Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment

February 2021 Author Qusairy Wardana Harahap Pius Ginting

Muhammad Rushdi EdyHaflah Burmansyah Distincta

Layout by Syaviera Aninda Putri Said

AEER 2021 Climate Emergency Mitigation Monitoring Program Website: http://aeer.info [email protected]

Email: Table of Contents Table of Contents i List of Tables ii List of Figures iii Glossary v Foreword viii Executive Summary xii Introduction xviii CHAPTER 1 Coal in South Sumatra 1 1.1 7 1.2 12 Analysis of Coal Types in South Sumatra 1.3 14 South Sumatra Mining Area CHAPTER 2 Coal Export Analysis 17 Dynamics of Low Calorie Coal Exports in South Sumatra 2.1 18 2.2 24 Analysis of Coal Exports in Indonesia Mine Mouth Power Plant Absorbs Low Quality Coal 2.3 30 Reserves in South Sumatra Development of Low Quality Coal Industry Infrastructure 2.4 32 in South Sumatra CHAPTER 3 Mine Mouth Power Plant Funding 35 Development of Mine Mouth Power Plant Transimisi 3.1 Chinese Investment in Mine Mouth Power Plant in South 37 Sumatra CHAPTER 4 Contradictions with Carbon Emission Reduction 44 Initiative 4.1 Contradictions with the Paris Climate Accord 45 4.2 National and Local Emissions Reduction Initiatives 47 CHAPTER 5 Impact of Mine Mouth Power Plant 49 5.1 50 5.2 51 Health Impacts of Lignite 5.3 55 Deforestation in Muara Enim and Lahat Regencies 5.4 61 Loss of Agricultural Land Access CHAPTER 6 Conclusions and Suggestions 65 River Pollution Due to Coal Waste

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment i List of Tables

Table 1.1 6

Table of Coal Resources and Reserves in South Sumatra by Table 1.2 7 Regency (in millions of tons) (Geoportal ESDM, 2020) Characteristics and Uses of Coal Data System (IEA, 2010 and Table 1.3 9 Coal Characteristics, Purdue University) Types of Coal in Each Indonesian Mining Company (Mills, Table 1.4 10 2011) Characteristics of PTBA coal trademarks (PTBA Presentation, Table 2.1 28 2017) 34 Table 2.2 List of Coal Companies’ Mouth Mine Recapitulation of Transmission Network Development Plan Table 3.1 36 (kms) (RUPTL 2020-2028) Power Plant in South Sumatera Province (RPJMD South Table 5.1 51 Sumatra 2019-2023) Pattern of Outpatient Disease in South Sumatra (Muara Enim Table 5.2 62 Regency in Numbers, BPS 2019) Indicators of Enim River Waters (Ijazah, et al., 2016)

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment ii List of Figures

Figure 1.1 2

Total Resources and Reserves of Indonesian Coal (PSDMBP Figure 1.2 3 ESDM, 2019) Total Coal Resources and Reserves in Three Provinces in Figure 1.3 4 Indonesia 4 Figure 1.4 Composition of South Sumatra coal by Calorie Coal Production in Three Provinces in Indonesia (ESDM Figure 1.5 7 Perfomance Report) General Classification of Coal by Rank Value and Utilization Figure 1.6 11 (Trus, 2010) PTBA Coal Sales by Coal Trademark (PTBA Corporate Figure 1.7 12 Presentation, 2017) 14 Figure 1.8 Coal Distribution of South Sumatra Province Total Production Coal Tanjung Enim (Annual Report PTBA, Figure 1.9 15 2019) Total Lignite Exports from Several Lignite Exporting Figure 1.10 15 Countries (TradeMap, 2021) Total Lignite Exports from Indonesia to China (TradeMap, Figure 1.11 16 2021) 18 Figure 2.1 Total Lignite Exports of Each Province (BPS, 2019) 19 Figure 2.2 Coal Transport Train in Muara Enim Regency 20 Figure 2.3 South Sumatra Coal Transportation Route (Hardian, 2011) Coal Transportation Scheme in South Sumatra (Hardian, Figure 2.4 22 2011) Coal Transportation Scheme in Kalimantan (Compiled from Figure 2.5 23 available data) Coal Transportation Lines by Train and Coal Stockpile in Figure 2.6 24 Lahat Regency Transportation Comparison Scheme between PT Adaro and Figure 2.7 26 PTBA (AEER, 2021) Self-igniting Coal at Stockpile in West Banko, PTBA Stockpile

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment iii List of Figures Figure 2.8 27

Stockpile of Mawar Site Muara Tiga Besar IUP PTBA (Persero), in Sirah Island Area, East Merapi, Lahat Regency, Figure 2.9 29 After Self-igniting, April 2019 Comparison of Mine Mouth Power Plant Development Plan Figure 2.10 32 in South Sumatra from Three Documents 33 Figure 2.11 Coal Transportation Development in South Sumatra Map of Electricity System of South Sumatra Province (PLN, Figure 3.1 38 2020) 40 Figure 3.2 South Sumatera Mine Mouth Power Plant 1 52 Figure 5.1 Sumsel Mine Mouth Power Plant 8 Deforestation in Muara Enim and Lahat districts in 2014, Figure 5.2 53 2017, and 2020 Mine Pits and Forest Cover in Merapi Barat Subdistrict, Figure 5.3 54 Lahat Regency Area of Non Vegetation Area in The District Around Coal Figure 5.4 55 IUP in Muara Enim Regency Conflict Between Humans and Tigers in South Sumatra Figure 5.5 57 Province Number and Percentage of People Working in Agriculture Sector in South Sumatra Province (South Sumatera BPS, Figure 5.6 57 2019) Gross Regional Domestic Product (GDP) on the Basis of Constant Price (ADHK) 2010 in South Sumatra during Figure 5.7 59 2010-2019 (South Sumatera BPS, 2019) Sutet 500 kV Tread in Tanjung Agung Village, Muara Enim Figure 5.8 60 Regency Sutet Network Site 500 kV for the Needs of PLTU Sumsel 8 Figure 5.9 61 in Muara Enim Regency 63 Figure 5.10 Residents of Tanjung Lalang Village Bathe in Enim River Construction of Embankment for Water Intake Channel of Figure 5.11 64 PLTU Sumsel 8 in Enim River, Tanjung Lalang Village Enim River is Murky and Muddy, Complained the Villagers of Keban Agung

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment iv Glossary

• Agglomerating

: a parameter that indicates strength of coal residue and • Air dried basis (adb): its ability to withstand 500 grams load without any damage/destruction. a parameter value that does not take into account • As received (AR): coal surface water content The value of the total coal parameter that takes into account the content of air, according to the circumstances when taken in • Ash content: the field. • Bituminous: amount of residue from coal combustion • Caloric value: a type of coal with lower quality than anthracite • Conveyor belts: an amount of heat produced from coal combustion continuously-moving strip of rubber that are used to • Coal reserve: move or transport goods or materials horizontally or at an angle. a part of coal deposits with known dimensions, quantity distribution, and quality, which at the time of feasibility assessment is • Coal resource: declared eligible to be mined. part of coal deposits that are expected to be utilized. It is divided based on the level of geological confidence determined qualitatively by geological conditions complexity and quantitatively by the distance of the point of information. This resource can be increased to • Cooking coal: reserve if after a feasibility study is declared feasible. a type of coal that is used to make coke in steel and iron • Deadweight tonnage (DWT): production industry. a measure of how much weight a ship can • Fixed carbon: carry. an amount of carbon left after coal combustion, after • Lignite: volatile matter is eliminated a type of coal with the lowest quality, characterized by low calorie • Metallurgical process: and high water content a process that is used for the extraction of metals in their pure form.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment v Glossary

• Non-vegetation areas:

a region that is not covered by green leaves • Open-pit mining: including settlements, bodies of water (rivers and lakes), or mining areas. surface mining technique of extracting rock or minerals from the Earth by their removal from an open-air pit. This form of mining • Steaming coal: differs from extractive methods that require tunneling into the earth. • Sub-bituminous a type of coal commonly used to move power plant turbine. : a type of coal with caloric value 4,165 – 5,700 kcal/kg • Supercritical: and water content 10-35 percent. one of boiler technology used in coal power plant with • Total moisture: higher efficiency than subcritical. • Vegetation area: water content inside coal based on field condition. a region that can be forests, plantations, rice fields, or • Volatile matter: other areas covered with green leaves. a measure of the non-water gases formed from a coal sample during heating.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment vi Coal Mining in Lahat Regency

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment vii Foreword

South Sumatra Province is one of the coal source locations in Indonesia in addition to South Kalimantan and East Kalimantan. However, compared to the two provinces in Kalimantan, South Sumatra's coal production is lower. This is certainly conducive to making room for the development of renewable energy, thus contributing to the reduction of regional, national and global greenhouse gas emissions.

However, currently the development of infrastructure and coal utilization in South Sumatra is very intensive. This can be seen from the improvement of railways, the construction of mine-mouth power plants, and other downstreaming agendas such as coal gasification programs. This is certainly worrying for the goal of achieving low- carbon development in South Sumatra Province.

The Master Plan document of South Sumatra Province as a National "seems to be constrained by two Energy Barn (2006-2025) states that the future development of factors, namely the limitations of coal transportation infrastructure South Sumatra coal production and the quality of most reserves. Nevertheless, the development of the mine-mouth power plant that will be used to supply electricity for the Sumatran system and integrated with Jamali electricity system using Sumatra-Java interconnection will demand the binding of South Sumatran coal production..."

This affordability should open up opportunities to strengthen the development of renewable energy because overcoming these constraints needs funds that make the difference in costs with renewable energy increasingly narrow. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment viii Knowledge and awareness of global warming caused by the burning of fossil fuels with the consequences of it increasing since the document was created. Indonesia hosted the UN Climate Change Conference in Bali in 2007, the year the 2015 Paris Climate Agreement was made.

Now some major economies such as China have set targets of neutral carbon emission before 2060 by reaching peak emissions by 2030.

Given the age of coal infrastructure in the form of power plants and railways aged at least 25 years, the development of coal infrastructure and power plants in South Sumatra will now have long-term consequences as well, and potentially complicate economic opportunities in the future with the increasing number of initiatives to industry. eliminate coal both by funding and investment institutions and the manufacturing

Infrastructure development and coal mine mouth power plant in South Sumatra will facilitate the reduction of forest land and agricultural land, resulting in a rise in animal and human conflict amid global concerns about reduced biodiversity. It also causes the loss of small people's access to agricultural land.

This study discusses the state of South Sumatran coal by looking at the impeding factors in regard to achieving emissions reduction targets in the electricity energy sector in South Sumatra related to the development plan of coal infrastructure and the consequences of environmental impacts for residents.

The Provincial Government of South Sumatra has planned the achievement of renewable energy by 21.06 percent by 2025 and 22.56 percent by 2050 based on South Sumatra Provincial Regulation No. 4 of 2020 on Regional Energy General Plan (RUED) of South Sumatra Province 2020-2050. The existence of investment in the mine-mouth Power Plant and high carbon coal infrastructure has the potential make this target unachievable, as will be discussed in this study.

In the preparation of this study, we relied on available secondary sources and field observation to determine the social and ecological impacts that have occurred and Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment ix the potential for further damage going forward and its recommendations. Thank you Aidil Fitri and Mary Silaban for reviewing. The responsibility of the content lies entirely with the Writing Team.

We hope that this study contributes to strengthen the achievement of renewable energy in RUED South Sumatra 2020-2050 by increasing investment in renewable energy, with the cooperation of all institutions in the country and also from abroad, such as companies from China that currently have a strong presence in the coal power plant sector in South Sumatra.

Regards, Pius Ginting

Coordinator of the AEER Association

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment x PT Piramanaya Stockpiling to West Merapi, Lahat Regency

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment xi Executive Summary

South Sumatra is one of the provinces with the largest total coal resources and reserves in Indonesia, in addition to the East Kalimantan and South Kalimantan. About 25 percent of Indonesia's coal reserves are in South Sumatra. The majority of these coal reserves are low quality lignite and sub-bituminous coal. Meanwhile, the coal mining area in South Sumatra is owned by companies holding PKP2B and IUP with a total mining area of ​​753,000 hectares.

Even though South Sumatra has large coal reserves, the amount of coal production is actually smaller than that of East Kalimantan and South Kalimantan. PT Bukit Asam (PTBA), the company with the largest IUP area in Muara Enim Regency, only produces low-quality lignite coal with the Bukit Asam-45 trademark for 500 thousand years in 2017. In fact, the company's lignite coal reserves are quite large, 1.35 billion tonnes.

The factor that influences this is the high cost of coal transportation in South Sumatra due to the coal reserves in South Sumatra being in a remote and isolated area, thus requiring a long land transportation infrastructure so that coal can be sold. In addition, transportation in South and East Kalimantan is easier and cheaper due to the large number of rivers in the two provinces, making it easier to transport coal from mining locations.

In order to use low quality coal which is large but uneconomical, several strategies have been developed by the government and companies in South Sumatra, including:

• Through the Minister of Energy and Mineral Resources Regulation No. 19/2018, the Mine-Mouth coal-fired power plant (PLTU) will be Low Carbon Development of South Sumatra Has built close to a coal source.the Potential Moreover, to be Hampered the Mine by Low Quality Mouth Coal InvestmentPLTU will alsoxii use low quality coal so that it can reduce the cost of providing power plants. With the Mine Mouth PLTU, low quality coal from South Sumatra which is not economical due to the fact that it is easy to turn into sand and burns when transported can be sold. The use of low-quality coal in South Sumatra is estimated to increase in line by 2029. with the plan to increase the construction of the Mine-mouth PLTU by 2450 MW

• The development of coal transportation infrastructure in South Sumatra is carried out by developing railroads from the Tanjung Enim coal mining location to the port so that it can facilitate and increase coal sales in South Sumatra for both domestic and international markets. There are four planned railway development projects. First, the construction of a railway line from the mining area in Tanjung Api-Api. Second, the development of a railway line from Muara Enim to Kertapati Port. Finally, there are two railway development projects from Muara Enim to Tarahan Port. The entire railway development plan can increase coal transport capacity by up to 230 million tons per year.

• The electricity transmission line from the Mine Mouth PLTU is needed so that electricity production can reach distant consumers due to the existence of the PLTU in a remote location. Currently, the existing electricity transmission lines around the Mine Mouth PLTU such as PLTU Sumsel 1 and Sumsel 8 are not sufficient to be able to transmit the electricity produced by the two PLTUs.

Mine Mouth PLTU is the result of a cooperation between coal miner and a power plant company. Most of the Mine Mouth PLTU development in South Sumatra received funding from Chinese financial institutions and investment companies.

• PLTU Sumatera Selatan 1 (Sumsel-1), with a capacity of 2 × 300 MW, sponsored by China Shenhua and executed by PT Shenhua Guohua Lion Power (PT SGLPI). PT SGLPI is a consortium of China Shenhua Energy Company Ltd and PT Lion Power Energy (LPE). PLTU Sumel-1 also received funds amounting to USD 520 million from China Construction Bank, Bank of China, and Industrial and Commercial Bank of China.

• PLTU Sumatera Selatan 8 (Sumsel-8), with a capacity of 2 × 620 MW, sponsored by PT Huadian Bukit Asam Power (PT HBAP) which is a consortium between Chinese Low Carbon Development of South Sumatra Has company, Huadian Hongkok Companythe Ltd Potential and to bePT Hampered Bukit by LowAsam. Quality ThisCoal Investment project alsoxiii received a loan from the China Export Import Bank of USD 1.2 billion. PT HBAP will also build a 500 kV extra high voltage transmission line from PLTU Sumsel-8 to the PLN substation in Muara Enim.

