Project – ActiveThis profile is actively maintained
Project – ActiveThis profile is actively maintained
Why this profile?
Jambi-2 is being proposed for construction in the Sumatran wilderness, in a region already plagued by the impacts of coal. If built, it will compound the severe health and environmental harms local communities are already experiencing. Jambi-2 will greatly increase Indonesia's coal-related greenhouse gas emissions.
What must happen
Financial close has not yet been reached on Jambi-2, so banks approached by China Huadian Group should not finance the project. Financial institutions with exposure to Jambi-2’s developers China Huadian Corporation and Indonesia’s state utility PLN must commit to a robust coal exclusion policy, as described by Reclaim Finance’s Coal Policy Tool and with a company exclusion list available in urgewald’s GCEL.
|Sectors||Coal Electric Power Generation , Coal Mining|
The Jambi-2 coal-fired power plant was proposed by Indonesia’s state utility, Perusahaan Listrik Negara (PLN), for construction in Jambi province on the island of Sumatra, Indonesia. The plant includes two units of 350 megawatts (MW) generation capacity each. The Jambi plant would source its coal from a mine directly adjacent to the coal-fired power plant.
Jambi-2 is currently presumed by Global Energy Monitor to be shelved, as of April 2023, meaning it is a proposed project that has had no development updates in two years. However, according to the report “Blowing Smoke” (IDI et al, p10), PLN stated by email to researchers in September 2023 that China Huadian Corporation is still developing the project and that the project is moving toward financial close. This is in spite of Huadian announcing in October 2022 that it would withdraw from the project and Chinese President Xi Jinping’s announcement at the UN General Assembly in 2021 that China would no longer be developing overseas coal projects. Huadian did not respond to requests from the same researchers for a comment on their involvement in the project.
Impact on human rights and communities
Local people The Environmental Justice Atlas estimates that 3,000 people may be affected by the project. Potential impacts to those living in and around the construction zone include loss of livelihood, traditional knowledge and land. Small agricultural villages like Lubuk Napal and Pemusiran, immediately next to and nearby the proposed Jambi-2 site, respectively, are already heavily affected by the existing coal mining industry. Thousands of trucks bringing coal to other plants hit and kill dozens of pedestrians each year on the two-lane highway in the area and cause gridlock which prevents villagers from accessing essential services (including causing deaths of some locals waiting to get to hospital). Water resources, previously potable and used for bathing, have been tarnished. The use of the extracted coal by Jambi-2 to create power will accentuate and lock in these impacts.
Loss of Indigenous peoples’ land and knowledge Small-scale crop cultivation and inter-community cooperation in land management are some examples of “traditional” land management practised by Indigenous groups in Jambi which have been disrupted by coal developments in Jambi. The displacement of Indigenous peoples in Sumatra entailed in the proposed Jambi-2 coal-mine-and-power project would further jeopardise their land stewardship and practices.
Impact on climate
Locking in coal Jambi province has coal reserves which are being mined intensively. These reserves are vast, according to Jambi Province’s head of Mineral Resources: if mined at current rates (between 13 and 19 million metric tons per year), the reserves of 1.9 billion metric tons are projected to be depleted in 100 years. As a mine-mouth project, the Jambi-2 coal power station would burn these resources at the source from which they are extracted. Cancelling coal-fired power projects in rapidly growing economies like Indonesia is identified by some experts as the most urgent priority in stopping climate change. WALHI Jambi, the province’s branch of Indonesia’s largest environmental NGO, has identified significant opportunities for renewable energy alternatives to supply the province with energy. These include solar, wind, geothermal and small-scale hydroelectric projects. Building new coal power, rather than renewables, further perpetuates Indonesia’s coal dependance.
Impact on nature and environment
Destruction of critical ecosystems A World Bank blog points out that Jambi province in central Sumatra is “home to forests and peatlands that regulate water flows, store carbon, support biodiversity, and are lifelines for traditional communities such as the Talang Mamak, Orang Rimba, and Melayu peoples” but that “these rich landscapes are fast disappearing”, with emissions from land use change accounting for over 85% of the province’s emissions. Jambi-2’s development will undoubtedly entail further significant land-clearing, both to build the actual plant as well as accompanying infrastructure like transmission lines and roads.
Threatening endangered species Endangered species living in Jambi, like the Sumatran elephant, are increasingly threatened by the creeping loss of nature from industrialisation and land-use change. Industries like palm oil agribusiness and coal mining and power, like the proposed Jambi-2 project, are triggering this effect.
No detailed information is publicly available on the specific financing arrangements for the plant. IDI’s Blowing Smoke report, referenced above, states that the International Finance Corporation (IFC) is exposed to the Jambi-2 project via equity investments in Postal Savings Bank of China (PSBC). PSBC is a major lender to China Huadian Group, the developer of Jambi-2, as described above.
Huadian’s power purchase agreement with PLN is a build-own-operate-transfer scheme (“BOOT”). Although details about this type of coal power plant development are usually in confidential contracts, it likely means that, if the project moves forward, Huadian will make equity investments in the project and seek financing from banks and other financial institutions.
In 2018, a subsidiary of China Huadian Group signed a power purchase agreement with PLN to build the Jambi-2 plant and supply electricity locally. As described above, PLN has maintained in October 2023 that Huadian is still developing the project and that the power purchase agreement is still in effect, while Huadian has provided no update on the project status.