China’s Pivot From Funding Coal Plants To Gasification Slammed As More Of The Same

  • China has promised to stop funding new coal-fired power plants abroad, but appears intent on investing in other coal projects, including gasification plants in Indonesia.
  • A state-owned Chinese company announced in October that it would build a $560 million gasification plant in Indonesia’s Aceh province, turning the fossil fuel into methanol.
  • Energy experts warn that this pivot away from coal-fired power plants to gasification plants “may be a loophole in the commitment to ending coal financing.”
  • At the same time Indonesian President Joko Widodo has promised billions of dollars of support for gasification while also seeking foreign investment to expand the industry.

When China announced, in late September, that it would stop financing the construction of new coal plants overseas, Indonesia looked to be one of the most impacted countries. The Southeast Asian nation is one of the world’s most prolific builders of coal-fired power plants, often with Chinese support.

Three months later, however, not one of the eight Chinese-funded coal plant projects in the permitting or planning phase in Indonesia has been shelved. Instead, the only major coal-related news was in October, when Indonesia’s Powerindo Cipta Energy and state-owned China National Chemical Engineering Corporation announced they would conduct a feasibility study into building a $560 million coal-to-methanol gasification plant in Meulaboh, a city in Indonesia’s Aceh province.

Coal gasification is a century-old technology in which coal is converted into a liquid gas that can then be used for industrial or transportation purposes. In recent years, the coal industry has revived gasification as an alternative to importing natural gas and petroleum. But observers say China’s financing of the Meulaboh project violates the spirit of China’s pledge to stop funding coal plants abroad, suggesting that China will merely shift to gasification and other fossil fuel-related projects in Indonesia rather than, as hoped, clean energy.

Andri Prasetiyo, program manager at Trend Asia, an Indonesian nonprofit that focuses on accelerating the transition to clean energy, said the announcement made China’s pledge seem like an “empty commitment.” Christine Shearer, program director for coal at Global Energy Monitor, a California-based NGO that tracks fossil fuel projects around the world, called it a “worrying development,” telling Mongabay, “It’s certainly a concern that coal gasification may be a loophole in the commitment to ending coal financing.”

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