• PLTU Sumsel 5 (SS-5), with a capacity of 300 MW, is owned by Dian Swastatika Sentosa Tbk Power through PT DSSP Power Utama (PMU). The two companies are subsidiaries of the parent company Sinar Mas. The project funding consists of USD 400 million loans from the China Development Bank and USD 20 million from equity company. Then, in December 2020, China Datang Corp, China's state-owned enterprise, has purchased 75% of PMU shares worth USD 394 million.

• Banyuasin Mine Mouth PLTU, with a capacity of 225 MW, is estimated to require USD 225 million investment. Initially, this PLTU was owned by PT Truba Alam Manunggal Engineering Tbk (TRUB). However, in 2015, it was revealed that this PLTU was owned by China Power Construction, Shanghai Electric Power and PT Satya Abadi Semesta. The construction of the Banyuasin Mine Mouth PLTU is constrained by several things so that information related to its development plan is uncertain.

It is feared that the presence of the Mine Mouth PLTU will exacerbate environmental damage. The location which is not far from residential and agricultural areas allow the impact of the Mine Mouth PLTU to expose waste and pollution that can disrupt local environment. Some of the environmental, economic and social impacts of the PLTU operation are as follows:

• With a higher dust content, the Mine Mouth PLTU which uses low quality lignite coal, potentially health of residents2 near2 the PLTU due to the air pollution. Several air quality parameters such as SO , NO , and PM10 were higher than other areas. This can lead to an increase in Upper Respiratory Tract Infections (ISPA) cases in areas around Mine Mouth PLTU such as Muara Enim Regency.

• Increased mining activity, marked by large non-vegetation areas, has resulted in deforestation in Muara Enim and Lahat Regencies. Coal mining through open pit mining method causes the water absorption area near the river around the mine to decrease, which potentially cause derivative disasters such as floods and landslides. The reduced vegetation area in South Sumatra has also led to conflicts Low Carbon Development of South Sumatra Has between wild animals and humans the Potential to be Hampered by Low Quality Coal Investment xiv • The ongoing aggressiveness of coal mining and the conversion of agricultural crop land has resulted in more limited agricultural land clearing, resulting in inequality of land tenure in South Sumatra. Such conversion causes a decrease in percentage of the population working in agricultural businesses in South Sumatra. In fact, the impact of coal mining operation caused a decrease in coffee production in Tanjung Telang Village, Lahat Regency due to increase in temperature and dust from the coal industry on coffee farmers' gardens.

• Construction of PLTU Sumsel-8 power transmission line that passes through communal land belonging to the community, causing conflicts between local communities and the mining company.

• Coal mining activities in Muara Enim Regency have an impact on the water quality along the rivers that is located near mining area. This can be seen from the increase in physical indicators such as Total Suspended Solid, Total Dissolved Solid and chemical indicators such as Biological Oxygen Demand and Chemical Oxygen Demand. This results in a decreasing oxygen levels in the waters and water clarity while increasing water temperature so that it can have consequences for river biodiversity.

Coal industry infrastructure development including special coal railroads and mine mouth power plants in South Sumatra are not in line with the commitment to prevent climate change in the Paris Agreement. This certainly makes it difficult for Indonesia to fulfill the emission reduction target in the energy sector. In addition, funding provided by Chinese institutions is contrary to the guidelines and funding principles agreed upon by the Chinese Government itself. In fact, PLTU Sumsel 8 will pay 17.9 million USD yearly for each emission produced if the PLTU operates in China. While, in Indonesia the PLTU potentially receive tax incentives.

In the Regional Energy General Plan (RUED) document, South Sumatra targets a renewable energy mix of 21.06 percent in 2025 and 22.56 percent in 2050. Therefore, coal infrastructure construction will hamper this target, especially at this time. The renewable energy mix is ​​still 3.01 percent and the use of renewable energy in power plants is still low. In fact, the funds needed for the construction of coal infrastructure can fulfill the planned development of a generator of 3,403 MW so that the target of increasing new renewableLow energy Carbon Development and the of South use Sumatra of renewable Has the Potential to be Hampered by Low Quality Coal Investment xv energy types in power plants in South Sumatra can be achieved. By canceling the low-calorie coal infrastructure development, other areas that enjoy low-calorie coal sales from South Sumatra will have more room to develop potential renewable energy available.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment xvi The Mouth of the Kungkilan River to the Lematang River

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment xvii Introduction

1 South Sumatra is a province that has renewable energy potential of 2 21,926 megawatts (MW) , ranked as the eighth province that has the 3 largest renewable energy potential . However, the potential utilized is only 67 MW , about 0.3 percent of the total renewable energy 4. potential. Currently, the renewable energy mix in South Sumatra Province is only 3%, while coal is 24.55%

The province of South Sumatra targets a 31% increase in renewable 5 energy in the primary energy market share for power generation by 2020 and 27% by 2050 . This can be achieved by encouraging the 6. increase of water-powered power plants (micro and mini hydro), geothermal and solar power

The vision of energy management of South Sumatra Province is "The creation of energy reliability and independence by optimizing the utilization of local energy that is environmentally sound and sustainable". There are several policy directions including the 7 utilization of new and renewable energy by gradually reducing fossil exports, especially gas and coal . In addition, there is also a 25% 8. reduction in carbon dioxide emissions from the consumption of electricity in residential buildings and commercial businesses

The vision and direction of this policy is excellent, in line with the 9 global spirit to reduce carbon emissions, as some countries have already targeted to be carbon emissions neutral by 2060. Therefore, cooperation of all parties, both national and international, is required to achieve the target.

The main obstacle for South Sumatra Province in achieving this 1 and 2. target is the dominance of fossil energy. This is described in Chapters Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment xviii The development of fossil energy is also related to the direction of foreign investment in South Sumatra in the Mine Mouth Power Plant project and railways that will be discussed in Chapter 3. In addition to increasing emissions, Mouth Mine Power Plant has an impact on residents whose polluted environment will be discussed in Chapter 4. The closing sections and recommendations include things that need to be done by stakeholders to achieve the renewable energy mix targets in RUED and Sustainable Development Goals (SDGs).

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment xix CHAPTER 1

COAL IN SOUTH SUMATRA

Ampera Bridge from the Musi Low Carbon Development of South Sumatra Has River the Potential to be Hampered by Low Quality Coal Investment 1 Chapter 1

CHAPTER 1 Coal in South Sumatra Coal in South Coal Sumatra

Based on data from the Ministry of Energy and Mineral Resources (ESDM) through 10 the Coal and Geothermal Mineral Resources Center (PSDMBP), as of December 11 CHAPTER 2 2019, Indonesia has 149 billion tons of coal resources and 37.6 billion tons of 12

Coal Export Analysis coal reserves The value of these resources and reserves was collected from 1,463 locations spread across 23 provinces.

Based on its caloric value, coal resources in Indonesia consist of 36% low calories,

Funding 54% medium calories, 8% high calories, and 2% very high calories. CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5

Figure 1. 1 Impact of Mine Mouth Power Impact of Mine Mouth Power (X axis: coal quality, fromTotal left Resources to right: low and calorie, Reserves medium of Indonesian calorie, high Coal calorie, very high calorie; blue: resources(PSDMBP and orange: ESDM, reserves; 2019 Y axis: millions of tons) CHAPTER 6 Suggestions Conclusions And According to data from PSDMBP ESDM, 2019, the majority of coal resources and reserves in Indonesia are found in several provinces,Low Carbon such Development as: of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 2 •

CHAPTER 1 South Kalimantan with a total resource of 17.4 billion tons and coal • reserves of 4.87 billion tons.

Coal in South Coal Sumatra East Kalimantan with a total resource of 60.1 billion tons and coal reserves • of 15.8 billion tons. South Sumatra with a total resource of 44.2 billion tons and coal reserves of 9.45 billion tons. CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4

(X axis from left to right: South Sumatera, South Kalimantan and East Kalimantan;

Contradictions with Carbon with Carbon Contradictions Figure 1. 2 Total Coal Resources and Reserves in Three Provinces in Indonesia Emission Reduction Initiative Emission Reduction blue: resources and orange: reserves; Y axis in billions of tons)

The percentage of total coal reserves in South Sumatra against the total coal Plant reserves in Indonesia alone is 25 percent. CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 3 CHAPTER 1 Coal in South Coal Sumatra CHAPTER 2 Coal Export Analysis Funding

CHAPTER 3 X axis coal quality from left to right: low, medium, high and very high; blue is resourcesFigure 1. and3 Composition orange is reserves; of South y Sumatraaxis is in millionscoal by Calorie of tons ( Mine Mouth Power Plant Mine Mouth Power ) CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power

Figure 1. 4 Coal production in Three Provinces in Indonesia CHAPTER 6 Suggestions (Blue: South Sumatera, orange: South Kalimantan and grey: East Kalimantan) (ESDM Performance Report) Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 4 CHAPTER 1 As much as 98 percent of resources and 96 percent of coal reserves in South Sumatra Province are low and medium quality coal. Coal in South Coal Sumatra South Sumatran coal is spread in several regencies such as Muara Enim, Lahat, and Musi Banyuasin. Muara Enim Regency has the largest coal reserves in South Sumatra with 38 percent of the total coal reserves in South Sumatra. (See Table

CHAPTER 2 1.1), and the largest resource is in Musi Banyuasin. Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 5 - - 25 77 15 287 596 425 CHAPTER 1 1,620 3,553 1,479 1,354 Reserves Coal in South Coal Sumatra 2019 75 25 287 6,506 2,335 1,080 2,541 3,821 1,624 2,248 10,310 13,215 Resources CHAPTER 2 - 25 77 15 340 567 147 297 Coal Export Analysis 1,620 3,840 1,691 1,435 Reserves 2018 75 15 394 6,484 1,464 1,235 9,000 2,572 3,821 1,229 2,180 Funding 13,386 CHAPTER 3 Resources - - 25 77 15 67 Mine Mouth Power Plant Mine Mouth Power 343 392 1,620 2,349 1,650 1,120 Reserves 2017 75 15 CHAPTER 4 861 300 6,484 1,237 1,464 7,600 3,621 2,508 2,202 12,487 Resources Contradictions with Carbon with Carbon Contradictions - - Emission Reduction Initiative Emission Reduction 0 0 100 304 195 1,306 1,878 3,702 3,304 123.7 Reserves Plant 0 2016 23 CHAPTER 5 573 884 460 1,102 5,692 3,674 6,086 6,072 1,593 14,611 Resources Impact of Mine Mouth Power Impact of Mine Mouth Power Ilir Ulu City Lahat Rawas Rawas CHAPTER 6 Suggestions Ogan Ilir Ogan Regencies Banyuasin North Musi Prabumulih Prabumulih Musi Rawas Muara Enim Muara Conclusions And Lematang Ilir Penukal Abab Abab Penukal Empat Lawang Ogan Komering Komering Ogan Ogan Komering Komering Ogan Musi Banyuasin Musi Banyuasin Table 1. 1 Table of Coal Resources and Reserves in South Sumatra by Regency (in millions of tons) (Geoportal ESDM, 2020) ESDM, (Geoportal tons) of millions (in Regency by Sumatra South in Reserves and Resources Coal of Table 1 1. Table

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 6 1.1 Analysis of Coal Types in South Sumatra CHAPTER 1

and its use. Coal can be classified based on physical character (carbon content and hardness) Coal in South Coal Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power

Figure 1. 5 General Classification of Coal by Rank Value and Utilization

CHAPTER 4 (Trus, 2010) In general, coal is usually divided into 4 categories, namely anthracite, bituminous, sub-bituminous and lignite.

Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction , , Each of these classifications has different characteristics such as calorific value, volatile matter fixed carbon and total moisture in each region based on data from the International Energy Agency (IEA). Plant

CHAPTER 5 Table 1. 2 Characteristics and Uses of Coal Data System (IEA, 2010 and CoalCharacteristics Characteristics, Purdue University) Types of Uses Coal Calories Volatile Fixed Total Impact of Mine Mouth Power Impact of Mine Mouth Power (kcal/kg) Matter Carbon Moisture CHAPTER 6 Suggestions Anthracite 5,703 <10% >90% <15% Industry Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 7 CHAPTER 1 Table 1. 2 Characteristics and Uses of Coal Data System (IEA, 2010 and CoalCharacteristics Characteristics, Purdue University) Types of Uses Coal in South Coal Sumatra Coal Calories Volatile Fixed Total (kcal/kg) Matter Carbon Moisture

industry Metallurgical CHAPTER 2 Bituminous 5,703 10-36 % 45-90% 2-15%

Coal Export Analysis Sub- 4,165 – 36% 35-45% 10-45% Electric bituminous 5,703

Lignite <4,165 36% 25-35% 30-60% Electric Funding CHAPTER 3 The International Coal Classification of the Economic Commission for Europe (UN/ECE) states that there are 2 categories of coal that can be interpreted widely,

Mine Mouth Power Plant Mine Mouth Power • namely: Hard coal is coal with a caloric value greater than 5,700 kcal/kg. Anthracite • and bituminous fall into this category

CHAPTER 4 Brown Coal is a non-agglomerating coal with a calorific value of less than 5,700 kcal/kg and contains volatile matter of more than 31 percent. Sub- bituminous and lignite fall into the brown coal category.

Contradictions with Carbon with Carbon Contradictions Anthracite Emission Reduction Initiative Emission Reduction 13

Anthracite, shiny black, contains carbon as much as 90-97%. Anthracite is the Plant coal with the highest heat value content and the lowest total water content of all

CHAPTER 5 types of coal. Anthracite is widely used as a material for steel industry activities 14 and household fuel needs. The countries with the largest anthracite reserves are China, Russia, and Ukraine.

Impact of Mine Mouth Power Impact of Mine Mouth Power Bituminous

Bituminous is usually faded black with a carbon content of 45%-90%, lower than CHAPTER 6 Suggestions anthracite. Bituminous is commonly used as a raw material for coking coal and Conclusions And is used in the iron and steel industries. When used for industrial activities, the volatile matter content of bituminous must be eliminated first. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 8 Sub-bituminous

CHAPTER 1 15 Sub-bituminous type coal, brown or faded black, is defined as non-agglomerating

Coal in South Coal Sumatra type coal with caloric values that between 4,165 kcal/kg and 5,700 kcal/kg with a moisture content of 10 to 35 percent. The characteristics of this coal are 16 between coal type bituminous and lignite. Sub-bituminous coal is widely used as a powerplant fuel . In fact, the low energy content and high water make this type of

CHAPTER 2 coal difficult to produce energy efficiently. Lignite

Coal Export Analysis ,

Lignite brown in color, falls into the category of low-quality coal because it has is a a high moisture content with low heat value or low calories (IEA, 2011). Lignite 17 non-agglomerating coal with a caloric value of 4,165 kcal/kg and a moisture

Funding content between 30 percent to 60 percent. CHAPTER 3

This low heat value certainly causes the burning of lignite type coal to be the most Mine Mouth Power Plant Mine Mouth Power inefficient if compared to other types of coal. Moreover, high moisture content also causes combustion to produce increasingly inefficient energy (Kashiwagi, 2015).

18

CHAPTER 4 With low carbon content and high moisture content, lignite and sub-bituminous are included in the category of low-quality coal . This low-quality coal has a low energy content, which is less than 5,300 kcal/kg and high-water content, which is Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction more than 20 percent so it is more difficult to burn than coal of higher quality.

19 In Indonesia, the majority of lignite and sub-bituminous types of coal have varied Plant characteristics Sometimes, coal types of lignite and sub-bituminous in Indonesia CHAPTER 5 have overlapping characteristics that make it difficult to differentiate between them especially in varied brands of coal mining companies.

