A new study by civic society groups accuses the Asian Development Bank of indirectly financing coal power plants in Indonesia as the multilateral holds its annual general meeting in Tbilisi, Georgia.

Ecobusiness-A new 2,000-megawatt coal power plant expansion in Indonesia is getting indirect funding from the Asian Development Bank (ADB), according to a group of non-government organisations present at the annual general meeting of the multilateral held this week in Tbilisi, Georgia.

Indonesia, Southeast Asia’s largest economy, is already the world’s third-largest coal producer and a major coal consumer.

ADB describes its US$600 million loan to Indonesia’s state-run electricity utility, Perusahaan Listrik Negara ( PLN), as a bid to “promote the use of clean energy.”

But the loan agreement does not explicitly include a no-coal clause, which would have been the simplest way for the bank to ensure that PLN would not use the money for scaling up its fossil fuel facility, stated a report by United States-based Inclusive Development International, Netherlands-headquartered Recourse and Indonesian nonprofit Trend Asia.

“Publicly funded institutions like the Asian Development Bank must include robust coal exclusions in contracts with clients and financial intermediaries in order to end coal finance for good,” said Daniel Willis, finance campaigner at Recourse. “Without these, general purpose loans, or even funds earmarked for green projects, could end up supporting coal expansion.”

Paying for the sins of the past

Apart from ceasing support for new coal development, the ADB is obliged to provide remedy for the impacts of its past coal funding, the report added.

This includes support for earlier development and expansion of the Suralaya Power Station dating back to the 1980s.

Pollution from an earlier ADB-backed expansion of the Suralaya Power Station has displaced families, reduced fish stocks and agricultural yields, and sickened their children, stated the study.

Banten Province already has some of the highest rates of acute respiratory infections in the country and it is estimated that the added pollution from the Java 9 & 10 plants will cause between 2,400 and 7,300 premature deaths over their expected 30-year lifespan.

“Any new coal plant built in Indonesia is likely to operate for 35 to 40 years. By backing PLN’s coal development plans, the Asian Development Bank is helping to lock Indonesia into a future at least partly dependent on the dirtiest of fossil fuels,” said Novita Indri, energy campaigner at Trend Asia. 

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Photo by Tiara Pertiwi/Trend Asia