February 13, 2017 Read More →

On the Blogs: Indonesia’s Coal Industry Fights an Uphill Battle

Tara MacIsaac for Mongobay.com:

Indonesia’s coal industry is trying to grow in a hostile climate. As the world moves to cut carbon emissions following the 2015 Paris Climate Agreement, the global coal industry is feeling the squeeze.

Financial institutions in the developed world have started pulling out of coal investments. The rapidly dropping price of renewables, combined with the environmental stigma around coal, have encouraged even rapidly developing Asian countries to cut back on coal use for power generation.

These trends have called into question the future financial viability of the coal industry. The new economic pressures, as well as the environmental concerns that have long dogged it, have put the industry in peril.

“There is pressure on a lot of the commercial banks, especially Japanese, Korean, and Chinese commercial banks that are really bankrolling a lot of the coal power projects and also coal mining projects in Indonesia,” said Yulanda Chung, IEEFA energy finance consultant, in an interview with Mongabay. American and European financiers have also been active in Indonesia, she said, and are also feeling pressure from environmental advocates.

Environment activists, pictured in Jakarta in August 2008, call on Indonesia’s Ministry of Energy to adopt renewable energy technologies such as wind, solar and geothermal energy.

As the coal industries in these other countries contract, coal developers there are looking to expand abroad — to places like Indonesia where coal remains relatively strong. These developers are looking to export their equipment and expertise to Indonesia, and thus hope to promote coal power there, Chung said.

Commercial banks and export credit agencies in these countries provide loans and support for coal projects in Indonesia, but they too are increasingly being targeted by activists in both host and recipient countries. “Following the climate agreement in Paris, we have seen a lot of civil society organizations pressuring both the export credit agencies and the commercial banks to pull out of coal power and coal mining projects,” Chung said.

Full item: Indonesia’s last stand for a coal industry in peril

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