Environment Update: Climate Change, the World Bank, Indonesia and Coal

I read two stories about the World Bank and climate change this week. One stated that Christine Lagarde, Managing Director of the International Monetary Fund of the World Bank, (seen below) is kept up at night because of concerns about climate change. The other talked about the World Bank and its policy towards coal-fired power plants. You see back in July of 2013 the World Bank’s board agreed to limit financing coal-fired power plants to rare circumstances. What did they mean? That the Bank would only provide financial support in the case where there were no feasible alternatives to coal.

So I was surprised to read just four days ago that the World Bank had decided to finance Indonesia’s Central Java Power with $33.9 million U.S. for a 2,000 Megawatt thermal power plant. Not only that, the World Bank would act as transaction advisor for the mega-project.

If you consider Indonesia and its potential capacity for wind, solar, tidal, and wave, geothermal, biomass and hydroelectric power one wonders which side of their mouths the World Bank directors are talking out of to make their no feasible alternative stick. The country in 2012 was almost totally dependent on fossil fuel derived energy. In fact, over 95% of electricity was being generated this way with energy consumption growth at 7% annually.

So renewables in Indonesia today are at 4.8% of the national energy mix with nowhere to go but up. And the government has declared its intent to wean itself to some degree from fossil energy. The Ministry of Energy has set a 2025 goal of developing 25% renewable energy in its total energy mix. When you consider that a third of Indonesian households today have no electricity, renewable both off and the on the grid sounds like the feasible alternative, not colossal coal-fired power plants like the one the World Bank is funding.

It’s not like there isn’t renewable energy capacity in the country. A series of recent studies conclude the following:

1. Estimated hydro capacity of 75,000 Megawatts with current installations accounting for only 4,200 Megawatts.
2. Geothermal capacity exceeding 29,000 Megawatts but only 1 Megawatt developed to date (see image below). Thing about that. Indonesia sits on the Ring of Fire and has more active volcanoes than any other country on the planet and yet it has developed less than 4% of its geothermal capacity.
3. 0.6 Megawatts of wind power installed to date in a country that is hundreds of islands with thousands of miles of coastline and incredibly constant winds.
4. Solar, a mere 12 Megawatts to date in a country that straddles the equator and receives more sunlight than most other places in the world.

Recently the Government of Indonesia introduced feed-in tariffs for geothermal power. They are starting to work. And now they have added feed-ins for solar photovoltaics and wind. So while the World Bank expresses concern about rising global temperatures, and the cost of climate change, and while it talks about no longer funding coal-based projects, it ends up subsidizing a coal-fired power plant that will undoubtedly increase Indonesia’s carbon emissions and not move the country to renewable energy at a faster pace.

Talk about hypocrisy on a global scale!