Divya Karyza (Jakarta Post)

Sunday, September 18, 2022

coal, coal business, PTBA, renewable energy, banking

Indonesia’s coal-fired power and mining companies are finding it harder to raise finance due to climate crisis concerns, prompting increasing pressure from banks to offer concrete transition plans to move away from dirty energy. We sought.

To date, over 100 of the world’s most significant asset managers and owners with over $50 billion in assets under management (AUM), and banks and insurance companies with over $10 billion in assets under management or loans outstanding, have invested in coal mining. and/or coal-fired power plants, the Institute for Energy Economics and Financial Analysis (IEEFA) report found.

IEEFA Energy Finance Analyst Elrika Hamdi expects coal power and mining companies to find it increasingly difficult to finance the industry as the pressure to transition to renewable energy increases.

As a result, more and more mining companies have announced commitments to diversify their business portfolios beyond coal, although they aim to maximize profits from coal production, Elrika said. .

“Coal prices are now at all-time highs, [mining companies] making a lot of profit. The question is whether these companies remain committed to implementing diversification. [plans]? ” she said Jakarta Post On Friday. “I hope they are [wise] Enough to know that investing in renewable energy will generate more profits in the future. “

Also read: Coal-fired power projects in doubt as China’s funding dries up

Standard Chartered Bank has announced that it will end its partnership with PT Adaro Indonesia, a subsidiary of coal mining firm PT Adaro Energy, Australia-based campaign group Market Forces reported in July.

The bank has provided Adaro Group with $434 million in funding since 2006, the campaign group found. Meanwhile, in April 2021, the bank joined a loan syndicate, providing another $400 million to mining companies.

National Bank to finance coal projects as Indonesia Financial Services Authority (OJK) requires lenders belonging to BUKU 4 category or those with core capital over Rp30 trillion (US$2.675 billion) We are also facing domestic and international pressure to stop offering. — State-owned Bank Rakyat Indonesia (BRI) and private lender Bank Central Asia (BCA) are diversifying their portfolios of loans from fossil fuels to mitigate climate risk.

“Unfortunately, [scheme] Not yet mandated. So basically there are no penalties for them. [who have yet] Diversify,” Erica said.

State-owned lenders Bank Mandiri, BRI, BNI and BCA, all of Indonesia’s largest banks by assets, reportedly lent $3.5 billion to coal companies between 2015 and 2021. . His August report published by the climate activists group 350.org.

According to the same report, Bank Mandiri provided the largest loan of $3.2 billion, followed by BCA, BRI and BNI with $170.4 million, $122.5 million and $53.3 million respectively.

This photo taken on May 19, 2017 shows an open pit coal mine in Jambi.This photo taken on May 19, 2017 shows an open pit coal mine in Jambi. (AFP/Go Chai Hin)

reluctant bank

Climate Policy Initiative (CPI) senior analyst Luthfyana Larasati said national banks were being cautious about funding coal-fired power plants and mining companies. She called on banks to continue to review and evaluate their financing strategies to mitigate the risk of stranded assets from funding coal projects, saying “the impact could be detrimental in the long term.” said.

With large coal reserves and a coal-dependent energy system, Indonesia faces significant challenges of abandoning commodities, including the cost of abandoning still-functioning plants and mines.

Hera F. Haryn, executive vice president of BCA’s secretariat and corporate communications department, said the company is looking to provide more funding to the renewable energy sector, including solar and hydropower projects. said. Existing projects funded by lenders have a total capacity of approximately 200 megawatts (MW).

“[BCA] We always refer to the regulations that apply when conducting business and business activities, and we support all government policies in different areas,” she asked about the company’s views on funding coal projects. I said when I was asked.

The company issued 0.2% of its total loan portfolio in financing coal projects, compared with 24.9% provided to renewable energy projects.

Meanwhile, BRI’s corporate secretary, Aestika Oryza Gunarto, said the company will continue to focus on providing loans to several sectors, including agriculture, manufacturing and financial services sectors.

“The coal industry is not a BRI priority. [The company] Aestika added on Friday that the BRI had issued “very small” loans to coal companies as of June. Its total loan portfolio.

Also read: Mining giant Indica cuts coal revenues by 50% with net zero in mind

Meanwhile, Apollonius Andwie, corporate secretary of state mining company PT Bukit Asam, said the company aims to develop the downstream coal industry and build renewable power plants.

For example, the company launched a US$2.3 billion worth of coal-to-dimethyl ether (DME) downstream project in January. The project is expected to produce 1.4 million DME annually to reduce imports of liquefied petroleum gas (LPG) by 1 million annually.

“[Bukit Asam] We will continue to expand our portfolio of renewable energy power plants,” he said on Friday.

Indonesia’s 10 largest coal miners, including Adaro Energy and Indica Energy, have started diversifying into non-coal businesses, including renewable energy development, electric vehicles and downstream coal industry development, IEEFA’s Errika said. .

“Adaro has announced that it wants to enter the green aluminum industry with hydropower as its energy source, while Indika has announced a joint venture with Singapore-based Fourth Partner Energy to build a solar power plant project. I plan to,” she said.

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