Short Wave - The $20 Billion Deal To Get Indonesia Off Coal

Episode Date: March 7, 2023

Indonesia is the world's largest exporter of coal for electricity. And it's also an emerging economy trying to address climate change. The country recently signed a highly publicized, $20 billion international deal to transition away from coal and toward renewable energy. The hope is the deal could be a model for other countries. But Indonesian energy experts and solar executives worry much of this deal may be "omong kosong" — empty talk. Today, NPR climate solutions reporter Julia Simon breaks down the realities and limitations of Indonesia's renewable aspirations. Reach the show by emailing [e-mail] pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

You're listening to Shortwave from NPR. Hey there, shortwavers, Aaron Scott here, and today we have a very special guest for you. One, Julia Simon, NPR's new climate solutions reporter. Welcome to Shortwave, Julia. Thanks for having me, Erin. I hear you are bringing us a story about climate from Indonesia. That is right, and I'm going to start by showing you this video. Love us some show and tell.

You're seeing all these palm trees. This is a huge, more than 40,000 acre park. Okay, massive. You've got this motorcade running through, and that's the Indonesian president, Joko Wittoto. And what this is, this is a green industrial park. The idea is that this park will make all this stuff for the green transition, like electric vehicle batteries.

And the ideas it will all run on really. renewable energy like hydropower and solar. Sounds great. I feel like I'm waiting for a butt, though. Well, here is Rahmat Kaimuddin. He's a deputy minister in the Indonesian government. To build hydropower 8 to 10 years. So in between, what is in mind is to build the coal fire or fossil initially. So he's saying that this green park that's going to run on renewables isn't going to run on renewables right away.

in fact, it's going to run on coal. And this contradiction is raising a lot of questions right now, because this fall, President Biden came to Indonesia to meet with the Indonesian president and a bunch of world leaders, and they announced this big climate deal, $20 billion to get Indonesia off of coal. And it's this huge undertaking because right now, Indonesia gets 60% of its electricity from coal. And these questions are why inside Indonesia, There are worries that some parts of this deal may be omongkoso. Empty talk.

Here's Anisa Suharsono, an energy analyst in Jakarta. You're paying this country to shut down some coal power plant. While also still building new ones, it just doesn't make sense. So today on the show, we try to make sense out of a deep contradiction. Indonesia is an ambitious test case for a developing nation getting billions of dollars to get off coal, while still building new coal plants. We'll look into some loopholes, some potential conflicts of interest, and why all this matters for future deals to get off planet heating coal.

I'm Julia Simon. I'm Aaron Scott, and you're listening to Shortwave, the Daily Science Podcasts from NPR. Okay, Julia, so how does Indonesia fit into weaning the world off coal? So this deal to get off coal in Indonesia, it isn't just about Indonesia. It's one of multiple deals. They call them just energy transition partnerships. One acronym in this whole episode, I promise, but it's called a JetPee. Is this kind of one of the ways that industrial parts of the world, like the U.S. and the EU, can help developing countries deal with climate change, like all that loss and damage funding that we heard about last year at COP 27?

Exactly, in the same vein. And there are now a lot of JetP deals in the works at various stages. in South Africa, there's one in Vietnam, maybe one soon in India. So for now, it's country by country. It's probably unlikely that we can kind of keep going just one jet pee, one jet pee, you know, a few every every year. That's not going to be fast enough. This is Camilla Fenning of the Climate and Energy Research Group, E3G. And this is why what's happening in Indonesia is especially important. We're going to kind of have to, you know, do jetPs by a factor of 10 or 20 or 30. And to do that, we just need to.

to devise the system where there's more of a sort of template, more of a machine. So is Indonesia kind of serving up a model potentially for how future countries could get off coal around the world? Exactly. And that's partly why the doubts about Indonesia's deal are so claring. I know we're going to get to those doubts. But before, I would love to learn about why this deal happened in Indonesia in the first place. Yeah. So Indonesia, it's actually the world's largest expert. border of coal for electricity. And it also has more coal electricity than it even needs. That's because in recent years, the country had all these very optimistic projections for growth. It signed these long-term contracts with coal plants. Those projections didn't end up coming to fruition in part because of the pandemic.

And now the country's basically stuck with all this goal. Here's Deputy Minister Kaimudin again. You can't just say, sorry, we don't want to do it anymore. So is the $20 billion supposed to actually kind of be used to prematurely shut down a lot of these coal plants? Yeah, the details aren't all out yet, but Kaimudin says potentially the loans and grants could help the country to pay to shut down coal plants ahead of schedule and make some space for renewables on this grid that's so dominated by coal. We call it early retirement. Instead of operating for X amount of years, we reduce it by five years, by 10 years. That will help us, you know, reduce emissions. But there are big red flags here.

