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The Point of No Return: How Indonesia’s coal mining expansion is accelerating climate change

The Point of No Return: How Indonesia's coal mining expansion is accelerating climate change

Indonesia is the world’s largest exporter of coal for power stations. The government is planning new infrastructure, including a US$2.8 billion railway, to help increase exports even further. How does this fit with the same government’s promises to reduce greenhouse gas emissions? Obviously, it doesn’t.

This week, Greenpeace released a new report highlighting 14 planned carbon intensive mega-projects worldwide. If these projects go ahead, they will dramatically increase global greenhouse gas emissions and hugely reduce the chances of avoiding runaway climate change. The report’s title, “Point of No Return”, says it all.

Kumi Naidoo, Greenpeace International’s executive director, focusses on the hypocrisy of government promotion of these projects:

“These new climate changing mega projects are the direct result of the hypocrisy shown by a handful of governments. These governments claim they want to prevent catastrophic climate change, but shamefully continue to approve and promote major fossil fuel projects that will lead to climate chaos and devastation.”

Indonesia is fourth on the list, behind the expansion of China’s coal mining, Australia’s coal exports, and drilling for oil and gas in the Arctic. Digging out and burning Indonesia’s coal will result in more emissions than tar sand mining in Canada or oil drilling in Iran. Here’s Greenpeace’s graphic of the 14 projects (click on the image for a larger version):

CO2 emissions

In addition to adding 460 million tonnes of CO2 per year to the atmosphere, Indonesia’s coal mining boom has serious impacts on people and forests in Kalimantan. The Indonesian NGO Mining Advocacy Network JATAM describes coal mining as “Digging your own grave,” because of the impacts of the industry on water supplies, forests, biodiversity, poverty, health and human rights.

JATAM, Greenpeace, Friends of the Earth Indonesia (WALHI) and the Indigenous Peoples Alliance (AMAN) are calling for a moratorium on coal mining on Kalimantan. They are also asking for a government review of existing concessions. Many coal mining concessions overlap with other forestry concessions. Some are in areas supposedly protected under Indonesia’s two-year moratorium on new forestry concessions, part of the US$1 billion Indonesia-Norway REDD deal.

Greenpeace’s report includes the following section about Indonesia’s coal mining expansion plans:

Indonesian government risks Kalimantan wildlife with coal exports

Key facts: Increase in annual CO2 by 2020: 460Mt
Country with comparable annual emissions: UK
Companies involved: KPC, Adaro, BHP, Banpu

On Kalimantan, the Indonesian part of the island of Borneo, dirty coal is waiting to be unearthed. Indonesia is already the world’s largest exporter of thermal coal used by power stations and it provides about half of China’s coal imports.[1]

As a result of expansion in Kalimantan, Indonesia’s coal output has been surging – reaching an average growth rate of 20% a year since 2000, from 77 million tonnes a year to 325 million tonnes in 2011.[2]

The planned increase in coal exports would produce an additional 460Mt of greenhouse gas emissions, as much CO2 as the entire emissions of the UK in 2010.[3]

The global picture

The extra coal would not only feed a burgeoning number of coal-fired power stations being built to meet local energy demand, but would largely go overseas to China, India, South Korea, Japan, and Taiwan, adding to the thick cloak of coal smoke hanging over Asia.[4]

Who pays the bill?

Yet the value of the coal production is only 3%[5] of Indonesia’s GDP, and – despite ambitious coal expansion plans – the share is set to decline as the economy grows.[6] Now, the Indonesian government is planning to spend public money on infrastructure investments and incentives that aim to dramatically increase coal exports from Kalimantan even further.[7] The toll on the people and the environment will be enormous.

To support this increase in coal exports, vast areas of Indonesian Borneo’s wilderness – land with strong links to indigenous communities – have been allocated as coal mining concessions. And it’s not just the new mines that will cut open the heart of Borneo, but new infrastructure for coal transportation will also be carved through the island’s forests, home to one of the richest tropical forest ecosystems on the planet. The forest provides natural habitats for the endangered orangutan and other species of primates, as well as for important bird life, including the argus pheasant and hornbills.

