Category: Blog

On April 29, 2020, over 260 civil society groups across the world called on the Chinese government to ensure that COVID-19 related financial relief for struggling Belt and Road projects flows only to high quality overseas investments satisfying specific stringent criteria, and avoid bailing out projects already mired in environmental, social, biodiversity, climate, or financial risks prior to the onset of COVID-19.

In February 2020, China’s Ministry of Commerce and the China Development Bank (CDB) jointly issued a notice creating a mechanism for directing finance to Belt and Road projects that have been impacted by the COVID-19 pandemic. The announcement instructed local commerce departments and centrally state-owned enterprises to collect information on overseas projects impacted by the outbreak, and pass this information on to CDB, which will consider providing financial relief to get projects back on track. Crucially, the notice states that projects that are “high quality”, “legally compliant”, and have “controllable risks” can qualify to receive COVID-19 related financial relief.[1]

In the statement, civil society groups highlighted 60 Chinese sponsored projects in the mining, pulp and paper, hydropower, infrastructure, fossil fuel, and other sectors which do not meet these criteria, and set out ten specific principles that if present could help to ensure that projects are “high quality”. This includes ensuring credible, robust environmental impact assessments, obtaining free, prior informed consent from affected people, committing not to impact on key biodiversity areas, and ensuring alignment with international norms and best practices and China’s green finance policies, among others.

As the world continues to respond to the COVID-19 crisis, economies are contracting, unemployment rising, and major development projects are stalled. As we find ways to manage the crisis and begin to address the harm caused by the pandemic, Chinese and global development actors will need to seriously consider how low quality, high risk investments may not only drive negative environmental, social, climate, and biodiversity impacts, but may also facilitate the spread of diseases, as a consequence of encroachment on undisturbed ecosystems.

In a post COVID-19 world, global actors will need to take stronger, decisive steps to stabilize and revitalize the global economy in an ecologically safe, people-oriented, and sustainable manner, and ensure that any COVID-19 related financial relief is allocated to projects and investments which are fully supported by and benefit local communities, align with international standards and best practice, and preserve our world’s increasingly fragile ecosystems.

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[1] Ministry of Commerce & China Development Bank (2020) #61, Work Notice On Supporting the High Quality and Cooperative Building of “One Belt One Road” By Unleashing the Role of Development Finance in Response to the COVID-19 Outbreak / 商合函【2020】61号 《关于应对新冠肺炎疫情 发挥开发性金融作用支持高质量共建“一带一路”的工作通知》  

President Jokowi in his speech stated that the second term priority of his administration was the development of human resources champion. The President stated that the quality of human resources starts from the womb, so there should not be any more stunted births. Mother and child health is key, especially until the age of 7-8 years, which is the golden age.

However, the development of quality human resources will not be fulfilled if the residential area filled by pollution. North Banten is filled with a lot of pollution, especially along the lines of Merak, Suralaya, Salira, Pulo Ampel, Bojonegara and Kramatwatu.

In this route there are Suralaya Coal Fired Power Plants with 5 active chimneys releasing air pollution. These power plants provide electricity for Jakarta city and surrounding areas. But the air pollution effects are spreading to the surrounding area. Another coal-fired power plant that has been operating are the Salira power plant and the Merak Energi power plant. Meanwhile, the Java 7 Power Plant (2 × 991 MW) will be operating in October 2019. This is referred as the inauguration gift of President Joko Widodo for the second period by medias

Rows of power plants and the chemical industry on the the road side, land and stone mining activities in the surrounding mountains make poorer ambient air quality. The leaves of the trees along the road were covered in dust, so the remaining campaigns posters of the politicians were also covered with dust.

A number of kindergartens and elementary schools exist in this area. From the Salira Elementary School, the dirty air coming out of the Suralaya power plant’s chimney is clearly visible. The Suralaya-Salira-Terate route is passed by parents to take and pick up their children from school using motorcycle causing air pollution exposure very worrying . A health worker in this area when talking with staff of the AEER Assosiation (Ecological Action and People Emancipation) said he bought a car because he uses it to take his child to school every day to avoid severe air pollution, not for raising prestige and social status reasons.

This dirty air contains fine particles PM 2.5, SOx, NOx which are harmful to the lungs and heart, especially children and the elderly. Another pollution ingredient is mercury which causes interference to the development of children’s brain tissue thereby reducing the ability to concentrate and learn.

The World Health Organization (WHO) states that babies born to mothers who are exposed to air pollution are more likely to be born prematurely and have low body weight which are the main factors causing stunting.

Severe air pollution in the Suralaya-Salira-Terate Line as the location of a large power plant supply to Jakarta can be mitigated by phasing out power plants with poor pollution control, such as Suralaya; the application of pollution control using international standards – can refer to tighter Chinese pollution control standards for Java Power Plant 7 (majority owned by Shenhua Gouhua); and stopping the addition of coal-fired power plants in this route (planned expansion of the Suralaya power plant, Salira, Terate).

