indonesia, Senegal , South Africa, and Vietnam.JETP ), which includes billions of dollars in investments, grants and loans from G7 members, multilateral banks and private lenders .
Reducing emissions from coal, the dirtiest fossil fuel, is seen as a key element of the JETP if the world is to protect itself from the worst impacts of climate change.
But South Africa has not yet agreed to shut down coal-fired power plants early because of blackouts , and a proof-of-concept hope is based on Cirebon-1, a 660-megawatt plant in Indonesia’s West Java province. 140 miles (560 km) east.
However, the legal and financial implications of shutting down Cirebon-1 remain a major hurdle. Jakarta is also concerned that the cost of replacing renewable energy could be up to $1.3 billion, most of which would be in the form of subsidies to pay for expensive renewable energy generation, according to the Jakarta Finance Ministry.
Fabi Tumiva, a renewable energy expert and member of the technical team advising Indonesia’s JETP, said the new government, due to take office in October, could further dampen the chances of a deal in Cirebon.
“If it is not signed before Oct. 20, I am worried the matter will be ignored,” Fabi said, citing newly elected President Prabowo Subianto’s call for self-reliance and energy security as a commitment to coal, which generates two-thirds of Indonesia’s electricity.
Prabowo, who took office that day, has not commented on Cirebon and has rarely discussed his energy policy, despite his campaign promises including ending coal power generation.
Prabowo’s team did not respond to a request for comment.
Under Indonesia’s JETP program, rich countries have pledged $20 billion to aid the Southeast Asian country’s energy transition , though very little of the funds have been allocated.
Legal issues
Earlier this month, Finance Minister Sri Mulyani Indrawati said the outgoing government was trying to complete the Cirebon deal as soon as possible but did not give any details.
David Elzinga, head of the Asian Development Bank’s Regional Energy Transition Mechanisms program, which is developing a plan to bring it to a quick close, said his group hopes to reach a binding agreement on Cirebon that should be acceptable to both the outgoing government and the newly appointed government.
“Indonesia has established itself as a leader…and it is now very important that we do this deal,” Erzinga said.
The Cirebon plant agreement is important for ADB’s regional ETM plans as it plans to sign similar agreements for other plants in other countries such as Vietnam, the Philippines and Indonesia.
To achieve this, state power utility Perusahaan Listrik Negara (PLN) and plant operator PT Cirebon Electric Power (CEP) must sign a new power purchase agreement by July, CEP director Joseph Pangalila told Askume.
PLN said the main issue is the need for stronger legal protections and a clear roadmap for shutting down coal-fired power plants, which can increase the cost of electricity generation by about 90%.
JETP consultant Fabi said PLN directors were also concerned they could face criminal charges in the future if anti-corruption investigators found the deal would harm the state.
Deputy Power Infrastructure Minister Rachmat Kaimuddin acknowledged this at a recent forum and said stakeholders were considering the possible legal consequences of any shutdown.
He said, “If we are not careful, some people may get into trouble as this can harm the country.”
In June, the former chief executive of state energy company Pertamina was sentenced to nine years in prison for signing long-term gas contracts that the corruption court said had caused losses of $114 million to the state.
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Ramesh Subrahmanyan, ADB Director General and Head of the Regional Group, said: “We are concerned that the work must be done, but it is also important to get the first deal done in the best way possible.
He said many private banks are willing to invest and many new deals are likely to follow once the Cirebon project is completed, with ADB already looking to build about 30 other factories in Indonesia.
“It took time, but we learned a lot … and we frankly believe the next mission will be a lot easier.”
Cirebon-1 is a new plant that began operations in 2012. The agreement means it will cease operations in 2035 instead of 2042.
Although other factories around Cirebon and Jakarta operate cleaner than the older plants, their emissions are often blamed for Indonesia’s long-term pollution, and some locals in neighbouring fishing villages want to see them gone.
Amin, a 64-year-old fisherman, blames pollution and a lack of fish in the waters around the plant and its dock where coal is unloaded.
“When it first opened, the water was very good, but gradually it got dirty. The oyster farm here hasn’t had a harvest for two years,” he said.
“I was against it from the beginning.”
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