Indonesia, the world's number one coal exporter and a major greenhouse gas
emitter, is struggling with conflicting green and growth aims.
It wants to increase coal-fired electricity generation by over 40 percent in the
next decade, cut emissions and preserve rainforests at the same time. Analysts
doubt it can manage all three.
"Indonesia is not in a position to be reducing greenhouse emissions at all,"
said Brian Ricketts, coal analyst at the Paris-based International Energy
Agency.
"Their coal-fired power plant construction programme is already under way and
Indonesia is quickly expanding coal production to be able to supply its own
growing domestic demand and exports," he said.
Indonesia's energy-related CO2 emissions must rise because, according to
government figures, its coal consumption is going to at least quadruple to
90-100 million tonnes a year by 2017.
The world's fourth-most populous country, with 226 million people spread across
17,500 islands, needs a substantial growth in electricity production to fuel
economic growth.
But while poised to boost its own emissions, in addition to exporting its own
polluting coal, Indonesia is attempting to add a new income stream as a high
earner of carbon credits if it agrees to be paid to preserve its forests.
But it may not be able to keep all its lucrative juggling balls in the air,
especially as demand builds to exploit more coal deposits in the jungles of the
Kalimantan region in Borneo.
CARBON CREDITS
Until its coal-fired power initiative takes effect, Indonesia is a leading
polluter due to deforestation, peatland degradation and forest fires, a World
Bank report said.
Environmentalists say that if these activities are taken into account it ranks
as the world's number three emitter of greenhouse gases. Deforestation accounts
for 20 percent of man-made carbon emissions.
"Indonesia emits a rather modest 380 million tonnes CO2 a year from fossil
fuels, the serious emissions are the ones from logging, burning and drainage of
peatswamp forests: 2 billion tonnes a year CO2," conservation group Wetlands
International said.
If the Reduced Emissions From Deforestation in Developing Countries (REDD)
initiative agreed at last December's climate talks in Bali goes ahead, Indonesia
could earn tens of billions of dollars annually.
This would be a strong revenue stream in addition to perhaps US$50 billion a
year from coal exports in years to come.
Indonesian coal production will double by 2017 to at least 400 million tonnes,
most of which will be exported.
It earned around US$10 billion from coal exports in 2007, producers said, and
will earn tens of billions of dollars annually in decades to come. Coal prices
have doubled during the past six months.
FOREST UNDER THREAT
Producers say Indonesia should be able to double its coal output without
destroying much forest.
"If you fly over Kalimantan it's clear how much forest has already gone. The new
thermal coal reserves to be developed are almost all in or near existing mining
areas," one major Indonesian producer said.
That journey shows very little rainforest -- almost all has been replaced by
bright green palm oil plantations for biodiesel and rice paddies.
The roads which run straight from the mines to the rivers to move coal have had
a minimal impact.
Large-scale timber logging cleared much of Kalimantan's rainforests years ago.
"Coal mining areas are relatively small in Indonesia. Logging has already
removed forest areas the size of Wales," the IEA's Ricketts said.
But global hunger for metallurgical or coking coal for steel production may
threaten the untouched forest in central Kalimantan.
Hard coking coal prices are around US$400 a tonne, double a year-ago's levels,
and some buyers say they cannot find it at any price.
"Central Kalimantan contains mostly metallurgical coal reserves and some
thermal. It's got huge logistical problems and costs associated with getting the
coal out for shipment and I'd tend to think if it could be done, it would have
been done by now," another large Indonesian producer said.
However, Indian coal end-users and traders said they were looking to invest in
Indonesian coking coal and thermal coal mines in central Kalimantan and
elsewhere.