Fast-Track Focus On Coal Power May Cost Indonesia Billions

By webadmin on 10:46 pm Nov 17, 2009
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Reva Sasistiya

As it begins to tap its massive coal reserves to generate cheap electricity, Indonesia may face additional costs of up to 2.4 billion euros ($3.58 billion) annually for carbon capture and storage at 37 coal-fired power plants planned in the first phase of the “fast-track” power program, a senior adviser on climate change said.

Those plants are expected to produce 60 million tons of carbon emissions annually, while the longer-term cost of carbon capture and storage is estimated at 40 euros per ton, David Hone, Royal Dutch Shell’s senior adviser on climate change, said late on Monday on the sidelines of Singapore Energy Week.

This would result in an average annual cost of $3.58 billion. State power utility PT Perusahaan Listrik Negara has said it will save $2.8 billion next year as a result of its shift from oil-based electricity production to coal.

Carbon capture and storage involves trapping carbon dioxide emitted from coal-fired plants and industrial sites, compressing it and transporting it to a permanent storage facility, often deep below ground. The government is considering implementing the technology in the future.

Hone said the technology involved in CSS was not challenging, but the substantial costs required political will and commitment ahead of any major power program because an individual power plant’s technology and geological conditions are the main factors in determining costs.

“The most important thing is to have a vision first,” Hone said. “The plant that you build today will affect the costs in the future, so it is important to think about what the end-game is.”

Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and a Pulitzer-prize winning author of a history of the oil industry, said Indonesia should focus on developing natural gas-fired power plants to reduce emissions, given the country’s massive reserves of natural gas.

“Gas is the future of the energy,” he said.

According to upstream oil and gas regulator BPMigas, Indonesia has 182 trillion cubic feet of commercially recoverable gas reserves, including 94 mmcf of proven reserves.

While PLN has converted some of its existing gasoline-fired plants to natural gas, the focus of the first phase of the fast-track program is on coal-fired plants.

PLN vice president Rudi Antara said on Tuesday that PLN planned to use CSS at its coal-fired plants, but hadn’t yet estimated the cost.

“Because it is already a global issue and we are concerned about our carbon emissions, it is PLN’s strategy to use environmentally friendly technologies,” he said.

Each coal-fired plant would be addressed on a case-by-case basis, he added.

Rudi noted that about 60 percent of PLN’s plants planned for the second phase of the fast-track program would run on renewable energy.

The reliance on coal will be reduced during the second phase, intended to add 10,000 megawatts of capacity. About 6,000 MW will come from geothermal and hydroelectric plants, while gas-powered plants will generate 2,600 MW and coal-fired plants about 1,200 MW.

A focus on renewable energy in the second phase may save the country billions of dollars. So far the country has signed nine carbon-credit agreements for plants planned for the second phase. Carbon trading is a mechanism to limit emissions by allowing companies or countries to buy or sell carbon credits if they exceed or fall short of emissions limits.

Indonesia could trade credits for more than 60 percent of the 99 power plants planned during the second phase, making it eligible for up to $280 million in carbon credits.