Indonesia swims against the global green tide with its new coal commitments


What do you do when your top export – coal – is down, production is falling and a new global climate accord calls for sharp cuts in CO2 emissions? Convert to greener energy? Contrary to some of its neighbours, Indonesia is going headlong in the other direction: burning more coal to boost demand.

With production more than 30 million tonnes below projections last year, the government is nearly quadrupling the number of coal-fired power plants, building 117 new plants throughout the country, which will provide 10,000 megawatts of power generation capacity, on top of the existing 42.

According to Arif Fiyanto, a coal campaigner with Greenpeace Indonesia, going forward with this plan would be devastating, in both environment and economic terms. “If the government continues down this path of kowtowing to coal interests, our beautiful country will be turned into a poisoned wasteland, producing a resource that fewer and fewer want to buy,” Fiyanto tells Equal Times.

One key reason for the drop in Indonesia’s coal export figures is that shipments to China fell by half last year, due to both an economic slowdown, but also a push to reduce horrific smog levels throughout the country. In addition, recent developments show that Vietnam and India will not be able to fill that China-sized hole as expected.

Earlier this month, Vietnam announced that it was abandoning its previously ambitious coal power plant plans in favour of “accelerated investment in renewable energy.” This was followed by news that India’s coal imports dropped by a much-higher-than expected 35 per cent last year due to massive oversupply and a quicker-than-expected expansion in renewables.

“The structural decline of the seaborne thermal coal market is increasingly evident from the trends in China and India,” said Tim Buckley, a director of energy finance studies at the Institute for Energy Economics and Financial Analysis in a press statement.

“That one of the leading coal developers in Southeast Asia, [Vietnam], is going to retreat from new coal plants further signals the terminal decline of the global coal industry,” he continued.


Commodity bust

This doesn’t bode well for Indonesia. In 2014 it was the world’s top exporter of the fossil fuel, sending 410 megatons of mostly thermal coal – most commonly used in power plants – to its power-hungry Asian neighbours. That’s because it produced the cheapest coal, in comparison to its competitors in Australia, Russia and the United States.

However, cheap coal had a huge external cost. Producers relied on low-paid, mostly non-union labour, used environmentally degrading strip-mining techniques, and shipped via uncovered cargo ships which polluted waterways.

If the Indonesian government’s plans go forward, it will only cement the control this destructive industry has over the country’s economy. Indonesia has long relied on natural resources for economic development – despite evidence that this single-minded focus leaves the economy overly dependent on commodity prices and shifts in global demand.

“During the [previous decade’s] resource boom, the growth of investment, and skill-based manufacturing, stagnated, resulting in a process of de-facto de-industrialisation,” said Zulfan Tadjoeddin, a senior lecturer in development studies at the University of West Sydney.

“The end of global commodity boom certainly has an impact on the Indonesian economy, but diversification away from resource dependence has not yet taken place.”

Indonesia’s environment is already reeling from years of exploitation that has done little to improve either the country’s infrastructure, or lift its rural populations out of poverty.

Indonesia is now the world leader in deforestation, recently overtaking Brazil. On the island of Borneo, where the bulk of coal mining currently takes places, there are high levels of water pollution and numerous incidents of human rights violations on local communities, including forced relocation from ancestral homelands.

A study released by a consortium of Indonesia NGOs last year found that, if the plans to increase coal production in Indonesia go forward, the health impact could become much worse, resulting in an additional 21,200 lives lost every year, on top of the estimated 6,500 premature deaths caused by existing coal plants.


Workers’ rights, corruption – and hopes for reform

There are other issues with coal mining – most of the workers on the mines tend to be migrants from other islands. There is little unionisation in not only coal mining, but in the entire mining sector, and thus, workers have few rights and often face hazardous working conditions – something that, according to Izzah Inzamliyah, program officer with Solidarity Center Indonesia – is a major problem.

“In the mining industry, where the conditions are so hazardous, we need unions to play a role as a watchdog or monitoring the implementation of safe working conditions,” said Inzamliyah in an interview with Equal Times.

A stark example was in 2013 when 21 people died in an accident in a copper and gold mine operated by US multinational Freeport McMoRan on the island of Papua.

But hope comes from the country’s most trusted institution – the Corruption Eradication Commission (KPK), which has made reform of the mining sector one of its top priorities.

Corruption is a major problem in the natural resources sector, and one reason that many believe Indonesia refuses to shift from coal despite low prices. But India can serve as a model for Indonesia. It faces similar challenges, with a growing economy and huge energy demands, but is it shifting far faster to renewables than anyone expected.

Indonesia – which has extensive geothermal, solar, micro-hydro and biomass resources – could go clean even faster than India.

“There is no justification for Indonesia licensing more coal mining. It needs to follow the example of China and the US, imposing a moratorium on new coal mines, and offering the Indonesian people a pollution-free future,” said Fiyanto.

Some moves are being made to shift the country from coal dependence – such as a push to expand geothermal, which the seismically active nation has in abundance.

But according to Pius Ginting, head researcher at the Indonesian Forum for the Environment/Friends of the Earth Indonesia, without a coherent, national renewable strategy, Indonesia will not be able to realise its clean energy potential.

“The government must develop a renewable energy strategy with appropriate incentives to massively scale up investment in renewables,” he said, “to avoid the massive pollution that will inevitably come from a suite of new coal plants.”