Main types of coal Impact of Mine Mouth Power Impact of Mine Mouth Power TableCompany 1. 3 Types of Coal in EachMining Indonesian Location Mining Company (Mills, 2011) produced CHAPTER 6 Suggestions PT Adaro Indonesia South Kalimantan Sub-bituminous

Conclusions And PT Berau Coal East Kalimantan Sub-bituminous PT Kideco Jaya Agung East Kalimantan Sub-bituminous Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 9 CHAPTER 1 Table 1. 3 Types of Coal in Each Indonesian Mining CompanyMain types (Mills, of 2011) coal Company Mining Location produced Coal in South Coal Sumatra

PT Arutmin Indonesia Bituminous, Sub- South Kalimantan (BUMI Resources) bituminous PTBA (Bukit Asam Coal

CHAPTER 2 South Sumatra Sub-bituminous, lignite Mine) PT Kaltim Prima Coal Coal Export Analysis East Kalimantan Sub-bituminous (BUMI Resources) PT Indominco Mandiri East Kalimantan Sub-bituminous (Banpu) PT Gunung Bayan Funding Pratama Coal (Bayan East Kalimantan Sub-bituminous CHAPTER 3 Resources)

Mine Mouth Power Plant Mine Mouth Power South Sumatra is one of the provinces that has the largest coal reserves in Indonesia, 22

the majority of which consist of coal20,21 with low-quality and has a calorie value range between 953-5,325 kcal/kg adb and contains water content of 18-35 percent.

CHAPTER 4 PT Bukit Asam (PTBA), one of the largest mining business license (IUP) companies in South Sumatra, has the majority reserves of coal with low quality sub-bituminous and lignite types. In its sale, PTBA provides classification of coal with trademarks Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction such as Bukitasam-45, Bukitasam-50, Bukitasam-55, and Bukitasam-64. Each of these brands has different characteristics based on multiple values (see Table 1.3).

Plant The trademark is basically a low-quality coal, especially Bukit Asam-45 and Bukit

CHAPTER 5 Asam-50 which are the highest selling coal brands from PTBA. (See Figure 1.6) Table 1. 4 Characteristics of PTBA Coal Trademarks (PTBA Presentation, 2017)

Coal Brand Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 10 CHAPTER 1 Coal in South Coal Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3

Mine Mouth Power Plant Mine Mouth Power Figure(X axis: 1. 6PTBA PTBA Coal coal trademark, sales by coal y axis: trademark tons) (PTBA Corporate Presentation, 2017)

From the presentation delivered by PTBA in 2017, it was obtained that the sale CHAPTER 4 23 of coal from PTBA is dominated by coal with a caloric value of about 5,000 kcal/ kg,ar.• In addition, the coal has the following categories: Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction • 28 percent total moisture • 6 percent ash • 35 percent of volatile matter Plant 31 percent of fixed carbon CHAPTER 5 PTBA classifies the quality of the coal as Bukitasam-50 coal. In general, the Bukitasam-50 coal category is sub-bituminous. Coal sales are 10 million tons per

Impact of Mine Mouth Power Impact of Mine Mouth Power year. This condition is in accordance with the company's coal reserves dominated However,by sub-bituminous lignite type and coal lignite which type is coal. categorized as Bukitasam-45 coal by PTBA with calorie value specification of 4,500 kcal/kg, 30 percent total moisture, CHAPTER 6 Suggestions 6 percent ash, 35 percent volatile matter, and 29 percent fixed carbon not

Conclusions And sold until 500 thousand tons in 2017. In fact, the reserves of lignite-type coal

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 11 in mining in Tanjung Enim are quite large at 1.35 billion tons.

CHAPTER 1 In addition, Indonesia's lignite-type coal exports to China continue to increase (Trademap,

Coal in South Coal Sumatra 2021), but most are not from South Sumatra. 1.2 South Sumatra Mining Area

South Sumatra Province has mining areas spread across Lahat, Musi Banyuasin,

CHAPTER 2 Muara Enim, and Ogan Komering. Each of the mines in the region is owned by companies that hold The Agreement of Coal Mining Business Work (PKP2B) and Coal Export Analysis Mining Business License (IUP). Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power Figure 1. 7 Coal Distribution of South Sumatra Province

As seen in the coal distribution map of South Sumatra Province above, at least until CHAPTER 6 Suggestions 31 December 2020, the government of South Sumatra Province has issued 123 IUP

Conclusions And with an area of 625,848 hectares (Geoportal ESDM, 2020). However, not all IUP has conducted exploration activities because land acquisition has not been done by the Low Carbon Development of South Sumatra Has IUP holder company. In addition, therethe are Potential 8 PKP2B to be Hampered holder by Low companies Quality Coal Investment with a total12 CHAPTER 1 area of 128,029 hectares.

Muara Enim Regency is the region with the largest coal reserves in South Sumatra Coal in South Coal Sumatra with a total mining area of 145,213 hectares (Geoportal ESDM, 2020). The mining area is owned by the company, both PKP2B and IUP license holders.

There is one PKP2B holder company and 22 IUP holder companies in Muara Enim

CHAPTER 2 Regency. Of the 22 companies holding the IUP, there is one mining business license holder company with the largest total area in Muara Enim Regency namely PT Bukit Coal Export Analysis Asam (PTBA) of 30,000 hectares (Geoportal ESDM, 2020). The coal production area in Tanjung Enim itself is a mining area with Mining Business License Rights owned by PT Bukit Asam (PTBA Annual Report, 2019).

Funding According to PTBA 2019 annual report, Tanjung Enim units, including Muara Enim

CHAPTER 3 and Lahat Regency, has a mining area of 66,414 hectares consisting of Air Laya (7,621 hectares), Muara Tiga Besar (2,866 hectares), Banko Barat (4500 hectares),

Mine Mouth Power Plant Mine Mouth Power Banko-Tengah Blok Barat (2,423 hectares), Banko-Tengah Blok Timur (22,937 hectares), and Banjar Sari, Kungkilan, Bunian, Arahan Utara, Arahan Selatan (24,752 hectares).

CHAPTER 4 According to the report, the amount of coal resources in Tanjung Enim is estimated to reach 4.63 billion tons while the coal reserves that can be produced are estimated at 2.82 billion tons. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction With the total coal reserves, PTBA can conduct coal production in the working area of the Tanjung Enim Unit company by 28 million tons in 2019. This production even 24

Plant continued to increase from 2015 (See Figure 1.8). Coal production from PTBA itself

CHAPTER 5 was mostly sold to the domestic market by 60 percent and abroad by 40 percent. Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 13 CHAPTER 1 Coal in South Coal Sumatra CHAPTER 2 Coal Export Analysis

Funding (X axis: year, y axis: tons per year) CHAPTER 3 Figure 1. 8 Total Production Coal Tanjung Enim (Annual Report PTBA, 2019) 1.3 Dynamics of Low Calorie Coal Exports in South Sumatra Mine Mouth Power Plant Mine Mouth Power

With a large amount of coal reserves, Indonesia is one of the world's coal exporters

CHAPTER 4 besides Australia. As much as 75 percent of total coal production is exported to China, Japan, Taiwan, Korea, and Europe, while the remaining 23 percent is used for domestic needs both for electric energy production and for industries such as Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction cement and paper (ESDM, 2019).

Especially for lignite-type coal, Indonesia is the largest exporting country in the world, accounting for 80 percent of lignite-type coal exports (Trademap, 2021) Plant (See Figure 1.9). As much as 90 percent of total exports of lignite-type coal from CHAPTER 5 Indonesia are sold to China. Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 14 CHAPTER 1 Coal in South Coal Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3

Mine Mouth Power Plant Mine Mouth Power Figure 1. 9 Total Lignite(X axis: Exportsyear, y axis: from in Several thousands Lignite of tons) Exporting Countries (TradeMap, 2021) CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions

Conclusions And (X axis: year, y axis: in thousands of tons) Figure 1. 10 Total lignite exports from Indonesia to China (TradeMap, 2021) Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 15 CHAPTER 1 The special character of low-quality coal in Indonesia is to have a low sulfur content or less than 2 percent, a high water content between 15-35 percent, a low

Coal in South Coal Sumatra ash content of less than 10 percent, and a carbon content between 30-50 percent (Hadiyanto, 2006). Coal with low sulfur content can be mixed with coal with high calories but has a high sulfur content (Mill, 2009).

The low sulfur and ash characteristics make Indonesian coal piped in order to meet CHAPTER 2 the operating standards of coal power plants. Low sulfur content is increasingly steaming coal coal

Coal Export Analysis minimized by many parties because it can be used as a mixture with coal type metallurgical process25. for the needs of power plants and coal type cooking for 26. In general practice, low quality coal is mixed with other coal to meet several emission criteria, specifically sulfur emission limits

Funding The majority of lignite-type low-density coal exports from Indonesia to China come CHAPTER 3 from South Kalimantan and East Kalimantan (See Figure 1.11). However, South Sumatra which has high low quality coal reserves, which is about 9 billion tons Mine Mouth Power Plant Mine Mouth Power only exports about 1.5 million tons per year. In addition to being exported to China, some lignite from South Sumatra is also exported to other countries with a total export of only 2 million tons per year. CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions (Blue is East Kalimantan, orange is South Kalimantan and grey is South Sumatera)

Conclusions And Figure 1. 11 Total lignite exports of each province (BPS, 2019)

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 16 CHAPTER 2

COAL EXPORT ANALYSIS

Muara Enim Coal Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 17 Chapter 2 CHAPTER 1 Coal Export Analysis Coal in South Sumatra

2.1 Analysis of Coal Exports in Indonesia

CHAPTER 2 Although South Sumatra is one of the regions with the largest coal reserves in Indonesia, South Sumatra has a smaller amount of coal production and sales than Coal Export Analysis Coal East Kalimantan and South Kalimantan. One of the factors that influence this is the large cost of coal transportation in South Sumatra.

The way coal transportation is carried out will certainly depend on geographical

Funding

CHAPTER 3 conditions and distance. At close range, coal is generally transported using conveyor belts or trucks. As for long distances transported by train or barge or other alternative water transportation (World Coal Institute, 2009). Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power

Figure 2. 1 Coal Transport Train in Muara Enim Regency CHAPTER 6 Suggestions The majority of coal reserves in South Sumatra are in remote and isolated areas that Conclusions And require long enough land transportation infrastructure to reach the port in order to be sold for both domestic and internationalLow markets. Carbon Development Trucks of South and Sumatra railways Has are the Potential to be Hampered by Low Quality Coal Investment 18 CHAPTER 1 required as a means of transportation to move coal to ports and barge terminals. The low quality and expensive transportation costs of moving coal makes South 27

Coal in South Sumatra Sumatra's coal in South Kalimantan and East Kalimantan difficult to sell, especially for the international market.

Coal transportation in South Sumatra until now relies on railway services that are assessed by industry and government limited capacity. The railway network

CHAPTER 2 in South Sumatra Province consists of two main routes built in the early 20th century. The route connects Lubuk Linggau to Palembang via Prabumulih. From Coal Export Analysis Coal Prabumulih, the railway line can also go to Tarahan (Lampung). In addition, there area. is also a branch line that connects between Muara Enim to the Tanjung Enim mine Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5

Figure 2. 2 South Sumatra Coal Transportation Route (Hardian, 2011) Impact of Mine Mouth Power Impact of Mine Mouth Power 28 The route from Tanjung Enim and Muara Enim to Tarahan is estimated to move 21 million tons of coal per year while from Tanjung Enim and Muara Enim to CHAPTER 6 Suggestions Kertapati Port can move 4.3 million tons per year in 2019. Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 19 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Coal Funding CHAPTER 3

Figure 2. 3 Coal Transportation Scheme in South Sumatra (Hardian, 2011) Mine Mouth Power Plant Mine Mouth Power 29. In addition, there are four port infrastructures to transport coal, namely Kertapati Port, Tarahan Port, Tanjung Api-Api Port, and Musi River

CHAPTER 4 There are two ports that are usually used as a means of coal transportation in South Sumatra, namely Kertapati and Tarahan Ports with distance of 154 and 397 km respectively from the mining area in Muara Enim. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction When compared to coal transportation in South Sumatra Province, coal transportation in South Kalimantan and East Kalimantan is easier and cheaper.

Plant This is due to the use of water transportation used by the coal mining industry in

CHAPTER 5 both provinces.

River is the most widely used water transportation infrastructure in Kalimantan Island because it has a large and long river that can be used by large ships. These Impact of Mine Mouth Power Impact of Mine Mouth Power rivers are widely used to transport coal mined from various locations to meet the needs of domestic coal and exports. CHAPTER 6 Suggestions The many beaches and long rivers around the coal mine are very profitable for

Conclusions And mining entrepreneurs in East Kalimantan and South Kalimantan provinces in coal mining and transportation. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 20 CHAPTER 1 Mahakam and Barito are the main rivers in Kalimantan that are used as coal barge

traffic routes. Barges used for coal transportation in these rivers measure 3,000 -

Coal in South Sumatra 10,000 deadweight tonnage (DWT). As for transport ships with export purposes has a capacity of 180,000 DWT. After that, coal on the barge is transported to the port for sale, both domestic and international markets. 30: In general, there are several patterns of coal transportation that are developing in 1. CHAPTER 2 Kalimantan today, such as From the mouth of the mine, coal is taken by truck or conveyor to the port fit Coal Export Analysis Coal 2. by the beach. From the mouth of the mine, coal is taken to a shelter or stockpile by the river, then transported by barge and tug boat to the port fit on the banks of the river/ 3. beach/middle of the sea. Funding 4. CHAPTER 3 From the port, coal is sent to the export destination by ocean vessel. There are also barges that transport coal from riverside ports or stockpiles

Mine Mouth Power Plant Mine Mouth Power directly to the domestic market.

Kalimantan does not have a railway line so that coal located on land is transported by trucks and barges. Some of the mines that operate have their own coal terminals

CHAPTER 4 such as PT Kaltim Prima Coal (KPC) and PT Indominco.

Other companies move coal with trucks and barges from their mines to offshore

Contradictions with Carbon with Carbon Contradictions haulage or coal terminals for ship ports. In transportation schemes such as those Emission Reduction Initiative Emission Reduction 31 carried out by KPC and Indominco companies, coal is delivered to coal terminals by truck and conveyor. Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 21 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Coal Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Figure 2. 4 Coal Transportation Scheme in Kalimantan (Compiled from available data) available Scheme in Kalimantan (Compiled from 2. 4 Coal Transportation Figure Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 22 CHAPTER 1 In addition, the distance between the mining areas in the two provinces is also 32

Coal in South Sumatra closer to the coast and major rivers. Both factors that make coal in Kalimantan can be transported without the need to build expensive transportation infrastructure.

The distance between the main coal port in Kalimantan to the export destination port is also closer than the coal port in South Sumatra. The distance between

CHAPTER 2 Balikpapan Port and North Pulau Laut Port, to export destinations such as Tianjin Port, China is about 5783 km and 6076 km respectively. Meanwhile, the distance

Coal Export Analysis Coal 33 between Tarahan Port and Kertapati to Tianjin Port, China is about 7125 km and 6589 km. Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Figure 2. 5 Coal transportation lines by train and coal stockpile in Lahat Regency

Therefore, it can be concluded that coal transportation in the mining industry

Impact of Mine Mouth Power Impact of Mine Mouth Power in Kalimantan Island, especially East Kalimantan and South Kalimantan is more effective and easier than South Sumatra. The main factor is the closer distance between mining areas and beaches and large rivers making it easier to transport CHAPTER 6 Suggestions while coal in South Sumatra is in a remote area so that the only land transportation

Conclusions And route is through railways.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 23 CHAPTER 1 Therefore, the cost needed to carry coal in South Kalimantan and East Kalimantan Provinces is cheaper than South Sumatra Province. This is due to the cost of

Coal in South Sumatra transportation via water is much cheaper compared to land transportation such as roads and trains (Ballou, 1998).

