French bank backs out of financing Indonesian coal plant
In the spotlight, 10 January 2017
by Yvonne Kunz
A part of civil society action at the COP 2007 in Bali Photo: Watch Indonesia!
For the first time at the Conference of the Parties (COP) in Bali 2007 and again with the ratification of the Paris Agreement, Indonesia has pledged to take serious emission reduction actions. As one of the biggest emitters worldwide, the pledge is to cut greenhouse gas emissions by 29 per cent by 2030, and up to 41 per cent with foreign support including technology and finance. The main contributors to toxic carbon emissions in Indonesia are deforestation and coal. According to the Climate Action Trackers 2017 (climateactiontrackers.org), Indonesia is the only country where a strong increase in deforestation emissions can be expected in the period to 2030. If Indonesia will not manage to cut emissions through a decrease in deforestation, the government might intend to decrease emissions in the coal sector. Taking a look at the numbers here though, reveals the contrary.
Indonesia has been and still is massively expanding its coal production and consumption. In 2016, Indonesia has not only been the biggest palm oil exporter but also the largest coal exporter worldwide. “Due to declines in the coal export market, the major Indonesian coal companies are looking to shore up domestic demand through investing in a new suite of coal plants in the country” (Coalswarm 2016). Increasing numbers in coal mining concession and a plan to construct new coal energy plants are clear indicators towards this direction. Approximately 80% of 10,922 mining business concession were released during Susilo Bambang Yudhoyono’s time as president between 2004 and 2014 (WALHI 2014). Obviously, not all concessions granted are in operation yet. According to Enerdata (2015), there are plans to construct around 210 power plant projects across the country until 2019, according to Source Watch (2013), 130 of them will be coal-fired plants.
One way of supporting Indonesia’s fight against global warming can be to cut financial support for unsustainable energy production plans. It is hence good news to hear that local resistance and international pressure have led to the decision that Société Générale’s backs out from financing coal plants as outlined in this article.
Mongabay, 04 January 2017
https://news.mongabay.com/2017/01/french-bank-backs-out-of-financing-indonesian-coal-plant/
French bank backs out of financing Indonesian coal plant
Société Générale will not provide financing for the Tanjung Jati coal plant expansion, activists report.
- The developers of Tanjung Jati B, a 2,640 megawatt coal-fired power station in Central Java, plan to add an additional 2,000 megawatts of capacity.
- In order to meet climate-change commitments, Société Générale, a French bank that had planned to help finance the plant’s expansion, pledged to cease funding coal-related projects.
- Attention has now turned to the project’s remaining financiers, France’s Crédit Agricole and the Japan Bank for International Cooperation.
French bank Société Générale has confirmed that it will not finance the expansion of Tanjung Jati B-2 coal plant project in the Jepara district of Indonesia’s Central Java province, activist group Friends of the Earth France announced Tuesday.
Tanjung Jati B power station, a 2,640 megawatt coal power plant in Central Java’s Jepara District, began operations in 2006. Plant Operator PT Central Java Power now plans to add two additional 1,000 megawatt units, at an estimated cost of $4 billion. The plant, and its expansion plans, have been the target of sustained protests from both local and international groups, who say the plant pollutes water, air and crops, threatening the health and livelihoods of the surrounding communities.
Société Générale’s move to drop financing for the project is in accordance with the bank’s recent pledge not to fund projects that are incompatible with the Paris climate agreements.
In October 2016, ahead of the Marrakesh climate talks, the bank announced it would “no longer finance the coal-fueled power plants or related infrastructure anywhere in the world.” The bank had previously committed to cease financing such projects in high-income countries.
Tanjung Jati fell into a grey area; a final contract had not yet been signed, but the bank’s deal with project-sponsor Sumitomo was initiated prior to the announcement of the new policy in October.
According to Lucie Pinson, private finance campaigner for Friends of the Earth France, Société Générale gave the project’s backers until December 2016 to complete financing, in order “spare its relations with its clients who are promoting the Tanjung Jati B project.” That grace period has now lapsed.
“As the project is enduring further delays, Société Générale is now obliged to disassociate itself from the group of funders in order to respect its commitment from October,” Pinson said in a press statement.
Attention is now turning to the two international banks still financing the project: France’s Crédit Agricole and the government-owned Japan Bank for International Cooperation (JBIC).
“Crédit Agricole is still involved in not one but two new coal power plant projects in Indonesia. To end up as the last French bank directly financing new coal-fired power plants would be an extremely bad legacy,” Pinson said. “In October 2016, the bank committed, just the same as Société Générale, to no longer fund new coal-fired power plant projects anywhere in the world. As New Year’s resolutions are still fresh in the air, it’s crucial that Crédit Agricole still respects the promises it made in 2016.”
JBIC is also already facing protests at home and in Indonesia over its involvement in funding coal projects in Indonesia.
Last month, Javanese villagers and NGO leaders traveled to Jakarta to submit their objections to the JBIC’s funding of a coal plant in Batang, Central Java, staging a protest outside the Japanese embassy and delivering a petition alleging the project has led to serious human rights abuses in their communities.
