Canceling Coal Plants an Eco-Cost Strategy to Reduce CO2, IESR Study Reveals

Jakarta-based think tank, the Institute for Essential Services Reform (IESR), has published an analysis—commissioned by The Rockefeller Foundation—that explores the implications of halting the construction of proposed coal power plants. The study, titled Delivering Indonesia's Power Sector Transition, revealed that preventing the development of nine Indonesian coal plants could be done with little impact on power supply, grid stability, or affordability, while also averting approximately 295 million tons of CO₂ emissions.

IESR Executive Director Fabby Tumiwa at the launch of the report "Delivering Power Sector Transition in Indonesia" in Jakarta. Credit: IESR.

Fabby Tumiwa, Executive Director of IESR, elaborated on the new analytical method employed: "We developed an entirely new approach to undertake this analysis. We looked individually at each planned coal plant in Indonesia. Based on a multi-criterion scoring system, we identified plants that could be canceled, and then assessed the legal, financial, system resilience, energy security, and carbon emission implications of this intervention. Our team used satellite images to track plants' development progress over time."

Dr. Joseph Curtin, Managing Director for Power and Climate at The Rockefeller Foundation, highlighted the global significance of this study. "There are some 950 coal plants planned or under construction around the world, which if built, would emit an estimated 78 billion tons of CO₂ into the atmosphere over their lifetime. This first-of-its-kind analysis illustrates that, in many cases, there are better options available to policymakers, utilities, regulators, and systems planners that can accelerate the shift from fossil fuels."

The nine proposed coal plants, primarily at the financing stage, would contribute nearly 3,000 megawatts (MW) of coal capacity, or about 20% of total planned additions in Indonesia. IESR's power system analysis, which used seven separate models, found that canceling these plants:

• Would avert 295 million tons of CO₂ emissions. Given that $238 million has already been invested into these nine plants, the calculated carbon abatement cost is less than 80 cents per ton of CO₂ emissions avoided.
• Could be implemented without compromising system stability, with existing power plants operating at higher capacity replacing the majority of the lost power. This option would likely incur additional power system operation costs of $2.5 billion per annum until 2050.
• Necessitates addressing the legal risks associated with unilateral cancellation of any project for the Republic of Indonesia and PLN, the country's government-owned electricity company, identified in the study. Negotiations would be required in each case to prevent breach of existing agreements with independent power producers.

Despite its potential impact, the study found that this strategy alone would not be sufficient to meet Indonesia's Just Energy Transition Partnership (JETP) target.

With coal accounting for more than two-thirds of Indonesia's electricity and an additional 13,822 MW of capacity predicted through new coal plants by 2030, Indonesia has the third largest coal pipeline globally, after China and India. The report concludes with a series of further recommendations that outline a systematic approach to achieving net-zero emissions by 2050 or earlier.