Shipping costs per year reached 71.6 million USD from Kertapati while from Tarahan Port amounted to 259.67 million USD. CHAPTER 2 While in Kalimantan, for example mining area owned by PT Adaro, the distance

Coal Export Analysis Coal between the mining area to the coal terminal in Kelanis is only about 80 km. The coal is transported by road and then from the coal terminal is transported through the waters to the port. Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction

Figure 2. 6 Transportation Comparison Scheme between PT Adaro and PTBA (AEER, 2021) Plant 2.2 Mine Mouth Power Plant Absorbs Low Quality Coal Re- CHAPTER 5 serves in South Sumatra Impact of Mine Mouth Power Impact of Mine Mouth Power In order to utilize low quality coal, one of the strategies developed is the construction of Mine Mouth Power Plant. The Mine Mouth Power Plant is also expected to lower electricity tariffs. The government has issued a policy for the construction of power CHAPTER 6 Suggestions plants near energy sources such as Coal-Fired Power Plants (PLTU) Mouth Mines 34 Conclusions And . through the Regulation of the Minister of Energy and Mineral Resources No. 19 of

2017. In addition, the Mine Mouth Power PlantLow will Carbon use Development low quality of South Sumatra coal Has the Potential to be Hampered by Low Quality Coal Investment 24 CHAPTER 1

Mouth Mine Power Plant is expected to reduce the Cost of Supply (BPP) of the Coal in South Sumatra plant to 75 percent of the national generation Cost of Supply through the reduction of handling and transportation costs as well as the price difference between low calorie coal used by the Mine Mouth Power Plant and the coal used by non-mine 35 mouth power plants. The Indonesia government claims that the Mine Mouth Power

CHAPTER 2 Plant is 20-40 percent more efficient than other coal-fired power plants.

Coal Export Analysis Coal A number of power plants were built in areas that will be the center of coal reserves, namely on the islands of Sumatra and Kalimantan. In the Electricity Supply Business Plan (RUPTL) 2019-2028, there are 5,690 MW of Mine Mouth Power Plant that is planned to be built with details of about 4,790 MW located in Sumatra, including Funding the South Sumatera 1 and 8 Mine-Mouth Power Plants, and 900 MW in Kalimantan. CHAPTER 3

Most of the low quality coal reserves in South Sumatra with lignite and sub-

Mine Mouth Power Plant Mine Mouth Power bituminous species are in remote areas, making it impossible to sell or export to faraway destinations such as China. These types of coal have a high water content and low caloric value, making them losers in the coal export market. 36 37

CHAPTER 4 . Physically this type of coal easily turns into sand if transported from mining area. Moreover, lignite contains 20-25 percent oxygen so spontaneous fires occur easily Spontaneous coal fires in South Sumatra have occurred several times. These factors Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction make it more difficult for lignite to be handled, causing it to be difficult to sell in the market. Therefore, the Mine Mouth Power Plant was chosen for South Sumatra. In addition to its close proximity, The Mouth Mine Power Plant can also absorb coal Plant with low quality lignite in South Sumatra. CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 25 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Coal Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5

Figure 2. 7 Self-igniting Coal at Stockpile in West Banko, PTBA stockpile (Photo: Andrawina) Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 26 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Coal Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant Figure 2. 8 Stockpile of Mawar site Muara Tiga Besar IUP PTBA (Persero), in Sirah CHAPTER 5 Island area, East Merapi, Lahat Regency, after self-igniting, April 2019 (source: Deby/www.detiksumsel.com) Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 27 CHAPTER 1 With the Mouth Mine Power Plant, coal that has been uneconomic because it is difficult to market because of the expensive transportation costs and low quality

Coal in South Sumatra becomes a commodity. Mine mouth power plant only requires transmission line with high voltage from mining areas to customer and mine mouth power plant itself.

Demand for low quality coal, which was initially uneconomic, will continue to

CHAPTER 2 increase in line with the presence of Mine Mouth Power Plant. To encourage the absorption of low quality coal, coal mining companies are also expanding their Coal Export Analysis Coal businesses by integrating the coal mining business with power plants such as PT Bukit Asam and Adaro Energy. This is done in order to ensure the absorption of coal from mining in the company.

Funding Table 2. 1 List of Coal Companies’ Mouth Mine

CHAPTER 3 Mine Mouth Coal Capacity Mining Company Scheme Power Plant (MW) Ownership

Mine Mouth Power Plant Mine Mouth Power 300

Sumsel-6 2 x 600 IPP PT Bukit Asam Sumsel-8 2 x 100 IPP PT Bukit Asam CHAPTER 4 Kaltim-5 2 x 30 IPP PT Adaro Energy Tanjung Tabalong 220 IPP PT Adaro Energy Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Banjar Sari IPP PT Bukit Asam 2 x 135

Keban Agung IPP PT Priamanaya Energi Plant CHAPTER 5 This can be seen from the Mine Mouth Power Plant in South Sumatra 8 located in Tanjung Enim mining, Muara Enim Regency. South Sumatra Mine Mouth Power

Impact of Mine Mouth Power Impact of Mine Mouth Power Plant 8 is owned by PTBA and China Huadian Corporation through a consortium company called PT Huadian Bukit Asam Power (HBAP).

South Sumatra Mine Mouth Power Plant 8 is estimated to use low calorie coal with 38 CHAPTER 6 Suggestions lignite type (<4200 kcal/kg) as its energy source and use supercritical technology in Conclusions And its boilers. South Sumatra Mine Mouth Power Plant 8 is believed to absorb about 39 5.4 million tons of coal per year. The coal comes from PTBA's mining production in Low Carbon Development of South Sumatra Has Tanjung Enim. the Potential to be Hampered by Low Quality Coal Investment 28 CHAPTER 1 The construction of Mine Mouth Power Plant in South Sumatra is expected to 40 41 increase in line with the increasing electricity needs in Sumatra Region, namely

Coal in South Sumatra from 36.7 TWh in 2019 to 61.7 TWh in 2029. Based on the RUED documents of South Sumatra Province and RUPTL year 2019-2028, the electricity supply the42 plan by the Mine Mouth Power Plant increased to 2,990 MW until 2030 while in Draft RUPTL Year 2020-2029 increased by 2450 MW (See Figure 2.7). The reduction of the capacity of the Mine Mouth Power Plant by 540 MW was caused by CHAPTER 2 the construction of Banyuasin power plant and Sumsel-6 power plant, Coal Export Analysis Coal Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Figure 2. 9 Comparison of Mine Mouth Power Plant Development Plan in South Sumatra from Three Documents

Plant The addition of mine mouth power plant capacity of 2,450 MW supports about 43

CHAPTER 5 72% of the total plan to increase the construction of power plants in South Sumatra 44 in 2029 by 3,403 MW. It is estimated that coal consumption for The Mouth Mine Power Plant in 2029 will reach 11 million tons per year. Impact of Mine Mouth Power Impact of Mine Mouth Power The presence of Mine Mouth Power Plant is feared to add to the severe environmental damage both by the Mine Mouth Power Plant and coal mining as a source of energy for power plants. Moreover, its location that is not far from CHAPTER 6 Suggestions residential and agricultural areas make the impact of Mine Mouth Power Plant will Conclusions And spread waste and pollution that can disturb the growth of crops and people.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 29 CHAPTER 1 In addition to the Mouth Mine Power Plant, low quality coal reserves in South Sumatra will also be absorbed by the Coal Gasification/Downstream Project and

Coal in South Sumatra converted into urea and Dimethyl Ether (DME). The coal gasification project is planned to be built at the mouth of the Tanjung Enim Mine, South Sumatra. Each 45 coal gasification into urea and DME project will consume 8.1 million tons and 1.4 million tons of coal per year.

CHAPTER 2 In regards to issues related the environmental, economic, and social impacts of the operation of the Mine Mouth Power Plant, Chapter 4 will discuss these in detail. Coal Export Analysis Coal

2.3 Development of Low Quality Coal Industry Infrastructure in South Sumatra Funding CHAPTER 3 With the potential of resources and large coal reserves, South Sumatra is expected by the government to become a locomotive of energy providers to meet national Mine Mouth Power Plant Mine Mouth Power energy needs. To answer these expectations, South Sumatra Province even built a potential development policy scenario since 2005, both from the exploration and 46 exploitation sector, as well as from the supporting infrastructure sector that can be CHAPTER 4 seen in the South Sumatra Energy Master Plan Document.

One of the sectors developed to support this goal is infrastructure for coal Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction transportation, both in the form of coal commodities and that has been changed in value-added form such as electricity. Currently, the infrastructure for coal transportation in South Sumatra is carried out by train from the coal mine site

Plant (Tanjung Enim) to the port (Tanjung Enim-Kertapati railway) and Tarahan Port

CHAPTER 5 (Lampung).

In order to develop coal transportation infrastructure in South Sumatera, four railway development projects have been planned. First, the Government of South Impact of Mine Mouth Power Impact of Mine Mouth Power Sumatra planned the development of a railway line from the mining area in Tanjung 47 48 Enim to the port of Tanjung Api-Api by making a crossroads and Payakubung Station. However, this project has been cancelled. CHAPTER 6 Suggestions

Conclusions And Second, the Provincial Government of South Sumatra plans to develop a coal 49 railway line from Muara Enim to Kertapati Port. This development was carried out Low Carbon Development of South Sumatra Has in cooperation with PTBA and PT Keretathe Potential Api Indonesia to be Hampered by(KAI). Low Quality The Coal Investment development30 CHAPTER 1 increased coal haulage capacity to 5 million tons per year. The project is targeted to be completed in the first quarter of 2020. Coal in South Sumatra Third, the development of a railway line from Muara Enim to Pelabuhan Tarahan consisting of two projects. First, a new 307 km railway development project was built by PT Bukit Asam Transpacific Railway (BATR) and China Railway Group 50 Limited. It is estimated that the coal carrying capacity of this line will reach 25

CHAPTER 2 million tons per year. The project requires a fund of 28 trillion rupiah. Second, the construction of a 150 km coal transportation railway with Tanjung Enim Baru

Coal Export Analysis Coal 51 route to Tarahan. This line will go through three regencies in South Sumatra, namely Lahat, Muara Enim, and Ogan Ilir. This railway construction project is owned by PT Servo Marga Sejahtera through Servo Railway in collaboration with PT Bukit Asam (Persero) Tbk and PT Kereta Api Indonesia (Persero) as its strategic partners Funding

CHAPTER 3 in this project. The line, built by the Servo Consortium, will cut the original rail 52 distance from 409 km to 349 km, resulting in a shorter journey duration of 9 hours,

Mine Mouth Power Plant Mine Mouth Power initially 12 hours.

The first phase of the Servo Consortium's plan is a double track system that is targeted to operate by the end of 2020 while the upgrade to a double track is

CHAPTER 4 targeted to operate by the end of 2024. Servo Railway aims to transport 50 million tons of coal from affiliated companies in its first year of operation. With this dual carriageway, servo railway carrying capacity will be able to reach 200 million tons 53 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction of coal per year. The construction of this railway project is estimated to require an investment of 37 trillion rupiah. Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 31 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Coal Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power

Figure 2. 10 Coal Transportation Development in South Sumatra (Coal Asia, 2021 CHAPTER 4 Issue 122)

In addition to the railway development and capacity project, the Government of Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction South Sumatra, in cooperation with the Regional Owned Enterprises (BUMD) of South Sumatra, plans to add a coal distribution line through the construction of a 54. special non-rail road that connects coal transportation from Simpang Unloading

Plant Station, Ogan Ilir Regency to be transported by packed car.

CHAPTER 5 55 The entire capacity increase of this transport line can reach 230 million tons per year. PTBA itself by 2020 plans to increase sales to 30 million tons per year.

Impact of Mine Mouth Power Impact of Mine Mouth Power 2.4 Development of Mine Mouth Power Plant Transimisi CHAPTER 6 Suggestions In addition to the construction of coal transportation infrastructure in the form of

Conclusions And commodities, the construction of electricity transmission is also required in order to deliver electricity produced by The Mouth Mine Power Plant located in a remote Low Carbon Development of South Sumatra Has area and does not yet have adequate transmissionthe Potential to be Hampered infrastructure. by Low Quality Coal Investment 32 CHAPTER 1 Therefore, this development is carried out so that electricity production located in remote areas can reach distant consumers. It can be seen in the South Sumatra

Coal in South Sumatra Mine Mouth Power Plant 8 project built by PTBA and Huadian through PT Huadian Bukit Asam Power (PT HBAP). In addition to building a power plant, PT HBAP will . also build a transmission line from the South Sumatra Power Plant 8 to the PLN Substation in Muara Enim and deliver its electricity to Sumatra Grid

CHAPTER 2 With the planned improvement of the construction of the Mouth Mine Power Plant, the new electricity transmission lines in South Sumatra Province will also be built Coal Export Analysis Coal so that the electricity can be sold. It is estimated that approximately 1,848 km of by 2028.56 transmission lines with voltages of 500 kV, 275 kV, dan 150 kV will be operational

Funding From the map of the electricity system of South Sumatra Province, it can be seen CHAPTER 3 that the electricity transmission lines around the Mine Mouth Power Plant both South Sumatra Mine Mouth Power Plant 1 and South Sumatra 8 are only in the form Mine Mouth Power Plant Mine Mouth Power of a transmission network with a voltage of 150 kV. CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions

Conclusions And Figure 2. 11 Map of Electricity System of South Sumatra Province (PLN, 2020)

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 33 CHAPTER 1 Based on the provisions, the electricity generated by the plant with a capacity of 10 57 MW, distributed with a cable of 20 kV or medium voltage while the higher requires

Coal in South Sumatra a high voltage cable between 30 kV to 500 kV, depending on its capacity.

South Sumatra 1 and South Sumatra 8 mine mouth power plants have a capacity of 200 MW and 1,200 MW. Thus, all electricity generated by both power plants must be transmitted by cables with a voltage of 275 kV each for south Sumatra Mine

CHAPTER 2 Mouth Power Plant 1 while for South Sumatra Power Plant 8 requires a cable with a voltage of 500 kV. Coal Export Analysis Coal

This can be seen from the electric power system map of South Sumatra Province (See Figure 2.8). Cables with a voltage of 500 kV with a length of 592 km are planned to be built in 2022 that will pass through the South Sumatra Mine Mouth Funding Power Plant 8. Then, cables with a voltage of 275 kV are also planned to be built CHAPTER 3 until 2024 with a total length of 728 km. The 275 kV cable will transmit electricity from south Sumatra power plant 1. Mine Mouth Power Plant Mine Mouth Power

Table 2. 2 Recapitulation of Transmission Network Development Plan (kms) Transmission (RUPTL 2020-2028) CHAPTER 4

Total Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 34 CHAPTER 3

MINE MOUTH POWER PLANT FUNDING

Coal Mining in Lahat Regency Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 35 Chapter 3 CHAPTER 1 Mine Mouth Power Plant Funding Coal in South Sumatra

The large number of low-calorie coal in South Sumatra makes this province a construction site for power plants that supply electricity throughout the Sumatra CHAPTER 2 Region. The following are some power plants that have been operating and under

Coal Export Analysis construction in South Sumatra, the information has been obtained from the 2019-2023 Regional Medium Term Development Plan (RPJMD) of South Sumatra Province. Table 3. 1 Power Plant in South Sumatera Province

Funding Generator (RPJMD South SumatraCapacity 2019-2023) No Location Owner CHAPTER 3 Name (MW)

Muara Mine Mouth Power Plant Mine Mouth Power 1 4 x 65 PT PLN (Persero) Enim Bukit Asam Sumbagsel Power Power Plant Plant Bukit Asam Simpang CHAPTER 4 Muara Sector 2 2 x 113 Enim PT GH-EMM Belimbing Power 3x 10 Contradictions with Carbon with Carbon Contradictions Indonesia

Emission Reduction Initiative Emission Reduction Plant Muara 3 Enim PTBA Power (eccses PT Bukit Asam Plant Plant 4 power:2 x 110 6)

CHAPTER 5 Banjarsari Power PT Bukit Pembangkit Lahat 5 Plant 2 x 110 Inovatif Keban Agung Banyuasin 6 Lahat 2 x 150 PT Priamanaya Impact of Mine Mouth Power Impact of Mine Mouth Power Power Plant Museum Sumsel-5 Power PT DSSP Power 7 Plant 2 x 10 Baturaja Power PT Bhakti Nugraha CHAPTER 6

Suggestions OKU 8 Plant Banyuasin 2 x 112.5 Yuda Energi

Conclusions And Energy Banyuasin Power PT Banyuasin Power

Plant Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 36 CHAPTER 1 Table 3. 1 Power Plant in South Sumatera Province Generator (RPJMD South SumatraCapacity 2019-2023) No Location Owner

Coal in South Sumatra Name (MW) Muara 2 x 300 9 Enim Sumsel-1 Power PT Shenhua Guohua Muara 10 Plant 2 x 660 Lion Power Indonesia

CHAPTER 2 Enim Sumsel-8 Power PTBA - PT Huadian

Coal Export Analysis Plant Bukit Asam Power

A number of power plants developed in South Sumatra in recent years are mine mouth power plants and are located in areas that are the center of abundant coal reserves, especially in Muara Enim. Among them are Simpang Belimbing Power

Funding Plant, South Sumatra Power Plant 8 and South Sumatra Power Plant 1. 58 the CHAPTER 3 In contrast to conventional power plants that are closer to the load center, Mine Mouth Power Plant is built close to the mine site. The Mine Mouth Power Mine Mouth Power Plant Mine Mouth Power Plant is the result of cooperation between coal mining companies and power generation companies. Coal mining companies can also act as power companies and sell their electricity to PLN. The development of The Mine Mouth Power Plant CHAPTER 4 in South Sumatra received mostly funding from Chinese financial institutions and investment companies. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction 3.1 Chinese Investment in Mine Mouth Power Plant in South Sumatra Plant CHAPTER 5 The development of Mine Mouth Power Plant in South Sumatra began since the launch of the electricity acceleration program that was encouraged since the exit of Fast Track Program (FTP) 1 of 9,934 MW in 2006 and FTP 2 of 17,428 MW in 2010, Impact of Mine Mouth Power Impact of Mine Mouth Power then continued with the 35,000 MW program in 2015.

