“Coal-powered industrial parks test Indonesia’s climate pledges – and China’s too" 30 March 2022

In February, a Chinese company began building a “power island” project on Indonesia’s Obi Island, five months after President Xi Jinping had announced China would stop building new coal power plants overseas.

The 4 x 380 megawatt (MW) project, which some sources suggest will be home to a coal-fired power plant, is designed to provide power solely to a heavy industry park. Such parks are increasingly the Indonesian government’s chosen format for capital-intensive economic development. Over the past few years, a series of regulatory changes has sought to boost domestic industries to capture more value from natural resources like nickel and aluminium before they are exported. Industrial parks house the energy-intensive refineries and smelters needed for these processes, equipment owned predominantly by Chinese companies and which so far relies on coal-fired power. [...]

“The financing process of these captive coal power plants [those run by industrial producers for their own consumption] has very little transparency, making it almost impossible to trace the financial responsibilities,” says Global Energy Monitor’s Yu. Before GEM accessed Chinese industry sources, it was unaware of roughly 5,000 MW of planned capacity, exclusively at captive plants for industrial parks that focus on turning ore into metal products. Public awareness about these projects suffers in the absence of information, often because their electricity generation remains off-grid. [...]

The Morowali Industrial Park, or IMIP, grew over the last 15 years in response to high demand for Sulawesi Island’s nickel ore for the production of stainless steel and, more recently, battery-grade nickel. The entire industrial area, which stretches across the border between the provinces of Central Sulawesi and Southeast Sulawesi and into neighbouring Konawe, plans on adding 3,470 MW of coal-fired power. Nearby, residents often speak of the “dust season”, when the wind shifts and coal dust settles in homes. [...]

President Joko Widodo has also pushed what he has called “the world’s largest green industrial region”, planned for a river system in North Kalimantan. The project plans to build five hydropower dams on the Kayan River, which could generate 9 GW for several industrial centres, including nickel and aluminium-processing factories. A similar hydropower project in Sulawesi, which has been slated to feed energy to Morowali, has experienced strong opposition for displacing and harming communities and wildlife. [...]