US, Japan back Indonesian energy transition plan
Indonesia plans to bring forward its peak in greenhouse gas (GHG) emissions from electricity generation, following Jarkata's agreement to a plan co-led by the US and Japan that will require $20bn in public and private financing over a 3-5 year period.
The plan — known as the Just Energy Transition Partnership (JETP) — was developed with Indonesia during its G20 presidency and was unveiled in Bali, where the two-day G20 summit started today. The plan also has the backing of Canada, Denmark, the EU, France, Italy, Germany, Norway and the UK, and is part of a strategy for Indonesia to reach its GHG emissions reduction targets and abide by the ambition of the Paris climate agreement.
Indonesia's electricity emissions will peak by 2030 under the JETP, instead of the previous target of 2037. Its power sector emissions — which is dominated by coal-fired plants — will also be capped at 290mn t of CO2 equivalent, down from a business-as-usual baseline of 357mn t of CO2e, Indonesia and its partner governments said in a joint statement today.
The plan also includes Indonesia adopting a goal to reach net zero GHG emissions in the power sector by 2050, instead of the current 2060 target. The plan will require an accelerated build-out of renewable energy so that 34pc of electricity will be generated by renewable sources by 2030, which would double total renewables deployment over the past decade.
The initial $20bn in public and private financing for the Indonesian power transition over a 3-5 year period will consist of grants, concessional loans, market-rate loans, guarantees, and private investments, the statement said.
Contributions to the JETP include $10bn in public sector pledges, and a commitment to work to
raise $10bn in private investment from an initial set of private financial institutions co-ordinated by the Glasgow Financial Alliance for Net Zero (GFANZ), and include US banks Bank of America and Citi, Germany's Deutsche Bank, Australia's Macquarie Bank, Japan's MUFG and the UK-listed HSBC and Standard Chartered.
"Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development," Indonesian president Joko Widodo said. "We are grateful for the co-operation and the support from our international partners to realize its full implementation that will accelerate this transition."
Indonesia is one of the world's largest 10 emitters. It is also the world's largest thermal coal exporter, having shipped 435mn t of coal last year with a target of 497mn t of coal exports this year. Coal consumption by Indonesia's domestic power sector will reach 161.16mn t in 2023, up from 128mn t this year, as new coal-fired generation capacity comes on line, according to an Indonesian energy ministry ESDM forecast.
Indonesia is one of the most vulnerable countries to the effects of climate change, such as rising sea levels, that will impact many of the low-lying islands on the archipelago nation.
"The resulting new and accelerated targets demonstrate how countries can dramatically cut emissions and increase renewable energy while advancing a commitment to creating quality jobs and protecting livelihoods and communities," US president Joe Biden said.
Japan will continue to co-lead the partnership with the US, in co-ordination with the other partner countries, and accelerate Indonesia's ambitious transition from coal to renewable alternatives with further private sector engagement, Japanese prime minister Kishida Fumio said.
Indonesia updated its nationally determined contribution (NDC) in September, improving its unconditional target from 29pc to 32pc below its business-as-usual scenario (BAU) from 2020 levels. The country also revised its conditional target from 41pc to 43pc below its BAU, including emissions from land use, land use change and forestry. The revised NDC was from the previous contribution pledge made in 2015.
Indonesian state-owned utility PLN last week targeted a cut to GHG emissions this year of 32mn t.
Related news posts
UN carbon market enshrines appeal, grievance processes
UN carbon market enshrines appeal, grievance processes
Berlin, 3 May (Argus) — The much-debated procedure for appeal and grievance processes for people negatively affected by carbon mitigation activities was finally passed this week by the regulator of the future UN carbon market. The supervisory body of the Paris agreement crediting mechanism, under Article 6.4 of the Paris climate agreement, called the appeal and grievance procedure a "crucial step towards developing a new international carbon market that sets the benchmark for high integrity carbon credits". The mechanism is expected to be passed at the UN climate summit Cop 29 in November in Azerbaijan. The appeal and grievance procedure sets the fee for filing an appeal at $30,000, compared with the $5,000 fee suggested in earlier iterations, which was seen by some supervisory body members at this week's meeting in Bonn, Germany, as "too low for project developers, but too high for vulnerable groups". The fee will be waived for appellants who are appealing for vulnerable groups, such as local communities and indigenous peoples. But the supervisory body failed to pass the mechanism's long-awaited sustainable development tool, instead launching a call for input. Members had criticised the lack of a validation and verification process for the tool, and its unclear delimitations, given that some of its objectives will be addressed in future rules on carbon removals activities or the carbon reduction methodologies under the mechanism. Making the tool mandatory was demanded by both countries and non-governmental organisations at recent Cop summits, with the lack of a grievance process and sustainable development tool part of the reason why the pricing mechanism was not finalised at Cop 28 in Dubai last year. The sustainable development tool of the Kyoto Protocol's clean development mechanism (CDM), which the new mechanism broadly aims to replace, was never made mandatory. A total of 1,796 carbon mitigation activities have now requested to transition from the CDM to the new mechanism, of which more than 300 have not yet provided full details and could miss the 31 August deadline, the UN's climate arm said in Bonn. The supervisory body called for an extension of the transition period to 4 November. Work on the new mechanism's registry is also advancing, with the supervisory body agreeing to launch a consultation on the "legal, technical and financial implications of providing functionality for the treatment of financial security interests in Article 6.4 emissions reductions within the mechanism registry". By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Beccs revenues 'dependent on sustainability'