The government conducted the planning process and the appointment of IPP CHAPTER 6 Suggestions as the owner of the electricity company. Mining companies that already have an 59

Conclusions And IPP permit can apply for expansion to build the Mine Mouth Power Plant without following the tender. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 37 CHAPTER 1 The construction of Mine Mouth Power Plant is usually in the form of cooperation between Indonesian companies and overseas companies, generally originating

Coal in South Sumatra from China. The majority of the shareholding ownership are with Chinese companies, as explained in the next section. South Sumatra Power Plant 1 (Sumsel-1) CHAPTER 2 Sumsel-1 power plant is a mine mouth power plant that is included in the 35,000

Coal Export Analysis MW Electricity Program. This mine mouth power plant has a capacity of 2x300 MW and is located in Tanjung Menang Village and Air Cekdam Village, Muara Enim Regency. Sumsel-1 power plant has started pre-construction since 2016 by freeing land in two villages covering 113 hectares, which is about 84 hectares or about 80 60

Funding percent in Tanjung Menang Village, while the remaining 20 percent is in Cekdam CHAPTER 3 Water Village. Sumsel-1 Power Plant is planned to be operational in 2023/2024. Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And Figure 3. 1 South Sumatera Mine Mouth Power Plant 1 Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 38 CHAPTER 1

The Sumsel-1 power plant project itself sponsored by China Shenhua was also Coal in South Sumatra carried out by PT Shenhua Guohua Lion Power (PT SGLPI). Based on Indonesia Corruption Watch (ICW) report in 2020, it is noted that PT SGLPI will be a consortium consisting of China Shenhua Energy Company Ltd and PT Lion Power 61 Energy (LPE). China Shenhua owns 75 percent of the shares and PT LPE owns the CHAPTER 2 remaining 25 percent.

Coal Export Analysis Shenhua Group controls Sumsel-1 power plant through its subsidiary, Tiongkok Shenhua Energy Company Ltd. The company is also known as Shenhua, China Shenhua, or Shenhua Energy. China Shenhua is a company engaged in the coal sector, both coal sales, coal transportation, and power generation.

Funding 62

CHAPTER 3 The Sumsel-1 power plant also received USD 520 million from China Construction 63 Bank, Bank of China, and Industrial and Commercial Bank of China (ICBC). The total funds needed to build Sumsel 1 power plant amounted to 700 million USD. Mine Mouth Power Plant Mine Mouth Power South Sumatra Power Plant 8 (Sumsel-8)

CHAPTER 4 64 Sumsel-8 power plant located in Tanjung Lalang Village, Payaman District, Muara 65 66 Enim Regency, South Sumatra is planned to operate in 2022. The project has a

Contradictions with Carbon with Carbon Contradictions capacity of 2x620 MW and is included in the 35,000 MW Program. Emission Reduction Initiative Emission Reduction

The project is sponsored by PT Huadian Bukit Asam Power (PT HBAP) which is a 67 consortium between Chinese company Huadian Hongkong Company Ltd and PTBA Plant with 55 percent and 45 percent share ownership, respectively. The project is 68 CHAPTER 5 financed by capital or equity derived from HBAP amounting to 390 million USD or 69 about 25 percent of the total construction costs. While the remaining 75 percent used loans from China Export Import Bank (CEXIM) amounting to USD 1.2 billion. Impact of Mine Mouth Power Impact of Mine Mouth Power PLTU Sumsel-8 is a Mine Mouth Power Plant whose invest value reaches Rp 24.08 trillion has signed a Power Purchase Agreement through the IPP scheme with state-owned enterprises, in this case PT PLN. This power plant is planned to be CHAPTER 6 Suggestions

Conclusions And connected with 500 kV Sumatra Transmission.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 39 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power

Figure 3. 2 Sumsel Mine Mouth Power Plant 8 CHAPTER 4 Initially, Sumsel-8 power plant was built to meet the needs of electricity in Java through High Voltage Direct Current (HVDC), but because the electricity supply in

Contradictions with Carbon with Carbon Contradictions Java has experienced a surplus, the electricity from the Sumsel-8 power plant will Emission Reduction Initiative Emission Reduction be flowed to Sumatra Grid through the Transmission Line Extra High Voltage 500 70 kV. HBAP will also build a 45 km transmission line from Sumsel-8 Power Plant to PLN substation in Muara Enim. Plant Sumsel Power Plant 5 (Sumsel-5) CHAPTER 5

71 Sumsel Power Plant 5 (SS-5) is a 300 megawatt (MW) Mine Mouth Power Plant. Impact of Mine Mouth Power Impact of Mine Mouth Power This power plant is located in Sindang Marga, Musi Banyuasin Regency. PLTU 72 Sumsel 5 is located in a mining area whose IUP is owned by PT Buana Bara 73 Ekapratama, which is a company affiliated with Dian Swastatika Sentosa Tbk CHAPTER 6 Suggestions Power through PT DSSP Power Utama (PMU). Conclusions And In 2011, PT DSSP Power South Sumatera, also a subsidiary of Dian Swastatika Low Carbon Development of South Sumatra Has Sentosa Tbk, signed a Power Purchasethe Potential Agreement to be Hampered by (PPA) Low Quality with Coal Investment PLN for the40 )

CHAPTER 1 procurement of IPP Sumsel 5 Power Plant. This power plant will supply electricity to PLN through the BOOT scheme (build, own, operate, and transfer for25 years. 74 Coal in South Sumatra PT Buana Bara Ekapratama, DSSP Power, and Dian Swastika Sentosa Tbk are subsidiaries of Sinar Mas parent company.

Sinar Mas built Sumsel 5 Power Plant since February 2012 with an investment 75 76 value of 420 million USD. The project's funding consists of 400 million loans from CHAPTER 2 the China Development Bank (CDB) and USD 20 million from Sinar Mas's equity.

Coal Export Analysis In addition, the contractor of the project is the China National Electric Company (CNNEC).

The South Sumatera 5 Power Plant Project is expected to be operational in November 2015. However, in early January 2015, the power plant project was declared to 77 Funding be delayed for 3 years due to several problems, such as land unpreparedness, CHAPTER 3 unavailability of funds and tender licensing issues. 78 Another report in June 2015, PT Dian Swastika Sentosa stated that the construction Mine Mouth Power Plant Mine Mouth Power of the power plant was on schedule and its readiness was at 90 percent . However, 79 by mid-December 2020, the plant's trials were declared to have been recently 80 conducted . The company's Annual Report in 2019 stated that IPP Sumsel-5 CHAPTER 4 Power Plant had been operating since 2016.

In the last RUPTL document for the last 3 years, the plant expansion is planned at Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction South Sumatera 5 Power Plant with 350 MW. In the latest RUPTL 2020 document, the expansion was completed in 2027. In December 2020, China Datang Corp., a 81 Chinese state-owned enterprise (SOE), purchased a 75% stake in PT DSSP Power Plant Utama (PMU), worth USD 394 million. CHAPTER 5 China Datang Corp. became the majority owner of Sumsel 5 Power Plant by owning the majority of PT DSSP Power Utama (PMU). It shows that China Datang Corp. has

Impact of Mine Mouth Power Impact of Mine Mouth Power become the owner of power plant companies under other PMU, namely Kendari-3 82 Power Plant, Kalteng-1 Power Plant. PT DSSP Power Sumsel 2, a subsidiary of PMU, is also prepared to acquire other power plant projects in South Sumatra. Banyuasin Mine Mouth Power Plant CHAPTER 6 Suggestions Conclusions And

The Mine Mouth Power Plant is one of itsLow development Carbon Development of that South Sumatra is constrained Has the Potential to be Hampered by Low Quality Coal Investment 41 CHAPTER 1 by Covid-19, and the development plan has become uncertain, based on the information obtained in the media. Coal in South Sumatra In March 2007, PT Banyuasin Power Energy and PLN signed a Power Purchase Agreement (PPA) with PLN for the construction of Banyuasin mine mouth power plant. Banyuasin Mine Mouth Power Plant is planned to be built in Talang Ubi Village, Muara Enim Regency, Sumatera Selatan. With a capacity of 225 MW, the CHAPTER 2 project is estimated to require USD 225 million.

Coal Export Analysis In 2008, PT Truba Alam Manunggal Engineering Tbk (TRUB) claimed ownership 83 of the Banyuasin Mine Mouth Power Plant project during a presentation to shareholders. In 2010, PT TRUB announced that it would provide USD 175 million for the Banyuasin Mine Mouth Power Plant development project. In 2013,

Funding PT TRUB experienced financial problems. The Banyuasin mine mouth power plant CHAPTER 3 development project did not appear on the planning of the construction of coal power plants in Sumatra. Mine Mouth Power Plant Mine Mouth Power In April 2015, the power plant construction project was seen on the website of China Ocean Wide Holdings Limited, an investment company listed on the Shenzhen Stock Exchange. The website reveals that Banyuasin Mine Mouth Power Plant is CHAPTER 4 owned by Ocean Wide Holdings Ltd, China Power Construction 85%, Shanghai Electric Power 5% and PT Satya Abadi Semesta 10%. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction It was reported that in December 2015, the company that owns the Banyuasin 84 mine mouth power plant and PLN signed the PPA. In the same year, Ocean Wide Holdings Ltd, reportedly provided $39.5 million to buy equipment for the plant. In Plant 85 the RUPTL Document 2016-2025 and RUPTL 2017-2026, the generating capacity CHAPTER 5 changed to 240 MW and there was a change in the operating target to 2020.

There is no information mentioning the relationship between this project and PT

Impact of Mine Mouth Power Impact of Mine Mouth Power Trub previously declared ownership of the project. In fact, in December 2018, the delisting of PT TRUB was carried out by the Indonesia Stock Exchange (IDX). The 86 absence of a business plan and future prospects is the reason TRUB shares are CHAPTER 6 Suggestions removed from IDX. 87 Conclusions And In the latest RUPTL 2020-2029 document, there is no longer a plan for the

development of Banyuasin Mine Mouth PowerLow Carbon Plant Development, although of South Sumatra in the Has RUPTL the Potential to be Hampered by Low Quality Coal Investment 42 88

CHAPTER 1 2019-2028 document, there is still a plan for the construction of the power plant.

In March 2020, global rating agency S&P stated that the financial condition of Coal in South Sumatra rating.89 Oceanwide Holdings was weak with an investment grade rating of CCC+, a high debt The state of this financial problem should be the reason for cancelling the Banyuasin Mine Mouth Power Plant, to provide more space for renewable energy. CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 43 CHAPTER 4

CONTRADICTION WITH CARBON EMISSION REDUCTION INITIATIVE

500KV Silk Network Construction Site in Muara Enim Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 44 Chapter 4 CHAPTER 1 Contradictions with Carbon Emission

Coal in South Sumatra Reduction Initiative

4.1 Contradictions with the Paris Climate Accord

CHAPTER 2 The development of Mine Mouth Power Plant in South Sumatra supported by

Coal Export Analysis overseas funding, especially from China, is not in line with the commitment to prevent climate change in the Paris Agreement which commits to withstand global 90 temperature rise below 2°C and seeks to suppress temperature rise to 1.5°C above pre-industrialization levels. To achieve this, each country should target a peak

in greenhouse gas emissions as soon as possible, considering the Nationally Funding

CHAPTER 3 Determined Contributions (NDC) delivered by all countries even if such actions are not enough to achieve the Paris Agreement targets.

Mine Mouth Power Plant Mine Mouth Power Indonesia itself made a commitment to reduce greenhouse gas (GHG) emissions

by 29 percent by its own efforts and 41 percent with international assistance from 91 the Business as Usual (BAU) scenario by 2030. This mitigation action plan was

CHAPTER 4 presented in an NDC document that was presented to the UNFCCC in 2016.

However, the electricity acceleration program dominated by the development of coal-fired power plants is contrary to the government's commitment to reduce Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction GHG emissions. Emissions from coal power plants contribute to 86 percent of emissions from the power plant sub-sector. In fact, the energy sector is projected 92 to be the largest contributor to GHG emissions by 2030 with a share of 58 percent Plant of total national GHG emissions. CHAPTER 5 Until now, coal power plants still dominate national plants, amounting to 29.9 GW 93 of a total of 62.1 GW of total power plants. In fact, there are currently 19 GW of coal

Impact of Mine Mouth Power Impact of Mine Mouth Power power plants that are planned to be built. If all the power plants were completed 94 and started to operate, it is certain that2 the emissions produced from the power plant will increase by 0.1 Giga ton CO -eq every year. CHAPTER 6 Suggestions This certainly complicates the target of reducing2 emissions in the NDC document Conclusions And in the energy sector of 0.314 Giga tons of CO -eq by 2030. In fact, power2 plant

emissions are projected to double by 2028 to Low351.3 Carbon million Development tons of South of Sumatra CO -eqHas which the Potential to be Hampered by Low Quality Coal Investment 45 95 2

CHAPTER 1 means that the contribution of emissions from power plants will reach 301.3 million tons of CO -eq or 86 percent of the total emissions by power plants. Coal in South Sumatra The project to increase the Mine Mouth Power Plant in Indonesia by 2029 up to 96 3,850 MW will hinder Indonesia in achieving emissions reduction targets according 97 to NDC documents. The total addition of the Mine Mouth Power Plant has the potential to provide GHG emissions of 20 million tons per year. CHAPTER 2 The Paris Agreement mandates increased cooperation between countries in 98

Coal Export Analysis increasing funding support for the renewable energy sector as mitigation and adaptation to climate change. The existence of foreign companies, especially China in the development program of power plants in South Sumatra certainly targets. makes it difficult for Indonesia to contribute a lot in achieving the Paris Agreement Funding CHAPTER 3 China's presence in funding in the power generation sector in several developing countries including Indonesia is highly contradictory to the Green Credit Guidelines Mine Mouth Power Plant Mine Mouth Power launched by the China Banking Regulatory Commission (CBRC) in 2019. The Green 99 Credit Guidelines requires China's domestic banks to push for a low-carbon green 100 economic scheme. In addition, countries included in the G-20 Group; China and

CHAPTER 4 Indonesia as members, have an agreement to encourage green funding.

