Government efforts to encourage massively nickel downstream industry has potential to increase carbon emission in Indonesia because of existing dependence on coal fired power plant in the nickle production operation, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) has revealed.
The report, titled “Indonesia nickel companies: The need for renewable energy amid increasing production”, highlights that the production hike plan of four big nickel companies in Indonesia − PT Aneka Tambang (Antam), PT Merdeka Battery Materials (MBMA), PT Trimegah Bangun Persada (Harita Nickel) and PT Vale Indonesia − is predicted to increase carbon emmision of 38.5 million tons CO2 in 2028.
The report shows that Antam, MBMA, Harita and Vale, which represent 26 percent of Indonesia nickel production, produced nickel metal of 350 thousand tons last year, with green house gas emissions of 15 millions ton. In the same year, the four companies secured US$996 million in profits and US$6.8 billion in income. The four companies plan to increase total production capacity to 1.05 million tons of nickel metal by 2028.
“As the Indonesian nickel companies enjoy huge profits and business scale with double production increase in the next 3-5 years, it is the time for them to accelerate transition from coal,” Ghee Peh, Energy Finance Analyst at IEEFA, said in a statement on Thursday, October 24, 2024.
Currently, Antam is recorded as the biggest emitter for every ton of nickel that it produces, namely 69.9 tons of CO2 per ton, while Harita at second position with 68.4 tons of CO2, following by MBMA with 56.9 tons of CO2 and Vale with 28.7 tons of CO2. High emmision of the first three companies are produced by coal fired power plants in their production. Meanwhile, Vale Indonesia has hydro power plant and biodiesel-based power plant as its electricity sources.
The IEEFA report projects emmision increase based on production capacity increase of the four nickel company. First, if the intensity of green house gas emmission of the four companies do not change from 2023 position. Second, if the three companies try to match its emmission in similiar amount of Vale’s.
“Under the first scenario, the total emission of the four companies will achieve 38.5 million tons or equal to 4.5 percent of Indonesia’s green house gas emmission last year of 861.5 million tons. Meanwhile under the second scenario, if the three companies can achieve emission intensity of 28.7 tons of CO2 per ton nickel like Vale, the total emission will reduce by 43 percent to 22.3 million tons of CO2 in 2028,” Ghee Peh said.
He reminded that additional capacity of 530 thousand tons in 2028 will have significant impact on the environment if the nickel companies continue to rely on fossil fuel-based power plants.
“IEEFA estimates that from the new total capacity of 530 thousand tons, 51 percent will hail from high emission ferro nickel production (around 60 tCO2/tNi), mainly from the coal fired power plant. Meanwhile, the rest of the emission will come from low emission (around 13 tCo2/tNi) of Mixed Hydroxide Precipitate with chemical based high pressure acid leach,” he said.
Switch to renewable energy
The IEEFA report stipulates emission intensity of Vale has become the lowest since its high portion of renewable energy consumption is at 30.1 percent in comparison with Harita of only 5.3 percent, MBMA 4.9 percent and Antam 1.2 percent.
The fact that Vale still produces emission because it still uses fossil fuel for the majority of its smelters and production.
Besides Vale, until now only Harita that has plan to use renewable energy power plant. Harita plans to build solar power plant with the capacity of 300 MW in 2025, that will make its emission intensity similiar to Vale’s. MBMA also plans to use solar panel but it does not provide the detail. Meanwhile, Antam just plans to terminate its coal fired power plant and to switch to use electricity from PLN with gas and coal fired power plants source.
The consumption of renewable energy by Vale and Harita shows that Indonesia nickel companies can reduce its dependency on coal fired power plants and cut its green house gas emissions. However to reduce emission intensity significantly, Indonesia nickel companies need to switch to hydro power, solar or other renewable energy.
“Companies need to balance economic benefit from increased export of nickel downstream products with environmental impact and reduce emission by replacing coal fired power plant with renewable energy,” Ghee said.