In addition, mining activities and material trucking traffic need to be restricted along this route so that villages and schools along this path are not exposed to air pollution. The Jokowi’s commitment to develop superior human resources is tested in Suralaya, Terate, Salira lanes so that children in this area are not sacrificed for the sake of fulfilling electricity and other products for the Jakarta and surrounding areas

The government and PLN need to improve the reliability of the Java-Bali electricity system by increasing the availability of renewable energy. In the case of a electrical disruption which resulted in a electricity blackout on August 4, 2019, coal-fired power plant seemed incompetent to respond quickly, so it took 6-8 hours to operate normally after being disconnected from the network system.

Regrettably, the PLN and the government’s response to the power outage is to strengthen the Power Plant including promoting the Java 7 Power Plant with a capacity of 2 x 991 MW which is scheduled to operate in October 2019 as a sollution to anticipate the same case. This solution does not consider  justice aspect for the people around the Power Plant who receive negative impacts such as health problems due to poor air quality from the Power Plant. In addition there are also fishermen whose fishing space in the sea has narrowed because it has turned into a special location for coal ports and the location of the Java 7 Power Plant. Moreover, the dominance of coal plants make a slow response to power outages because power plants require a long time to be able resuming normal operation.

Another long-term solution offered is to continue the construction of Java HVDC (High Voltage DC) transmission. The consequence of this network is the addition of the Mine-mouth coal-fired power plant in South Sumatra. Mine-mouth coal-fired power plants effect environmental degradation for residents at the power plant site, because they have environmental impacts from mining activities (floods, river diversion, mine dust) and at the same time there is also the impact of power plants (air pollution, noise). The mine-mouth coal-fired power plant caused disturbance to the residents’ agricultural land and rubber plantations in Muara Enim.

Ecological injustice for the Java-Bali electricity fulfillment by sacrificing of environmental quality and the health of residents around the mine-mouth coal-fired power plant must be avoided, in addition, the construction of the Sumatra- Java HVDC which is dominated by the power plant increases greenhouse gases.

The reliability of the Java-Bali electricity system will increase if the renewable energy supply in each region/province is developed. The integration of the Java-Bali system makes fluctuations in the availability of renewable energy manageable, for example if the wind power supply on the South coast of Java slows down, it can be overcome by optimizing land and floating solar power plants that are built in each province. In addition, each province/region can have energy independence and electricity power responses quickly in anticipation of transmission failures between provinces. With the availability of large-scale electricity storage technology, the development of renewable energy is increasingly possible on a large scale and household scale.

The Chinese and Japanese parties support and invest in Indonesia’s coal-fired power plant and claiming using clean coal technology with using ultra super critical (USC) boilers.

The Indonesian government, through PLN (the State-owned electricity company/ PT Perusahaan Listrik Negara) in Electricity Supply Business Plan/RUPTL), also announced that it’s using clean coal technology to reduce emissions. For the Java-Bali power system, PLN has allocated a class capacity 1,000 MW coal-fired power plant with USC as part of clean coal technology to obtain better efficiency and lower CO₂ emissions. One of them are Java-7 (2 × 919 MW) owned by a joint venture by Shenhua Guohua and PT. Pembangkit Jawa Bali (PJB).

The second grid national system in Sumatra island also began the development of coal-fired  power plant utilizing USC with a class capacity of 300-600 MW with USC.

List of ultra super critical technology coal-fired power plant of Chinese and Japanese’s investment in Indonesia

Coal Power Plant	Capacity (MW)	Owner
Tanjung Jati B Unit 5	1,000	Sumitomo
Tanjung Jati B Unit 6	1,000	Sumitomo
Java-7 Unit 1	991	National Energy Investment Group (Shenhua Guohua) 70%, PT PJB 30%
Java-7 Unit 2	991	National Energy Investment Group (Shenhua Guohua) 70%, PT PJB 30%
Central Java (Batang) Unit 1	950	Adaro, Itochu-J Power
Central Java (Batang) Unit 2	950	Adaro, Itochu-J Power

In total, 5,882 MW Ultra Super Critical related to Japanese and Chinese investments in Indonesia currently. With the carbon dioxide intensity factor 740–800 g CO₂/kWh for USC technology, the total capacity of this plant will produce 26-28 million tons of carbon dioxide per year. This is equivalent to 148 to 195 times the carbon dioxide gas emissions of the Republic of Vanuatu in 2016, one of the island countries in the Pacific Ocean that is most threatened by sea level rise due to global warming.