The Chinese government also issued the Nine Principles on Encouraging and Standardizing Outbond Investment which is a principle for Chinese investment Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction activities both domestically and abroad by taking into account the environmental and social aspects of such investments. The fourth principle states, "Following the

Plant ideal of environmentally friendly and resource conservation, companies should 101

CHAPTER 5 develop a green, low-carbon economy, implement sustainable development strategies and achieve "win‐win" between profit and environmental protection".

In early February 2021, The Chinese government has issued a funding scheme for 102 Impact of Mine Mouth Power Impact of Mine Mouth Power its country's carbon trading policy. The emission level limit2 set for power plants 103 with a capacity above2 300 MW is 0.877 million tons of CO /MWh at a set price of In$6.3 comparison, for a ton of COSouth that Sumatera exceeds its 8 powerlimit. plant produces GHG emissions of 10 CHAPTER 6

Suggestions 104 million tons of CO2-eq per year. If South Sumatera 8 power plant that funded Conclusions And by Chinese financial institutions operates in China, South Sumatera 8 Power

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 46 Plant should pay USD 17.9 million annually for CO2 emissions produced.

CHAPTER 1 In fact, with the passing of the Job Creation Bill in the last year, Mouth Mine Power Plants has the potential to gain tax incentives for the downstreaming 105 Coal in South Sumatra of coal that is done .

4.2 National and Local Emissions Reduction Initiatives CHAPTER 2

Coal Export Analysis The emissions reduction agenda has also been adopted by Indonesian government agencies. Among them is the Low Carbon Development Document: Paradigm 106 Shift Towards Green Economy in Indonesia, which was issued by the Ministry of Development Planning (Bappenas) in 2019. The ministry expects GHG emissions

Funding to be reduced by up to 43% by 2030, exceeding the Nationally Determined CHAPTER 3 Contribution (NDC) target set at 41% below the internationally supported baseline.

South Sumatra Province, which has the potential of abundant energy resources, Mine Mouth Power Plant Mine Mouth Power energy needs.107 is expected to be able to become a locomotive energy provider to meet national With a potential renewable energy source of 21,926 MW as well 108 as being one of the provinces with the largest renewable energy potential, South CHAPTER 4 Sumatra Province should be able to achieve that goal. However, currently the 109 utilization of renewable energy potential is still very low which is 67 MW, about 0.3 percent of the total potential. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction The construction of railway infrastructure and Mine Mouth Power Plant to absorb coal reserves will prevent South Sumatra Province from achieving its renewable

Plant energy mix targets of 21.06 percent and 22.56 percent in 2025 and 2050. In fact, 110

CHAPTER 5 currently the renewable energy mix in South Sumatra Province is less than 3.01 percent.If the funds of 97.2 trillion rupiah used to build the current coal railway infrastructure as well as the Sumsel-1 and Sumsel-8 Mine Mouth Power

Impact of Mine Mouth Power Impact of Mine Mouth Power Plants could be used to build plants that use renewable energy such as geothermal. This will result in a plant with a total capacity of 3,182 MW.111 With the province's geothermal potential and reserves of only 918 MW, this CHAPTER 6

Suggestions scenario of diverting coal investment funds needs to be combined with other 112 Conclusions And renewable energy sources.

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 47 CHAPTER 1 If this direction is taken, the target to meet the plant development plan of 3,403 113 MW in 2029 South Sumatra Province can almost be achieved. In fact, 96 percent

Coal in South Sumatra of power generation comes from renewable energy. This direction can meet the 114 target of increasing the type of renewable energy in power plants by 31% in 2025 and 27% by 2050.

In addition, by cancelling the construction of low calorie coal infrastructure, other

CHAPTER 2 areas that are the destination of low coal sales from South Sumatra will have more space to develop the potential of renewable energy available in each location/ Coal Export Analysis province. Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction Plant CHAPTER 5 Impact of Mine Mouth Power Impact of Mine Mouth Power CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 48 CHAPTER 5

IMPACT OF MINE MOUTH POWER PLANT

The Location of Mining Accident in Low Carbon Development of South Sumatra Has Muara Enim Regency the Potential to be Hampered by Low Quality Coal Investment 49 Chapter 5 CHAPTER 1 Impact of Mine Mouth Power Plant Coal in South Sumatra

5.1 Health Impact of Lignite

CHAPTER 2 Sumsel-8 Mine Mouth Power Plant will use coal with a calorie content of 4200 kcal/

Coal Export Analysis kg. This power plant will consume lignite coal as much as 5.4 million tons per year. Power plants that use lignite as an energy source have the potential to cause health impacts to the surrounding residents who are in the area around the power plant.

Examples include the Janschwalde, Schwarze Pumpe, and Boxberg power plants Funding

CHAPTER 3 located in Germany as well as the Turow and Dola Odra power plants in Poland. According to a report from the European Environment Agency, the five lignite 115 power plants caused losses of 3 to 5 Billion Euros as a result of the resulting air Mine Mouth Power Plant Mine Mouth Power pollution.

Air pollution produced from power plants with lignite sources in the area has

CHAPTER 4 significant consequences for the economy and public health system. Additional treatment and costs are required to finally provide an economic burden for affected families and individuals. The European Economic Area (EEA) even states that the Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction Janschwalde Power Plant has the highest pollution levels in Europe.

Therefore, the construction of Mine Mouth Power Plant with energy sources in 116 the form of lignite can provide potential to the residents of Muara Enim Regency, which amounts to about 628 thousand people. With a dust content of about 10- 117 CHAPTER 5

Power Plant Power 40 percent higher than other types of coal, it has the potential to worsen pollution from coal power plants. Impact of Mine Mouth In 2018, the number of people of all ages in Muara Enim Regency affected by upper respiratory tract infections (URTI) were almost 45 thousand people and bronchitis 1,217 people. The number of cases of both diseases is about 29 percent of the CHAPTER 6 Suggestions total number of disease cases in Muara Enim Regency. The figure has always been 118

Conclusions And consistent from 2015 to 2018. This type of disease is the most common disease in Muara Enim Regency. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 50 CHAPTER 1 Table 5. 1 Pattern of Outpatient Disease in Muara Enim Diseases(Muara Enim 2015Regency in 2016Numbers, BPS2017 2019) 2018 Coal in South Sumatra

URTI 47,841 46,085 44,885 43,998 970 967 Diarrhea 15,281 12,598 10,689 9,598 Bronchitis 1,442 1,217 CHAPTER 2

In 2017, the number of cases of URTI or pneumonia in toddlers in South Sumatra

Coal Export Analysis 119 Province reached 13,021 cases. Muara Enim regency contributed 1,854 cases in terms of cases uncovered and treated in toddlers.

It needs to be known that the highest causes of infant or toddler death in South

Funding Sumatra are diarrhea and pneumonia. Upper respiratory tract infections and 120 CHAPTER 3 bronchitis diseases are associated with air pollution. Air pollution is high in mining and power plant areas. Mine Mouth Power Plant Mine Mouth Power Several parameters2 2 that 10indicate the state of air quality in Muara Enim Regency 121 such as SO , NO , and PM parameters, and air particles smaller than 10 microns, turned out to be higher than other regions. CHAPTER 4

5.2 Deforestation in Muara Enim and Lahat Regencies Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction

In 2001, Muara Enim Regency had a primary forest area of 52,000 hectares covering 6.1 percent of the land area in Muara Enim Regency (Global Forest Watch, 2021). Lahat Regency has 58,300 hectares of primary forest or equal to 14 percent of land CHAPTER 5 Power Plant Power area in Lahat Regency. Primary forest itself is defined as a natural moist tropical forest that has not been cut down or regrown for some time. Impact of Mine Mouth CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 51 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction CHAPTER 5 Power Plant Power

2020. Impact of Mine Mouth Figure 5. 1 Deforestation in Muara Enim and Lahat districts in 2014, 2017, and CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 52

CHAPTER 1 The three maps above are changes in vegetation and non-vegetation122,123 areas in Muara Enim and Lahat Districts, South Sumatra in 2014, 2017, and 2020. Coal in South Sumatra The area of non-vegetation in Muara Enim and Lahat Districts were at the highest level in 2014 with 158,577.54 ha. This figure fell in 2017 before rising again in 2020 with an area of 133,930.09 ha. The increase back in 2020 could also be due to cloud cover affecting identification via satellite imagery. (See Figure 5.3) CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction Figure 5. 2 Mine Pits and Forest Cover in Merapi Barat Subdistrict, Lahat Regency

Further observations are focused in subdistricts with coverage of coal IUP and PKP2B. In Muara Enim, the largest area of deforestation was found in Lawang Kidul Subdistrict in 2020 with 6394.55 ha equivalent to 25% of the land area of Lawang CHAPTER 5 Power Plant Power Kidul itself is the second largest coal mining district in Muara Enim Regency with a total of 7 permits. While in Tanjung Agung Subdistrict, Muara Enim which is Impact of Mine Mouth covered by 10 coal mining permits, non-vegetation areas are decreasing slowly.

Lahat Regency, the highest non-vegetation area found in East Merapi Subdistrict, reached 7,666.4 ha in 2020. In this sub-district there are 6 coal mining permits. CHAPTER 6 Suggestions Meanwhile, West Merapi Sub-district with the largest number of coal mining

Conclusions And permits (16) experienced an increase in non-vegetation areas, which reached its area. peak in 2020 with 3,240 ha. This figure is equivalent to 20.2% of the district’s land Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 53 CHAPTER 1 Through visual interpretation, non-vegetation areas are concentrated in sub- districts with a considerable scope of coal mining permits such as Lawang Kidul

Coal in South Sumatra and Tanjung Agung in Muara Enim and West Merapi Subdistrict in Lahat. However, more research is needed related to land use that becomes a non-vegetation area.

Non-vegetation areas in subdistricts around coal IUPs in Muara Enim and Lahat in 2014, 2017 and 2020. CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4

Figure 5. 3 Non Vegetation Area in Subdistricts Around Coal IUP in Muara Enim

Contradictions with Carbon with Carbon Contradictions (X axis: subdistricts, y axis: area (hectares))

Emission Reduction Initiative Emission Reduction Regency

Based on the map, the non-vegetation areas concentrated on the river bank as seen in Lawang Kidul Subdistrict should also be a record. Coal that can be near

CHAPTER 5 124 Power Plant Power the surface of the Earth encourages open pit mining methods so that the water absorption area near the river will also decrease. This along with un-cautious Impact of Mine Mouth mining practices have the potential to cause inherited disasters such as floods and landslides.

On May 5, 2020, 30 families in RT 14 Tegal Rejo Village, Lawang Kidul Subdistrict, CHAPTER 6 Suggestions Muara Enim Regency were hit by flooding allegedly due to overflowing water river.125 Conclusions And caused by mine excavation owned by PT Bukit Asam in the upstream of the According to one of the residents, the high rainfall caused landslides into Low Carbon Development of South Sumatra Has the river so that it overflowed. Acting Regentthe Potential of to beMuara Hampered Enim, by Low Quality Juarsah, Coal Investment asked PTBA54 CHAPTER 1 to resolve the issue immediately. Meanwhile, Head of Lawang Kidul Subdistrict .126 explained that there has been mediation between the company and residents

Coal in South Sumatra related to the relocation of residents and the shifting disposal

Due to the reduced vegetation land in South Sumatra, it also encourages wild animals to conflict with humans. There were at least 9 cases of conflict between humans and tigers in four districts of South Sumatra Province in the period 2015- CHAPTER 2 2019. About six of the victims died and three were injured. In July 2020, the animal 127

Coal Export Analysis was found at the construction site of Sumsel 8 Power Plant in Tanjung Lalang Village, Muara Enim Regency. Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction CHAPTER 5 Power Plant Power Impact of Mine Mouth Figure 5. 4 Conflict Between Humans and Tigers in South Sumatra Province

5.3 Loss of Agricultural Land Access CHAPTER 6 Suggestions Conclusions And The aggressiveness of coal mining driven by the development of The Mouth Mine Power Plant has implications for the worseningLow inequality Carbon Development of landof South tenureSumatra Has in South the Potential to be Hampered by Low Quality Coal Investment 55 CHAPTER 1 Sumatra. Based on the Regional Spatial Plan (RTRW) of South Sumatra Province for 2016-2036, the area of mining land in South Sumatra covers an area of 1,231,361.13

Coal in South Sumatra hectares while agricultural land only covers 990,215.42 hectares.

This land tenure inequality is further exacerbated by the conversion of food 128 agricultural land that continues to spread, while the expansion or clearing of agricultural land is limited. CHAPTER 2 This land inequality can be seen from the comparison of concession area with the Coal Export Analysis number of permits in conservation forests and protected forests. In the report of the Corruption Eradication Commission (KPK) on The Arrangement of Coal Permits in coordination and supervision of the KPK in 2017, it was stated that 129 during 2014 to 2016, the area of coal mining concessions (IUP) in Protected Forest Funding and Conservation Areas in some areas is increasing. CHAPTER 3

The collapse of mining business licenses in this area also encourages the occurrence

Mine Mouth Power Plant Mine Mouth Power of space utilization conflicts. During 2017 there were 75 cases of conflict, of which 73,761 hectares were conflicts involving community settlements in forest areas.

Conversion of farmland can lead to the loss of opportunities for farmers working CHAPTER 4 in the agricultural sector (Hidayat, 2017). This can be seen from the decrease in the number and percentage of people working in agricultural businesses in South Sumatra Province from year to year (See Figure. 5.4) Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction CHAPTER 5 Power Plant Power Impact of Mine Mouth CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 56 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 (x Figureaxis-orange 5. 5 Number is number and of Percentage workers, grey of People is percentage, Working y inaxis Agriculture is number Sectorof workers in South Sumatra Province (South Sumatera BPS, 2019) in thousands) Mine Mouth Power Plant Mine Mouth Power

In addition, the distribution of agricultural businesses to the overall GDP shows a CHAPTER 4 downward trend, from 19.62% in 2010 to 14.39% in 2019. Agricultural businesses cover agriculture, forestry, and fisheries (See Figure 5.5) Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction CHAPTER 5 Power Plant Power Impact of Mine Mouth CHAPTER 6 Suggestions Figure 5. 6 Gross Regional Domestic Product (GRDP) on the Basis of Constant

Conclusions And Price (x(ADHK) axis year, 2010 y axis in South GRDP Sumatra in billions during of rupiahs) 2010-2019 (South Sumatera BPS, 2019)

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 57 CHAPTER 1 According to South Sumatera BPS (2019), the cause of the decrease in the role of agriculture, forestry, and fisheries is the decreasing land area for agriculture and 130 Coal in South Sumatra the slow increase in the agricultural products price compared to other type of 131 products. In fact, the exchange rate of farmers (NTP), a proxy indicator of farmer welfare, in South Sumatra has averaged below 100 since 2015.

The impact of land conversion and operationalization of coal companies on CHAPTER 2 agricultural businesses around the coal industry can be seen from the case that

Coal Export Analysis befell coffee farmers in Tanjung Telang Village, Lahat Regency, South Sumatra. Rising temperatures and dust from the coal industry around coffee plantations adversely affect coffee growth, thus reducing the production of crops cultivated by 132 farmers around coal mining. The decrease in production causes farmers to tend to sell their land for coffee plantations. Funding CHAPTER 3 Although the contribution to the GDP of Muara Enim Regency consisting of mining and quarrying was 52.25 percent, while the agricultural sector contributed 16.70 Mine Mouth Power Plant Mine Mouth Power percent of GDP, the agricultural sector provided employment for 61.4 percent of the total population. Thus, the expansion of mining will make people lose their job and access to agricultural land. This encourages farmers to move to unsafe jobs

CHAPTER 4 such as working in people’s mines because the job absorption of mining and power plant labor is not as much as agriculture.