How many flags are we talking about? There are a lot of red flags. We're going to do three red flags. Three, top three. Here's the first one. Not long before the $20 billion deal was announced in Bali and Inesia's president made this new regulation. He says no new coal, which is good. But there's this section on page six that's really important.

Uh-huh. It says no new coal plants except plants that are already in the pipeline or plants that are attached to these nationally strategic projects like that green park. So people in Indonesia I spoke to said this is really concerning. Here's Anisa Suharsono. They keep saying no new coal, no new cool, no new coal. So the way I see it is like they put that clause there to give a loophole. Yeah, it's the kind of loophole that can fit a power plant through it.

Many power plants potentially. Yeah, Indonesia is this mineral-rich archipelago. It has coal, but it also has cobalt. It has nickel. These are these really important minerals for the green transition. And so if all these parks for these new green tech, if they build coal plants, that's potentially, A lot of coal.

And a lot of emissions that are putting us entirely in the wrong direction for dealing with climate change. Exactly. The International Energy Agency said that to keep warming less than 1.5 degrees Celsius and avoid the worst effects of climate change, there should be, quote, no new development of unabated coal power plants. So that's our first big red flag. What's number two? The second has to do with renewables. And there are these renewables. Tarneyable Targets in the Deal. The deal has this goal of getting to 34% renewables by 2030. And I spoke to a half a dozen renewable energy company CEOs and investors in Indonesia who think this 34% goal in seven years is too ambitious, mainly because the country has these big roadblocks that make it hard for renewables to make money. What kind of roadblocks are we talking about? So there is this price cap that keeps coal price. is so low that renewables struggle to compete. And while there was an announcement about the deal that says Indonesia is going to phase down coal subsidies, it's really unclear what that means

because the country isn't just building new coal power plants, Aaron. It's also turning coal into gas for cooking. Last year, Indonesia and a company based in Pennsylvania began constructing this $2.3 billion facility to make gas from coal, and this makes a lot of emissions? And it requires subsidies. Okay, Julius, so Indonesia is subsidizing coal, which is making it a lot harder for renewables to compete. That brings us, I think, to our third red flag. That's right. Gon flikip and thing on.

Yes, you're learning Indonesian as well as about science on shortwave. And something you have to know about Indonesia is that a lot of the political elite have interest in coal. That green park that's planning to build new coal plants is a project of a coal billionaire whose brother is a government minister. and another minister, Luhud Panjaitan, sometimes known as Pat Luhud, he's running the deal to get off coal, and he has coal assets himself. Okay, I can see why there is fear of conflicts of interest here. Exactly. And so I reached out to Pat Luhut's office by email.

His office replied that transparency and accountability are critical components of Indonesia's decarbonization efforts. I did ask his deputy about this, though. Deputy Minister Rahmat Kaimuddin. Palut is my direct supervisor, and I can say so far he's been very, very supportive of this decarbonization. And never once, he mentioned about, like, you know, what about my asset or whatever? It's not about that. So, Julia, I have to ask, did you ask the U.S. participants in this deal what they thought about these potential red flags?

I did. I emailed John Kerry's office, the U.S. Special Envoy for Climate. They're involved in the deal in helping Indonesia with this deal. And he said in an email, Indonesia made these commitments not only to combat the climate crisis, but also to transform and grow their economy. And the Just Energy Transition Partnership is squarely focused on supporting Indonesia's aspirations. Okay. So is this a done deal or is there the chance some of these red flags could still be addressed? They could definitely be addressed because this deal isn't done. And the people I spoke with in Indonesia really hope that they start releasing more details to the public about the deal, that they start involving more stakeholders like Indonesians involved in renewables and environmentalists. And for all this talk about how the international community can support getting Indonesia off of coal, Anisa Suharsono says there's this key thing to remember here. Because right now we can still get finances from international banks. Like, they're still okay with funding coal development. Suharsono says the strongest message from the international community to help move Indonesia off of coal

would be for international banks to stop funding any new coal. If you want to send a message, you want to ask them to get a message. of Fult, stop funding us. Simple message that one. Juliet, thank you so much for bringing us this story. Thank you so much, Erin. This episode was produced by Liz Metzger, edited by our managing producer Rebecca Ramirez, and fact-checked by Anil Oza.

Alex Dre Winskis was our audio engineer. Brendan Crump is our podcast coordinator, our senior director of programming is Beth Donovan, and our senior vice president of programming is Anya Grundman. I'm Aaron Scott. Thanks, as always, for listening. listening to Shortwave from NPR.