Adaro Energy’s Green Initiative is Greenwashing at best

Jakarta — Climate activists held a peaceful demonstration in front of Adaro Energy’s building today during the Annual General Meeting of Adaro Energy, Indonesia’s second-largest coal producer. The activists called on the energy giant’s investors and banks to urge Adaro Energy to start reducing their dependency on coal, develop clear plans for phasing out coal and begin a transition to just and clean energy.

“Adaro Energy’s CEO, Garibaldi Thohir, announced that the company will diversify and include green energy within its portfolio. However, to date, none of the company’s public documents detail how this diversification will occur amidst an ever-accelerating climate crisis. The current Adaro’s Green Initiative is only a pseudo-narrative to build the company’s reputation. At the same time, Adaro is still trying to get a US$400 million loan to cover maturing debts which will allow it to continue exploiting dirty coal energy,” said Andri Prasetiyo, Trend Asia Researcher.

Elok Faiqotul Mutia, Executive Director of Enter Nusantara, said, “This action is part of an effort to stop the use of dirty energy and urge investors and financial institutions not to be lulled by Adaro Energy’s Green Initiative plan, which appears to be greenwashing. ”

In its annual report, Adaro Energy stated that coal mining remained the DNA of the group and is targeting a coal production volume of 52-54 million tonnes, the same amount as their production last year. Adaro Energy also has 1.1 billion tonnes of coal reserves. If this coal is used, it will produce 2.2 gigatons of CO2-equivalent emissions. Secretary-General of the United Nations, Antonio Guterres, stated that the world must stop using coal immediately in order to achieve the global target of limiting temperature rise to below 1.5 ° C.

Adaro Energy also assumes coal demand will remain stable for the next five years. Based on analysis by the International Energy Agency, in a scenario where the global economy returns to pre-pandemic levels, global coal demand will not follow. Adaro Energy’s coal export target countries, such as South Korea, China, and Japan, have also declared zero-emission targets, the impact of which is expected to reduce coal demand.

“Adaro Energy is one of 100 companies in the world that is responsible for 71 percent of global emissions. Supporting the finance of Adaro Energy is the same as investing in ensuring the climate crisis happens. Currently, the world has left fossil energy behind. Indonesian, especially young people, have become increasingly smart about the dangers of the climate crisis. It doesn’t take a genius to see the market sentiment that thirsts for sustainable development. Banks and investors have to choose whether they want to invest in humankind or save the coal elite. We are waiting for the commitment of financial institutions and investors to immediately stop funding fossil energy,” said 350.org Indonesia Team Leader, Sisilia Nurmala Dewi.

Adaro Energy, through its subsidiary PT Adaro Indonesia which is the largest coal mining company in its holdings, has a syndicated loan with a ceiling of US$1 billion, which will mature in August 2021. The banks that provided the loan include ANZ, Standard Chartered, HSBC, Citigroup, CIMB, Maybank, DBS., OCBC, UOB, MUFG, SMBC, Mizuho, ​​ING Bank, and Bank Mandiri.

“Coal has proven to be a silent and deadly killer for the people around the coal power plants. For example in the Greater Jakarta area, coal power plants within a radius of 100 km from Jakarta are responsible for around 2,500 premature deaths in the Jabodetabek area, with annual costs incurred up to IDR 1.5 trillion each year, ”said Tubagus Soleh Ahmadi, Executive Director of The Indonesian Forum for Environment (Walhi) Jakarta.

Last year, PT Adaro Indonesia, accounted for 87% of Adaro Energy group’s total revenue. PT Adaro Indonesia operates coal mining operations in South Kalimantan under a coal mining exploitation work agreement (PKP2B) which is valid until 2022.

“Banks that are involved in financing Adaro Energy will be exposed to reputation risk as a bank that finances the climate crisis. Investors should encourage Adaro Energy to develop strategic plans with metrics and measurable deadline targets to reduce the company’s dependence on coal and eventually exit the coal business,” said Binbin Mariana, Market Forces Southeast Asia Energy Finance Campaigner.

Pius Ginting, coordinator of Ecological Action and People’s Emancipation added, “The trend of Adaro Energy production which continues to increase in 2016-2020 is contrary to the mandate of the general national energy plan (RUEN) 2017 which requires coal production to be reduced from 461.6 million tons in 2015 to a maximum of 400 million tons in 2019. So the proportion of Adaro Energy’s investment has not had a significant transformation to non-coal energy. ”

Pictures of today’s action (credit to Dhemas Atmodjo/Bersihkan Indonesia)
https://s.id/AksiTolakRefinancingAdaro

For more information, please contact:
Sisilia Nurmala Dewi -350.org Indonesia: [email protected]
Elok Faiqotul Mutia – Enter Nusantara: [email protected]
Andri Prasetiyo – Trend Asia: [email protected]
Binbin Mariana – Market Forces: [email protected]
Pius Ginting – AEER: [email protected]

Endnotes:

1. Farid Firdaus, Adaro Explores US Debt Refinancing $ 400 Million, investor.id, 19 April 2021, online: https://investor.id/market-and-corporate/adaro-jajaki-refinancing-utang-us-400-juta

2. Antonio Guterres, Climate Action for People and Planet: The Time is Now, The Jakarta Post, 21 April 2021, online: https://www.thejakartapost.com/academia/2021/04/20/climate-action-for-people -and-planet-the-time-is-now.html

3. International Energy Agency, World Energy Outlook 2020, October 2020, online: https://www.iea.org/reports/world-energy -outlook-2020

4. Tess Riley, Just 100 Companies Responsible for 71% of Global Emissions, study says, The Guardian, 10 July 2017, online: https://www.theguardian.com/sustainable-business/2017 / jul / 10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change

5. Center for Research on Energy and Clean Water, Transboundary Air Pollution in provincial Jakarta, Banten and West Java, in August 2020, online: https://energyandcleanair.org/ wp / wp-content / uploads / 2020/08 / Jakarta-Transboundary-Pollution_Final-Bahasa.pdf