While the Indonesian government pays lip service to environmental sustainability in the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), it largely ignores the terrible price those living around the mines will have to pay. Reports have surfaced of the oppression of those speaking out against the destructive mining practices.[8] The coal industry makes an intensive demand on water resources but also releases acids and sulphates into rivers. These pollutants destroy water supplies that in turn decimate fish stocks and contaminate crops, leading to loss of livelihoods, a reduction in food sources and health problems for local communities.

Since coal mining and deforestation began upstream along the Mahakam River, the World Wildlife Fund (WWF) “Heart of Borneo” report notes that flooding has become commonplace in Samarinda, in East Kalimantan. Major floods in 2008-2009 affected families and disrupted the economy, transportation, employment and livelihoods.

The total cost of these floods was estimated at US$9m, while the cost of flood prevention is far greater than the town’s income from coal. Construction of a flood polder has already cost $7m, and the local government has put together a flood-mitigation plan that would cost another $350m.[9]

This deforestation-and-mining-induced flooding serves as an early indication of the kind of local impacts that Indonesians will experience if this dirty project goes ahead. On top of that would come the impacts of climate change on Indonesia, which include lower agricultural yields, leading to food shortages and price increases and damage to fisheries due to reduced coral reefs.[10]

Greenpeace and other groups such as Friends of the Earth Indonesia (WALHI), the Indigenous Peoples Alliance (AMAN) and the Mining Advocacy Network (JATAM) are calling for a moratorium on coal mining on Kalimantan.[11] The groups are asking the government to review existing concession permits, particularly where they overlap with areas that have already been protected under a two-year forestry moratorium on the allocation of new concessions that was declared in May 2011.[12]

Potential for renewable energy

Indonesia does not need to risk its natural environment and undermine Kalimantan’s indigenous communities for the sake of development that is achieved through the unsustainable extraction of fossil fuels. There are other ways the country could meet its economic goals.

The Greenpeace Energy [R]evolution scenario for Indonesia shows how the country could meet its burgeoning energy demand with reliable, sustainable energy solutions without relying on coal. Instead of spending scarce public money on non-renewable, destructive extractive industries, the country could focus on high-value added industries, as a pathway to development.

Indonesia has the natural resources to become a leader in the provision of renewable geothermal energy. Together with other technologies such as solar and biomass, the
country’s renewable energy industry could be worth $40bn by 2030; and could reduce the country’s dependence on coal by as much as 15%. This kind of investment could cut Indonesia’s emissions by at least 10% without taking into account other emissions-reduction strategies, such as energy efficiency.[13] These renewable-energy industries would keep on boosting Indonesia’s economy into the future, long after the coal had run out.

[1] The Age (2012). China slowdown hits Indonesian coal exporters. 7 September 2012.

[2] BP (2012). Statistical review of world energy, 2012. June 2012.

[3] IEA (2012a). CO2 Emissions from Fuel Combustion 2012.

[4] Harrington A & Trivett M (2012). Indonesian Coal Review – The short term option. Patersons Securities, Perth, Australia.

[5] World Bank (2012c). Coal rents (% of GDP).

[6] The value of the 2011 coal output of 325Mt at a free on board price of $60-80 US dollars was 2.3-3.1% of Indonesia’s GDP of $846.45bn as reported in IMF World Economic Outlook Database, October 2012.
The planned coal export expansion implies a 5.0% annual growth rate of coal output and the IEA World Energy Outlook 2012 foresees coal prices declining from 2011 levels until 2015, meaning that the added value from coal production will grow slower than output. The IMF projects the Indonesian GDP to grow at 6.0-6.8% a year until 2017, implying a declining GDP share of coal production.

[7] Cosslett CE & van Paddenburg A (2012). Heart of Borneo: Investing in Nature for a Green Economy. WWF Heart of Borneo Global Initiative. Jakarta, Indonesia. p112.

[8] Jaringan Advokasi Tambang – Mining Advocacy Network (JATAM) 2010. Deadly Coal, JATAM, Jakarta, Indonesia, p21.

[9] Cosslett CE & van Paddenburg A (2012) op cit.

[10] McKinsey Global Institute (2012). The Archipelago Economy: Unleashing Indonesia’s Potential. McKinsey & Company, Seoul, South Korea, p61.

[11] Visit to find out more about this local campaign.

[12] Cosslett CE & van Paddenburg A (2012) op cit.

[13] McKinsey Global Institute (2012) op cit, p61

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