Indonesia was the biggest coal exporter in the world. Producing over 775 million tons in 2023, almost 70% of this coal was exported while the rest consumed domestically to power coal-fired power plants (CFPP), which generate more than 60% of Indonesia’s electricity. While Indonesia’s climate ambition will require the country to transition towards renewable energy, recently, there are plans to utilize carbon-capture and storage (CCS) technologies as one of the decarbonization strategies. Through CCS technology, CFPP can still be utilized, including the vast coal commodities owned by the country.
Although utilizing CCS can ensure the longer life of coal and CFPP, it won’t be the most cost effective pathway. Project Clean, Affordable and Secure Energy for Southeast Asia launched the Coal’s Endgame: Cost-Benefit Analysis (CBA) of Early Retirement of CFPP versus CFPP with CCS to compare two different decarbonization strategies.
Fadhil Ahmad Qamar, Project Officer of CASE, Institute for Essential Services Reform and the lead author of the Coal’s Endgame presented his findings through comparative analysis between retrofitting CFPP with CCS and retiring CFPP early. After its early retirement, CFPP will be replaced by renewables, in this case solar power plants with similar generation capacity as the retired CFPP and supported with energy storage. Both scenarios are compared with a reference scenario, where CFPP operates as its initial agreement without intervention.
“Through our findings, both strategies may reduce carbon emission, although with additional cost. However, early retirement of CFPP by 10 years of its power purchase agreement (PPA) shows lower cost, rather than retrofitting them with CCS which potentially doubles the electricity tariff or increases the state budget for electricity subsidy,” said Fadhil. Coal’s endgame report suggests several recommendations, including but not limited to; strategically retiring coal plants while least-prioritizing the use of CCS on CFPPs and to create a national emission pathway. CASE Coal’s Endgame report was launched on 21st March 2024, followed with a fruitful discussion and feedback from PT PLN Persero and Indonesia Fiscal Policy Agency (BKF). The full report is available to read at s.id/CASE-CoalEndgame or simply visit www.caseforsea.org