Contradicted to the claim that has been put in PLN’s Electricity Supply Business Plan, The  Energy Sector Greenhouse Gas Emission Inventory Data which issued by the Ministry of Energy and Mineral Resources 2016 stated “based on historical data on GHG emission reduction in the power generation sector, the use of CCT does not contribute much to emission reduction, only 15% of total emissions issued of the power generation sector or 4% of the total reduction in energy sector GHG emissions.” This report suggested cogeneration electricity, that can reach 85% total emission reduction in the power generation sector, or 20% of the total reduction in GHG emissions in the energy sector. ”

Besides greenhouse gas emissions, the construction of electricity generation mainly in the coastal area has caused damage and disruption to the ecology of the coastal area where fishermen community live. Such as in coastal area of Terate, Serang Regency, Banten Province, communities has experienced a decline in fishing space due to the coastal has been reclaimed for the construction of Java 7 coal power plant.

Ultra Super Critical technology is still emitting too high greenhouse gases, making it difficult for Indonesia to reach of its reducing greenhouse gases target from the energy sector. As a country whose technology has advanced, China and Japan should concretize their leadership in overcoming climate change by stopping the development and promotion of USC coal-fired power plant. And they should use their overseas investment capacity to develop renewable energy, including in Indonesia.

Many parties, including UN Secretary General Antonio Guiterres, hoped that China would take leadership actions in the climate change negotiations after the US government under Donald Trump took skeptical about climate change. China joined together with G77 countries have urged developed countries to take responsibility in overcoming climate change. In the opening speech of COP24 in Katowice, Poland which was just finished, the G77 and China urged the transfer of technology from developed to developing countries in climate change mitigation and adaptation.

China adalah negara yang paling besar melakukan investasi energi terbarukan untuk dalam negeri, sebesar 102,9 milyar $AS pada tahun 2015, sementara itu Amerika Serikat jauh lebih kecil yakni sebanya 44,1  milyar $AS (Laporan Institute for Energy Economics and Financial Analysis, IEEFA, 2017). Hal ini tentu diapresiasi.

China is the largest investment in renewable energy in each its domestic country, amounting to US $ 102.9 billion in 2015, while the United States is much smaller at US $ 44.1 billion (Report of the Institute for Energy Economics and Financial Analysis, IEEFA, 2017). This is certainly appreciated.

China is expected to take more action to tackle climate change. Investment from China is currently listed as one of the largest in the coal energy sector. Among them are Java 7, South Sumatra, Celukan Bawang coal-fired power plant in the form of ownership with a total capacity of 3,666 MW, which will consume 12.8 million tons of coal per year, which will produce more than 12 million tons of carbon dioxide per year.

The existence of coal power plant investments from China has begun in the Susilo Bambang Yudhoyono’s Government through the Fast Track Program I (FTP I) of 10,000 MW and FTP II of 17,918 MW and 35,000 MW programs during the current Jokowi’s administration.

In China itself, the coal-fired power plant has been reduced. Recorded in China as many as 150 coal power plants have been suspended to achieve the target of reducing greenhouse gases emissions and overcoming pollution.

The Chinese government, as well as other countries such as Japan, argue that they are still supporting coal abroad because their partner countries are still developing coal-fired power plants. This is certainly contrary to the spirit of foreign investment policies made by China.

The Green Credit Guidelines issued by the Bank of China Regulatory Commission in 2007 directed foreign projects supported by funding from China in line with international good practice. Several international financial institutions have stopped funding coal, this development is a good standard of practice amid the urgent actions to reduce greenhouse gas emissions.

The Chinese government needs to show its leadership globally in stifling the pace of climate change by reconsidering (withdrawing or canceling) its investments from fossil energy projects.

In the time global trend to leave coal, Indonesia is increasingly consumptive in this type of energy. Various rejections have come from residents and local and international organizations because they are vulnerable to ecology and social relations, but the construction of the power plant continues in a number of regions. The rate of power plant construction is higher than other energy, and until 2017 coal dominates the national energy supply, which is 57.22% (LAKIN DJK 2017). Meanwhile, renewable energy moves slowly and shows signs of heavy homework to reach the target of 20% in 2025.

The Minister of Indonesian National Development Planning, Bambang Brodjonegoro, at the 24th Climate Change Summit in Katowice, Poland, said the three aspects that the Indonesian government sought to mitigate climate change were the use of renewable energy, forest rejuvenation and more efficient transportation. In the energy sector, the report compiled by Germanwatch, the New Climate Institute and Climate Action, 2018, shows Indonesia’s performance is relatively low (from four categories: high, medium, low and very low) for renewable energy. The report said, the lack of an effective mechanism was one of the factors supporting the slowdown in the development of renewable energy.

The old style development paradigm that upholds economic growth but despite ecological sustainability is naturally overhauled. The refusal of citizens and a number of environmental organizations should be noted as consideration by business people and decision makers. For a long time the Indonesian people became victims of operating fossil fuel-based power plants that disturbed their social and ecological “peace”. This injustice in the supply of energy which sacrifices residents around the plant needs to be stopped by switching to renewable energy.