Beccs revenues 'dependent on sustainability'
London, 3 May (Argus) — Danish state-controlled utility Orsted and UK utility Drax are increasingly dependent on sustainability criteria for their revenue streams from carbon removal (CDR) credit sales from bioenergy with carbon capture and storage (Beccs) projects, delegates heard at the Argus Biomass conference in London last week. "The key to be able to create such a project is to secure finance, which actually comes from the sale of carbon removal certificates," Orsted senior lead business developer for CCS David Fich said. Adding that the ability of companies to prove the sustainability of the biomass they source was now key to securing financing — including from CDR — for Beccs, and not only a matter of communicating that bioenergy and Beccs were environmentally friendly and carbon neutral businesses. Drax commercial director Angela Hepworth agreed: "Sustainability here is not a nice-to-have, this is the very foundation of our licence to upgrade and our ability to sell the credits and enable us to progress in these projects." Aligned standards within the industry and stronger incentives would encourage corporates to buy carbon credits against reputation backlashes, Hepworth added. Drax and Swedish utility Stockholm Exergi commissioned a methodology for measuring the net CO2 removal through Beccs published in October 2023, which was overall well-received by market participants. The utilities also presented it to the European Commission in the same month. A standardised approach to Beccs would encourage smaller buyers, which rely on certifications to identify the sustainable criteria of the carbon removal value chain when purchasing CDR credits, Fich said. While most larger corporates were doing their own due diligence. "The smaller buyers are those that are able to pay more," Fich said, adding that these companies were necessary to improve the liquidity of the market. Orsted signed a contract with Microsoft in May 2023 for the purchase of 2.76mn t of carbon removals over the next 10 years. Drax is also selling CDR certificates in the voluntary carbon market](https://direct.argusmedia.com/newsandanalysis/article/2441200) and is hoping to get the credits into the UK's trading scheme. Such deals "will help to make Beccs credits be seen in the more mainstream markets," Hepworth said. By Marta Imarisio Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oregon renewable diesel pours into CFP bank
Oregon renewable diesel pours into CFP bank
Houston, 2 May (Argus) — Rising renewable diesel deliveries helped grow the volume of Oregon Clean Fuels Program (CFP) credits available for future compliance by a record 30pc in the fourth quarter of 2023, according to state data released today. The roughly 253,000 metric tonne (t) increase in available credits from the previous quarter — bringing the total to 1.1mn t — illustrates the spreading influence of US renewable diesel capacity on markets offering the most incentives for their output. California and Oregon low-carbon fuel standard (LCFS) credit prices have tumbled as renewable diesel deliveries generate a surge of credits in excess of immediate deficit needs. LCFS credits do not expire. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed the annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Renewable diesel volumes in Oregon increased by 12pc from the previous quarter to about 37,000 b/d — more than double the volume reported in the fourth quarter of 2022. The fuel represented 24pc of the Oregon liquid diesel pool for the period, while petroleum diesel fell to 75pc. Renewable diesel generated 46pc of all new credits for the quarter, compared to the 14pc from the next-highest contributor, biodiesel. Deficit generation meanwhile shrank from the previous quarter. Gasoline deficits fell by 6.6pc from the third quarter as consumption fell by roughly the same amount. Gasoline use trailed the fourth quarter of 2022 by 7.1pc. Diesel deficits also shrank as renewable alternatives push it out of the Oregon market. Petroleum diesel deficits fell by 19pc from the previous quarter and consumption was 27pc lower than the fourth quarter of 2022. Spot Oregon credits have fallen by half since late September, when state data offered the first indications that renewable diesel that was already inundating the California market had found its way to the smaller Oregon pool. The quarter marks the first time Oregon credits available for future compliance have exceeded 1mn t. Oregon in 2022 approved program targets extending into next decade that target a 20pc reduction by 2030 and a 37pc reduction by 2035. An ongoing rulemaking process this year will consider changes to how the state calculates the carbon intensity of fuels and verifies the activity of participants, but will not touch annual targets. By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian rail workers vote to launch strike: Correction
Canadian rail workers vote to launch strike: Correction
Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more