Indonesia Advances in Closing Java Coal Plant Early

According to Yahoo News, Indonesia has taken a significant step towards the early retirement of the privately-owned Cirebon-1 coal-fired power station, a landmark deal that could potentially shut down the plant almost seven years ahead of schedule and serve as a model for other facilities. A non-binding agreement was signed during the United Nations climate talks in Dubai, in which the Asian Development Bank, Indonesian state-owned utility PT PLN, the Indonesia Investment Authority, and the plant's owners agreed to allow the operation to close by the end of 2035, earlier than anticipated after previous phase-out discussions. The plant was initially scheduled to operate until July 2042. The financial arrangements and terms of the deal were not disclosed by the ADB and other signatories. These critical details will determine whether the agreement can serve as a blueprint for state-owned and private coal plants in Indonesia or for similar efforts worldwide. Early phase-outs like this one are crucial to global efforts to limit climate damage but depend on funding. Existing investors need to be compensated for the loss of future earnings, and blending private and concessional financing has proven challenging. A final agreement is expected next year. The deal is part of the ADB's Energy Transition Mechanism program, one of several ongoing efforts by international funders to accelerate the transition from fossil fuels to clean energy. Indonesia's state wealth fund signed a non-binding agreement late last year to help fund the early retirement of the 660-megawatt coal-fired plant. Indonesia has committed to shutting down all coal plants by 2050 as part of its net-zero emissions goal. Several challenges hinder its efforts, including large-scale coal use for industrial purposes, financing, and the need for significant investments in renewable energy deployment, grid infrastructure improvements, energy storage, and managing the human impact of a dramatic change for the world's largest coal exporter. The ADB agreement is subject to due diligence, including environmental and social reviews, and depends on the results of an ongoing study of the technical and financial impact of the plant's early closure on PLN's electricity system. The owners of Cirebon-1 include Marubeni Corp., PT Indika Energy, and Korea Midland Power Co.