Most of Indonesia’s electricity currently produced by coal plants, with 140 806 GWh (56%) capacity in 2016. The coal power plant is long-lived, can reach age of 40 years as Kamojang power plant. Long life is also reflected in the power purchase agreement between PLN and power generation company’s 30-year as stipulated in the Energy and Mineral Ministerial Regulation No. 19 Year 2017 on Coal Utilization for Power Generation and Power Purchase Excess (Excess Power). Thus, once it is decided to build a coal power plant, then the energy system area with this electric generator will be locked long enough with plant this type. The other hand, electricity Indonesia is currently only containing 1% renewables (PLN RUPTL 2016-2025).

Indonesia government has issued the National Energy Policy (KEN), that targeting new and renewable energy by 2025 as much as 23%. KEN targets have been incorporated into a carbon emissions reduction program components, described in the document NDC (Nationally Determined Commitment) that has been agreed in Paris 2016. The government has ratified the Paris climate deal through Law No. 16 Year 2016 on Ratification of the Paris Agreement to the United Nations Framework Convention on Climate Change. Indonesia’s contribution to emissions reduction is 29% by its own efforts and to 41% if there is international cooperation in 2030 compared to business as usual. Part of this target will be achieved through energy sector.

However, several new policies in the energy sector today potentially deviate path to achieve the commitment targets to mitigate climate change, as well to achieve renewable energy targets in KEN.

Java island, as the biggest sub system of Indonesia power generation (75% of PLN’s electricity in 2015) is dominated by coal plants. This sub system already has a high enough reserve capacity, i.e. 31%, with larger potential of oversupply as several coal power plants is being built in pipeline. As a result, the space for the development of renewable energy is very limited in Java.

Sub system of energy grids that open to new electric generation are located outside Java, especially in eastern Indonesia that still lack of electricity supply. Its contribution to the KEN’s target actually not big considering regional electricity consumption only 6% of the national energy demand in 2015. However, still with low of electrification ratio, the development of renewable energy in the eastern part of Indonesia is urgent. But this was not supported by the regulations. The new policies issued instead giving space of affirmation for coal power plant fuel not to renewable energy. The cost of supply (BPP) power generation of the ​​eastern Indonesia, such as NTB, Papua, Maluku and East Nusa Tenggara are more than doubled compared to the average cost of the national which is 7 US cents per Kwh. These areas are relatively far from the coal source located in Kalimantan and South Sumatra. The areas have potential for renewable energy development such as wind and solar renewable energy, but still not empowered by policies.

Regulation of the Minister of Energy and Mineral Resources No. 12 Year 2017 on Utilization of Renewable Energy Sources for Electricity Supply established a mechanism of price caps for solar and wind power technology but not for non mouth of the mine coal plants, making both types of renewable energy will be difficult to develop in the east area. Regulation of Minister No. 12 of 2017 makes solar power and wind as the last choice in power generation after there are no other primary energy sources. Also, renewable energy is tasked to reduce the cost of electric supply. When local BPP above average national generation, then the purchase price of electricity from solar and wind power are limited to a maximum of 85% of BPP local plants.

Stark advantage is given to coal power plant under Regulation Minister No. 19 of 2017. In an area that has BPP higher than the average national plant (generally applicable to all the provinces of Eastern Indonesia), for generating power less than or equal to 100 MW allowed to be auctioned. Data on 35,000 MW program, the first FTP (Fast Track Program) and the second FTP II showed all coal power plant in the eastern region under 100 MW. Given the coal power generation technology has matured, and developed countries began to leave this kind of technology due to restriction related to environmental pollution, and also restrictions on new coal power plant in India and China (Report CoalSwarm 2017), cost of coal power technology become cheap, and Indonesia become potential to be the location of “dumping” coal technologies, including the eastern part.

Providing energy access to the last communities without, from experiences of some countries showed for increasing electrification rate from 85% to 100% have more severe challenges. The 10-15% last community groups without access to electricity are generally constrained by geographical, economic and dispersion of users. Renewable energy is suitable to face these challenges, due to more easy to to be decentralized based local energy resources. Therefore, renewable energy should be main candidate for eastern Indonesia with electrification ratio lower than the national electrification ratio, to help government target to reach electrification 99.7% by 2025 from 88.3% in 2015.

To achieve this target giving electricity access to communities in remote areas, would need support such as viability gap fund for private sector to build renewable energy generation, or subsidies to PLN’s unit that work in these territories. It is not yet reflected in several regulations curently issued by the government.

Jokowi government should provide and review closely on implementation regulation to reach commitments of climate, renewable energy, and electrification ratio target. The current regulation seems not lead towards these targets. Therefore, it is important to conduct an evaluation and review of the latest regulations related to this electricity