Contradictions with Carbon with Carbon Contradictions The economic impact of land loss leads the farming community to lose their Emission Reduction Initiative Emission Reduction livelihoods. As a result of the decrease in coffee crop production, there is a conflict 133 between the community and the company regarding land issues, job availability, and cultural change. CHAPTER 5 Power Plant Power In addition to the massive consequences of mining, regional problems also arise as a result of the construction of transmission lines to deliver electricity production Impact of Mine Mouth from the Mine Mouth Power Plant. 500 kV transmission line used to power the Sumsel-8 power plant. One of them passes through the Tanjung Agung Village, Tanjung Agung Subdistrict, Muara Enim Regency. The line was built right on community-owned (ulayat) land that was claimed unilaterally by PT Sawindo Bumi CHAPTER 6 Suggestions Permai (PT SBP) since the 1990s. Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 58 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3

Figure 5. 7 Sutet 500 kV tread in Tanjung Agung Village, Muara Enim Regency Mine Mouth Power Plant Mine Mouth Power In 2014, in the midst of this unfinished ulayat land conflict, plantation land owned by PT SBP was then sold and acquired by PT Bukit Asam, a mining company and the party working on the Sumsel-8 power plant project. The acquired land area is CHAPTER 4 approximately 10,000 hectares.

Tanjung Agung villagers objected, through village heads and indigenous community Contradictions with Carbon with Carbon Contradictions

Emission Reduction Initiative Emission Reduction leaders, the community protested against the company over the acquisition 134 process conducted by PT SBP and PTBA. The community then asked PTBA as the new owner to make a settlement related to the ulayat land conflict. However, PTBA even disengaged and delegated the handling of the problem to PT SBP’s own CHAPTER 5

Power Plant Power internal mechanisms.

Several times the company had negotiated with the community and promised Impact of Mine Mouth compensation such as compensation money and the construction of infrastructure facilities, namely roads or houses of worship in the Tanjung Agung Village itself. The residents refused because it was not in accordance with the demands of the village deliberations, namely the return of the customary land to the village. CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 59 CHAPTER 1 Coal in South Sumatra CHAPTER 2 Coal Export Analysis Funding CHAPTER 3 Figure 5. 8 Sutet network site 500 kV for the needs of PLTU Sumsel 8 in Muara Enim Regency Mine Mouth Power Plant Mine Mouth Power The villagers then formed the Tanjung Agung Bersatu Community Forum (FMTAB). Through this FMTAB, the community performs live action. The action was carried out by closing the access road to oil palm plantations owned by PT SBP. Moreover, CHAPTER 4 residents also built a post near the entrance of the garden. The action lasted for 9 months with the condition of deploying a large number of police officers to dampen the action. Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction The struggle of the community in defending the ulayat land was again confronted by criminalizing the citizens carried out by the police force on the orders of the arrested. company. Two villagers who were doing regular pickets in the plantation area were CHAPTER 5 Power Plant Power

They were ensnared on charges of violating article 2 of The Emergency Law No. 12 Impact of Mine Mouth of 1951 related to the possession of sharp weapons. As farmers, residents have a habit of carrying sharp weapons in the form of machetes for the needs of plantation activities. CHAPTER 6 Suggestions While this study report is written, the community is still struggling and demanding

Conclusions And the construction of sutet tower should be stopped until there is clarity regarding the land conflict. The community continues to demand that their rights to the land Low Carbon Development of South Sumatra Has be restored. the Potential to be Hampered by Low Quality Coal Investment 60 5.4 River Pollution Due to Coal Waste CHAPTER 1

Coal in South Sumatra F.Z. Ijazah, et. al. (2016) revealed that coal mining activity in Muara Enim Regency impacts water quality, especially along rivers around mining area. The mining activity disposed acidic wastewater from stockpile runoff and entered the mud Watersheds and its tributaries. deposition pond (KPL) before it finally flowed into natural rivers like Enim CHAPTER 2 135 In fact, these rivers are a source of livelihoods for local communities, especially in Coal Export Analysis Lawang Kidul Subdistrict whose population reaches up to 70 thousand people. Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction

Figure 5. 9 Residents of Tanjung Lalang Village bathe in Enim River CHAPTER 5 Power Plant Power F. Z. Ijazah et al (2016) conducted research on the impact of coal mining activities on the water quality of Enim River in Lawang Kidul Subdistrict, Muara Enim Impact of Mine Mouth Regency. This study used water quality testing method using physical indicators like Total Suspended Solid (TSS) and Total Dissolved Solid (TDS) as well as chemical indicators such as Dissolved Oxygen (DO), Biochemical Oxygen Demand (BOD), and Chemical Oxygen Demand (COD). The test was conducted on the river flow CHAPTER 6 Suggestions before and after through the site of coal mining activities. Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 61 CHAPTER 1 Table 5. 2 Indicators of Enim River Waters (Ijazah, et al., 2016)

Coal in South Sumatra Location 1 Location 2 River Before Crossing River After Crossing Area Area Percentage Location Coal Mining Activity Coal Mining Activity Parameters change

CHAPTER 2 37.42 39.74 Coal Export Analysis Physical TSS (mg/l) 23.14 51.61 6% TDS (mg/l) 123% 1.09 1.38

Funding Chemical CHAPTER 3 BOD (mg/l) 3.91 5.47 27% COD (mg/l) 40% Mine Mouth Power Plant Mine Mouth Power

Total Suspended Solid (TSS) CHAPTER 4

The data above shows a significant increase in TSS in the area before and after mining activity. The 6 percent increase occurred due to the high water runoff that 136 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction brought soil erosion due to the transfer of material from the opening of coal mining land. 137 This has an impact on physical changes in water such as a decrease in sunlight 138 penetration and temperature changes that can affect phytoplankton and algae CHAPTER 5 Power Plant Power populations that are food sources for species in the river. Impact of Mine Mouth

139 In addition, the increase in TSS also reduces oxygen levels in water causing fish species to lack oxygen. Therefore, the increase of TSS in a water will have an impact on the population in the region. CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 62 Total Dissolved Solid (TDS) CHAPTER 1

140 The Total Dissolved Solid (TDS) indicator measures the amount of organic, Coal in South Sumatra inorganic and other materials with a diameter of < 2 μm. TDS experienced a significant increase in the area of water passed by mines around Enim River. This increase occurs due to coal mining3 activity that produces acidic water flowing3 over 141 2+ 2− rocks containing calcite (CaCO ), such as lime, calcium (Ca ), carbonate (CO ) and CHAPTER 2 dissolved ions. Coal Export Analysis Funding CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction

Figure 5. 10 Construction of Embankment for Water Intake Channel of PLTU Sumsel 8 in Enim River, Tanjung Lalang Village

Water hardness is the content of certain minerals in water, generally the mineral CHAPTER 5 Power Plant Power such as calcium and magnesium ions in the form of carbonate salts. High water 142 hardness causes changes in aquatic biota communities, inhibits biodiversity and Impact of Mine Mouth causes acute and chronic effects on these aquatic species.

High TDS level also affect water clarity, decreased photosynthesis, the 143temperature. incorporation of toxic compounds and heavy metals resulting in an increase in CHAPTER 6 Suggestions water Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 63 Biological Oxygen Demand (BOD) and Chemical Oxygen Demand (COD) CHAPTER 1

BOD and COD samples showed significant increase. This occurs because there Coal in South Sumatra is a water runoff from the transfer of coal material resulting in increased water acidity and DO. This resulted in relatively high oxygen consumption for biological 2014. processes, resulting in BOD and COD increasing by 27 percent and 40 percent in

CHAPTER 2 144 COD in unpolluted waters are usually less than 20 mg/l. If it is left continuously and Coal Export Analysis increased, it can cause water biota to die.

The case of Enim River pollution due to mining activities continued until 2020. 145 Residents of Keban Agung Village complained that the disposal of land from mining

Funding activities by PT Bara Anugerah Sejahtera resulted in itching. CHAPTER 3 Mine Mouth Power Plant Mine Mouth Power CHAPTER 4 Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction CHAPTER 5 Power Plant Power Impact of Mine Mouth Agung (source: sripoku/ardani) Figure 5. 11 Enim River is murky and muddy, complained the villagers of Keban CHAPTER 6 Suggestions Conclusions And

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 64 CHAPTER 6

CONCLUSIONS AND SUGGESTIONS

Coal Mining in Lahat Regency Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 65 Chapter 6 CHAPTER 1 Conclusions and Suggestions Coal in South Sumatra

This study revealed two constraints on the utilization of South Sumatra coal: trans- portation infrastructure that is quite far (nearest river port 154 km) and low cal- CHAPTER 2 orie coal quality that makes South Sumatra coal production lower than East and

Coal Export Analysis South Kalimantan. Overcoming these constraints requires a large cost, in the form of railway development and the construction of mine mouth power plant to make coal an economic commodity.

These constraints can be a driving factor for developing renewable energy, and in- Funding vestment costs can be used for the development of renewable energy, in line with CHAPTER 3 the spirit of the Sustainable Development Goals to overcome climate changes, thus low-carbon development. Mine Mouth Power Plant Mine Mouth Power However, low-carbon development in South Sumatra and Indonesia can be con- strained by the direction of coal transportation infrastructure development and Mine Mouth Power Plant. CHAPTER 4 This high-carbon development possess difficulty for local residents, including the loss of access to clean water and sanitation which is also one of the goals of sus- Contradictions with Carbon with Carbon Contradictions Emission Reduction Initiative Emission Reduction tainable development. The expansion of the mine caused residents to lose access to land, prompting residents to enter unsafe working areas such as coal mining with- out facilities and safety practices for workers who have resulted in fatalities. This Plant can be seen in the events of October 2020, leaving 11 people dead in one incident. CHAPTER 5 The development of mining infrastructure will also encourage the loss of forest and vegetation areas, potentially increasing conflicts with wildlife, such as tiger and human conflicts that have occurred. Impact of Mine Mouth Power Impact of Mine Mouth Power

WeLocal advise Government: the following parties to: • CHAPTER 6 Suggestions • Facilitate the development of renewable energy ambitiously Conclusions And Conclusions Improve environmental impact monitoring of existing mines and power plants, Low Carbon Development of South Sumatra Has encouraging the repair of environmentalthe Potential damage to be Hampered that by has Low Quality occurred, Coal Investment such as the66 CHAPTER 1 restoration of former mines, ensuring the quality of environmental health stan- • dards of river water for the purposes of hygiene sanitation and public baths. Coal in South Sumatra Disclose to the public periodically about environmental quality parameters of regional health, river water quality, ambient air quality

Central Government:

CHAPTER 2 •

Coal Export Analysis Cancel the planned development of coal railway infrastructure and Mouth Mine power plants especially the process is still early and direct domestic and foreign • investment into renewable energy.

Improving the development of renewable energy that has a lot of potential in

Funding South Sumatra, certainly without neglecting the participation and approval of CHAPTER 3 the most affected local residents.

Domestic and foreign investors: Mine Mouth Power Plant Mine Mouth Power

• energy. Stop investing in the coal sector, and make significant investments in renewable CHAPTER 4 •

Support Indonesia in its low-carbon development strategy with a strategy of

Contradictions with Carbon with Carbon Contradictions phasing out coal, referring to the initiatives of several countries such as China Emission Reduction Initiative Emission Reduction that reach peak emissions by 2030.

Local residents Plant • CHAPTER 5

Improving the knowledge and skills of the non-coal economy because it gives a positive impact long-term (sovereignty over land, a healthy environment both

Impact of Mine Mouth Power Impact of Mine Mouth Power • physically and mentally).

Monitor the quality of the environment, air, vegetation as a system that sup- ports physical and mental health. CHAPTER 6 Suggestions Conclusions And Conclusions

Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 67 Endnotes 1 Regional Energy General Plan (RUED) of South Sumatra Province 2020-2050 2 Indonesia Clean Energy Status Report: Potential, Installed Capacity, and Renewable Energy Power Plant Development Plan 2019. Institute for Essential Services (IESR) 3 Draft Business Plan for Electricity Supply (RUPTL) year 2020-2029 4 Ibid 5 RUED South Sumatra Province 2020-2050 6 Ibid 7 Ibid 8 Ibid 9 Darby, Megan. (2019, June 14). Which countries have a net zero carbon goal. Climatechangenews. Accessed from https://www.climatechangenews.com/2019/06/14/countries-net-zero-climate-goal/ 10 Coal resources are part of coal deposits that are expected to be utilized. These coal resources are divided into classes of resource classes based on the level of geological confidence determined qualitatively by geological conditions complexity and quantitatively by the distance of the point of information. This resource can be increased to reserve if after a feasibility study is declared feasible. 11 Coal reserves are part of coal resources that have been know the dimensions, quantity distribution, and quality, which at the time of feasibility assessment is declared eligible to be mined 12 Indonesia's 2019 Coal Resources and Reserves Balance Sheet. Center for Mineral Resources, Coal and Geothermal. 13 Bowen, Brian. (2008) Coal Characteristics. Indiana Center for Coal Technology Research 14 BP Statistical Review of World Energy 2019 15 The "agglomerating" coal sample indicates that the coal residue is strong and can withstand a load of 500 grams without experiencing damage/destruction 16 Gianfrancesco, Di. (2017). The fossil fuel power plants technology. Woodheadpublishing. Pages 1-49. 17 Mills, Stephen. (2011). Global perspective on the use of low quality coals. IEA Clean Coal Centre 18 Mills, Stephen. (2011). Global perspective on the use of low quality coals. IEA Clean Coal Centre 19 Based on Government Regulation (PP) No.45 of 2004, Indonesian coal is grouped into: Low calorie coal: caloric value <5100 kcal/kg. Low calorie coal: caloric value is between 5100 and 6100 kcal/kg High calorie coal: caloric value is between 6100 and 6800 kcal/kg Very high calorie coal: caloric value over 6800 kcal/kg 20 Water dried base (adb): a parameter value that does not take into account coal surface water content 21 Sari, Siska., Rahmawati, MA. (2017). Impact of Sulphur Content on Coal Quality at Delta Plain Depositional Environment: Case study in Geramat District, Lahat Regency, South Sumatra. Journal of Geoscience. 22 Belkin, Harvey, Tewalt, Susan. 2007. Geochemistry of Selected Coal Samples from Sumatra, Kalimantan, Sulawesi, and Papua, Indonesia. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 68 23 As Received (AR): The value of the total coal parameter that takes into account the content of air, according to the circumstances when taken in the field. 24 Presentation of PT Bukit Asam (PTBA) 2017 25 https://www.rheinbraun-brennstoff.de/en/products-for-industry-and-the-environment/lsc- lignite-special-coke/metallurgy/ 26 Kashiwagi, Takeo. (2015). Mine-mouth Power Generation System Based on Upgraded Brown Coal (UBC). Kobelco Technology Review 27 Hardian, Bobby. (2011). Transport Economics of Coal Resources in South Sumatra, Indonesia. Erasmus University Rotterdam. Thesis 28 Puspitasari, Ika. (2019, January 5). PTBA continues tonggenjot increase coal hauling capacity. It's kontan. Accessed from https://investasi.kontan.co.id/news/ptba-terus-menggenjot-peningkatan- kapasitas-angkutan-batubara 29 Based on data in South Sumatera BPS, Musi River became one of the ports for Export lignite. 30 Suseno, Triswan. (2017). Analysis of Logistics Distribution Patterns and Coal Infrastructure for Small Scale Power Plant. Journal of Mineral and Coal Technology. 53-72 31 Ibid 32 Mimuroto, Yoshimitsu. (2002). Preliminary Feasibility Study on Railway Coal Transportation in Kalimantan, Indonesia. IEEJ 33 Ports to ports.com 3435 RUPTL (Electricity Supply Business Plan) 2020-2029 https://industri.kontan.co.id/news/lebih-efisien-hingga-40-pln-andalkan-pltu-mulut-tambang 36 Mills, J. (2011). Global perspective on the use of low quality coals. IEA Clean Coal Centre 37 Kashiwagi, Takeo., et al.(2015). Mine-mouth Power Generation System Based on Upgraded Brown Coal (UBC). Kobelco Technology Review 38 Meilanova, Denis. (2020, October 22). President Director of PTBA Encourages Coal Utilization to Mine Mouth Power Plant. Bisnis.com. Accessed from https://ekonomi.bisnis.com/ read/20201022/44/1308428/dirut-ptba-dorong-pemanfaatan-batu-bara-untuk-pltu-mulut-tambang 39 Suryahadi, Akhmad. (2020, 16 July). Sumsel Mine Mouth Power Plant Project 8 owns Bukit Asam (PTBA) has reached 48%. Kontan. Accessed from https://investasi.kontan.co.id/news/proyek-pltu- mulut-tambang-sumsel-8-milik-bukit-asam-ptba-sudah-mencapai-48 40 RUPTL Year 2019-2029 41 Draft (RUPTL) Year 2020-2029 42 Two good documents that RUPTL 2019-2028 as well as the Draft RUPTL 2020-2029 does not have data on the plant plan in 2030 so the author assumes there is no plant construction in that year 43 Draft RUPTL 2020-2029 44 AEER calculations using data from RUPTL 2019-2028 and Draft RUPTL Year 2020-2029 45 Annual Report PTBA 2020 46 Master Plan of South Sumatra Province as a National Energy Barn in 2006-2025 47 PTBAAnnual Report 2011 Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 69 48 Hardiyanto, Sari. (2018, April 19). Four PSN Constructions cancelled in South Sumatera. JawaPos. com. Accessed from https://www.jawapos.com/jpg-today/19/04/2018/empat-psn-batal-dibangun- di-sumsel/ 49 Binsari, Chrysanthemum. (2018, December 29). PTBA develops coal transportation lines with a capacity of 60 million tons per year. It's kontan. Accessed from https://investasi.kontan.co.id/news/ ptba-gandeng-kai-kembangkan-jalur-angkutan-batubara-berkapasitas-60-ton 50 Rica. (2011, November 18). China funded a coal railway project in South Sumatra. Kontan. Accessed from https://nasional.kontan.co.id/news/china-danai-proyek-kereta-api-batubara-di-sumatera- selatan 51 Mulyana, Ridwan. (2018, September 19). Servo Railway coal is targeted for Construction in November 2018. Kontan. Accessed from https://regional.kontan.co.id/news/servo-railway-batubara- dtarget-construction-on-november-2018 52 PT Kereta Api Indonesia (KAI). (2018). Railways as a Coal Transportation Distribution Solution in South Sumatra. Accessed from https://kai.id/information/full_news/1711-kereta-api-sebagai-solusi- distribusi-angkutan-coal-in-sumatra-south 53 Wulandari, Dinda. (2018, February 12). Investors Still Interested in South Sumatera Coal Railway. Bisnis.com. Accessed from https://sumatra.bisnis.com/read/20180212/533/756529/investor-masih- minati-jalur-ka-batubara-sumsel 54 Triatmodjo, Yuwono. (2020, 8 April) Coal Transport Trials by BUMD South Sumatra and Mega Rizky Indonesia. Kontan. Accessed from https://insight.kontan.co.id/news/uji-coba-angkutan-batubara- oleh-bumd-sumatra-selatan-dan-mega-rizky-indonesia 55 Annual Report PTBA 2019 56 Draft RUPTL 2020-2029 57 Book I: Design Criteria for Electrical Distribution Network Construction. 2010. State Electricity Company (PLN) 58 Conventional Coal Power Plant is built near load center/user and transmission network. Various power plants that become the backbone of Electrical systems in Java Island was built along the North Coast which is the main load center distribution in Java Island. For example Paiton Power Plant in East Java, Tanjung Jati Power Plant, Pelabuhan Ratu Power Plant and Pacitan Power Plant. Coal supply which is power plant fuel, comes from coal mines in Sumatra and Kalimantan, which are transported by barges. 59 BAPPEDA Of South Sumatra Province. (2015). South Sumatera Builds 10 Power Plants with a Total Capacity of 6,000 MW until 2019. Accessed from https://bappeda.sumselprov.go.id/berita/448/ sumsel-bangun-10-pltu-berkapasitas-total-6000-mw-hingga-2019 60 Draft RUPTL 2020-2029 61 Primayoga et al. (2020). Who's Behind the Power Plant. Indonesia Corruption Watch (ICW) 62 Preview of Sumsel 1 Coal-Fired Power Plant (600MW). IJGlobal. Ijglobal.com 63 http://en.xfafinance.com/html/Companies/2016/186295.shtml 64 Draft RUPTL Year 2020-2029 65 PTBA Annual Report 2019 66 Bosnia, Tito. (2018, July 23). Bukit Asam Starts Construction of Sumsel 8 Power Plant Worth Rp 24 Trillion. CNBC Indonesia. Accessed from https://www.cnbcindonesia.com/ market/20180723144640-17-24928/bukit-asam-mulai-konstruksi-pltu-sumsel-8-senilai-rp-24-t Low Carbon Development of South Sumatra Has 67 Andi, Dimas. (2020, March 1). Bukit Asam (PTBA)the Potential focuses to be onHampered Sumsel by Low8 power Quality plantCoal Investment and Feni power70 plant. Kontan. Accessed from https://industri.kontan.co.id/news/bukit-asam-ptba-fokus-garap-pltu- sumsel-8-dan-pltu-feni?page=1 68 Preview of Bangko Central (SS-8) Coal-Fired Power Plant. Ijglobal.com 69 PT Bukit Asam. (2017). Bukit Asam Started To Build South Sumatera 8 Power Plant in Early 2018. Accessed from http://www.ptba.co.id/id/berita/detail/613/bukit-asam-mulai-bangun-pltu-sumsel-8- awal-2018 70 Kurniawan, Willem. (2018, July 23). Bukit Asam starts to build Central Banko Power Plant worth Rp. 24 Trillion 71 Fadillah Rangga. (2012, February 25). Contracts for 3 mine-mouth power plants awarded. The Jakarta Post. Accessed from https://www.thejakartapost.com/news/2012/02/25/contracts-3-mine- mouth-power-plants-awarded.html 72 Quitcoal. (2021). Pltu Sumsel-5, Sumsel. Retrieved February 8, 2021. https:// quitcoal.id/artikel/ detail/pltu-sumsel-5-sumsel 73 Annual Report DSS Energy and Infrastructure 74 Annual Report DSS Energy and Infrastructure 75 CDB approved a $400 million loan in December 2012 76 Preview of Sumsel-5 Mine Mouth Coal Fired Power Plant. Ijglobal.com 77 https://beritapagi.co.id/2015/06/19/pembangunan-pltu-mulut-tambang-banyak-hambatan.html 78 Widyasari, Esti. (2015). At the end of this year Dian Swastatika Started To Operate Sumsel-5 Power Plant. Retrieved February 8, 2021. https://www.tambang.co.id/akhir-tahun-ini-dian-swastatika-mulai- operasikan-pltu-sumsel-5-6551/ 79 Wulandari, Dinda. (2020, 28 September). South Sumatera 5 Power Plant Soon Operational, Trial since Mid-September. Bisnis.com. Accessed from https://ekonomi.bisnis.com/read/20200928/44/1297455/ pltu-sumsel-5-segera-beroperasi-uji-coba-sejak-pertengahan-september 80 Annual Report DSS Energy and Infrastructure 81 DSS energy and infrastructure. (2020). Transfer of Shares of Subsidiary. https://dssa.co.id/ news/157/pengalihan-saham-entitas-anak.html82 Dian Swastatika Back Incar Power Plant in Sumsel - Investor.ID 83 Hamdi, Elrika. (2019). The Case for System Transformation in Indonesia: Time for a Full Electricity System Audit. Institute for Energy Economics and Financial Analysis (IIEFA) 84 Annual Report China Oceanwide Holdings Limited 2015 85 RUPTL Document 2016-2025 and RUPTL 2017-2026 86 H, Yoliawan. (2018, September 14). This is the cause of Truba Alam Manunggal (TRUB) delistings. Kontan. Accessed from https://investasi.kontan.co.id/news/ini-yang-jadi-penyebab-truba-alam- manunggal-trub-didelisting 87 RUPTL Draft 2020-2029 88 RUPTL 2019-2028 89 Hamdi, Elrika. (2019). The Case for System Transformation in Indonesia: Time for a Full Electricity System Audit. Institute for Energy Economics and Financial Analysis (IIEFA)

90 Paris Agreement Document. Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 71 91 First Nationally Determined Contribution Republic Indonesia 92 Ibid 93 Ng, Christina. PLN's Green Ambition Hangs in The Balance: What the Company Should Do To Be Taken2 Seriously by Investors. IEEFA 94 Co -eq includes greenhouse gases from carbon dioxide, methane gas 95 RUPTL 2019-2028 96 RUPTL 2019-2028 97 AEER calculations uses data from China's Global Power Database issued by Boston University Global Development Policy Center 98 Paris Agreement Document

992019 Green. Credit Guideliness – Translation by International Finance Corporation access from http:// www.cbrc.gov.cn/chinese/files/2012/E9F158AD3884481DBE005DFBF0D99C45.doc October 10,

100 Fisher Paul. (2017, July 17). How the G20 can supercharge green finance. Reuters. Accessed from https://www.reutersevents.com/sustainability/how-g20-can-supercharge-green-finance 101 Guideline on Environmental Protection in Foreign Investment and Cooperation. Diakses from https://www.followingthemoney.org/wp-content/uploads/2017/03/2013_MOFCOM-MEP_Guideline- on-Environmental-Protection-in-Foreign-Investment-and-Cooperation_E.pdf 102 https://www.spglobal.com/platts/en/market-insights/latest-news/coal/010621-Tiongkok-to- launch-national-carbon-emissions-trading-scheme-on-feb-1 103 Shieber. Jonathan (2021, February 2). China launched its national carbon trading market yesterday. Accessed from https://techcrunch.com/2021/02/02/china-launched-its-national-carbon-trading- market-yesterday/ 104 Li, Xin. (2017). China's electricity emission intensity in 2020- an analysis at provincial level. Energy Procedia. 2779-2785 105 Nugraha, Indra. (2020, February 29). Supporting Incentives for the Mineral and Coal Industry in the Omnibus Law Bill. Mongabay. Daccess from https://www.mongabay.co.id/2020/02/29/menyoal- insentif-buat-industri-mineral-dan-batubara-dalam-ruu-omnibus-law/106 https://www.bappenas.go.id/id/berita-dan-siaran-pers/pembangunan-rendah-karbon- pergeseranparadigma-menuju-ekonomi-hijau-di-indonesia/, retrieved February 13, 2021. 107 Master Plan of South Sumatra Province as National Energy Barn 2006-2025 108 Indonesia Clean Energy Status Report: Potential, Installed Capacity, and Renewable Energy Power Plant Development Plan 2019. Institute for Essential Services 109 RUPTL 2020-2029 110 2020-2025 Regional Energy General Plan (RUED) of Sumatera Province. 111 Calculation using the funds needed to build a geothermal power plant (PLTP) in South Sumatra. https://finance.detik.com/energi/d-4345066/pembangkit-listrik-panas-bumi-55-mw-di-sumsel- kelar-2019 112 2020-2025 Regional Energy General Plan (RUED) of South Sumatra Province 113 RUPTL Draft 2020 2029 Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 72 114 2020-2025 Regional Energy General Plan (RUED) of South Sumatra Province 115 Huscher, Julia. (2012). Health impact of lignite-fired power plant. Health and Environmental Alliance116 (HEAL) 117 Muara Enim Regency in 2020, Central Statistics Agency (BPS) of South Sumatra Province Bowen, Brian. (2008). Coal Characteristics. Indiana Center for Coal Technology Research. Purdue University118 119 Muara Enim Regency in 2020, Central Statistics Agency (BPS) of South Sumatra Province 120 Health Office of South Sumatra Province. (2017). Health Profile of Sumatra Province SeLatan. Sukana, Bambang. Readiness of Muara Enim Regency Government in Order to Overcome Coal Pollution.121 Center for Public Health Intervention Technology. 2014 Sukana, Bambang, Henry, Lestary. ISPA CASE STUDY ON BATUBA MINING ENVIRONMENTRA IN MUARA REGENCY, SOUTH SUMATRA. Center for Public Health Intervention Technology.2015 122 Vegetation and non-vegetation areas are calculated using the Normalized Difference Vegetation Index (NDVI) parameter with Landsat 8 satellite imagery data. Because of limited data, a number of areas could not be identified because they were covered by clouds. 123 Vegetation areas can be forests, plantations, rice fields, or other areas covered with green leaves. While the non-vegetation areas are not covered by green leaves including settlements, bodies of water (rivers and lakes), or mining areas. 124 Methods of open mining operations performed on the surface of the mine site. It is usually done at mining sites that tend to be flat or with ramp topography. 125 https://sumeks.co/warga-tegal-rejo-banjir-dampak-galian-ptba/ 126 Disposal is a site designed to hold waste material from the layers of mining land excavated. 127 https://palpos.id/2020/07/16/raja-hutan-sidak-proyek-sumsel-8-sempat-recorded-worker- construction/ 128 See RPJMD South Sumatra Province 2019-2023, p. 505 129 Budiono, Great. (2017). Arrangement of Coal Permits in Coordination and Supervision of KPK. Publish What You Pay (PWYP) 130 BPS South Sumatra, 2020, Gross Regional Domestic Product of South Sumatra Province by Business Field 2015-2019, Palembang: BPS Sumsel. 131 NTP is smaller than 100, meaning farmers are experiencing a deficit. The increase in production price is relatively smaller compared to the increase in the price of consumer goods. Farmers' incomes are down. Less than he spends. NTP has the use to measure the ability to exchange products sold by farmers with products needed by farmers in the production and consumption of households. (BPS Sumsel,2019) 132 Kesumariani, Pipin., Suharno., Ekayani, Meti. (2018). Socioeconomic Factors Influencing Farmers to Sell Land Coffee Plantation To Coal Mining Company. 133 Ibid 134 Interview with residents of Tanjung Agung Village, September 2020 135 Diploma, F.Z., Rohmat,D. (2016). Impact of Coal Mining Activities on Enim River Water Quality in Lawang Kidul Subdistrict, Kabupaten Muara Enim. Geography Education Anthology 136 Ibid Low Carbon Development of South Sumatra Has the Potential to be Hampered by Low Quality Coal Investment 73 137 Bilotta, G.S., Brazier, R.E. (2008). Understanding the influence of suspended solids on water quality and aquatic biota. Water Research. 2849-2861 138 Lloyd, D.S., 1987. Turbidity as a water quality standard for Salmonid** habitats in Alaska. North Am. J. Fish. Manage it. 7, 34–45. 139 Ryan, P.A., 1991. Environmental effects of sediment on New Zealand streams: a review. New Zealand J. Mar. Freshwater Res. 25, 207–221. 140 Phyllis,K. (2007). Effects of Total Dissolved Solids on Aquatic Organisms: A Review of Literature and Recommendation for Salmonid Species. American Journal of Environmental Sciences. 1-6 141 Diploma, F.Z., Rohmat,D. (2016). Impact of Coal Mining Activities on Enim River Water Quality in Lawang subdistrict, Kidul, Muara Enim Regency. Geography Education Anthology 142 Bierhuize,n J.F.H. and E.E. Prepas, 1985. Relationship between nutrients, dominant ions and phytoplankton standing crop in prairie saline lakes. Can, can you? J. Fish. Aquat. Sci., 42: 1588-1594 143 Ibid 144 Diploma, F.Z., Rohmat,D. (2016). Impact of Coal Mining Activities on Enim River Water Quality in Lawang145 Kidul Subdistrict, Muara Enim Regency. Geography Education Anthology https://palembang.tribunnews.com/2021/01/13/diduga-tercemar-aktifitas-tambang-warga- desa-keban-agung-keluhkan-condition-river-enim, accessed 12 February 2021

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