Connect with us

Energy

Don’t Expect Sanctions to Stop Nord Stream II

Published

on

Republican Senator Ted Cruz has become the principal Sisyphus-like character to take over the task of rolling the boulder of sanctions against Nord Stream II. The last four years have seen tumultuous U.S. sanctioning efforts against the project and have epitomized an outdated, stale, and dangerous policy against the Russian Federation that should be re-prioritized and established alongside American principles and level-headed recommendations. This current policy of the passé will not change overnight, however, a sober, self-reflective examination of the failed sanctioning efforts on the part of U.S. policymakers could lead to one less thorn in the side of the Russo-American relationship. As the project nears completion, European and American critics of it have attempted to wield a Russian domestic issue, the alleged poisoning of opposition politician Alexey Navalny, as a pressure tool to stop it. With Denmark recently granting permission to continue laying the pipeline using pipe-laying vessels with anchors along the southeast coast of Bornholm, this disheartened push may now prove too weak.

It’s Time to Let Go

When former U.S. Vice President Joe Biden first voiced his disapproval of the Nord Stream II pipeline and called it a “bad deal” for Europe in 2016, it was to be expected that the weight of his utterance would have the power to transform into a discernible political reality sooner rather than later in the halls of U.S. Congress. Especially in light of America’s perspective LNG aspirations hoping to meet Europe’s growing import needs. This would not come in the form of recurring strong-worded messages or initiating a new wave of tit-for-tat expulsion of diplomats but by way of economic sanctions. After all, this has long been the U.S. go-to.” When it comes to Russian pipelines, U.S. efforts to derail them since the 1960s, the time of the construction of the Druzhba (Friendship) pipeline, have largely seen a string of failure. Sanctions have also more generally become, as Hunter Cawood aptly frames it, “a mythology that has persisted and lived on in spite of failure after failure”. Hopes of finding an exception to this convention did not begin with a flying start.

It’s time to let go…because of an incoherent strategy, appearing in a historical context of failure, signals peril.

Round One: Shaky First Steps

This new task of sanctioning the NS2 project appeared not as a unilateral and relatively clear-cut scenario as had been the case of sanctions vis-à-vis, for example, Iran, where its effects could do minimal damage to the robust transatlantic relationship with the EU. Overarchingly, the principal argument and qualms from the side of the U.S. was the claim of its detrimental impact on the EU’s energy security and, as a shared concern with various EU countries spearheaded by Poland, the “threat to EU unity”. As we shall discover, U.S. justifications for sanctioning NS2 would zig-zag around different lines of reasoning but would frequently come back to this notion of Russia’s malign influence. NS2, more interestingly, became a scenario where entanglements of linking the target of sanctions with a particular cause could become awkward in light of any signs of ambiguity or lack of clarity. German Chancellor Angela Merkel, from her part, was clear in this regard: this was an economic project, first and foremost, that required no extra mandate from the EU. To disagree on this principle, as the U.S. would do from the onset by likening it to that of a “weapon”, would become the root of the disagreement.

In August 2017, this is precisely what occurred when the subsequent Trump administration dealt the first real blow by targeting foreign investments into Russian export pipelines and against energy companies which owned 33% shares or more. This arose in light of the multi-faceted bill called the Countering America’s Adversaries Through Sanctions Act (CAATSA). Receiving praise in Congress, President Trump did not share the same optimism about the bill and called it “seriously flawed”, namely due to its encroachment on the executive branch’s authority to negotiate. In such a move, the issue was that major European companies involved, including Austria’s OMV, were left in limbo about realistically being able to finance the project. It would spark debate in Europe and evoked serious questions about the legal implications of the sanctions bill itself and the role of the U.S. in European affairs; Germany and Austria jointly called it an “unacceptable intervention” in the EU’s energy sector. This initial European reaction would ultimately reach the Department of State that went on to clarify and water down their effects the following October — the project effectively gained immunity from the capital restrictions. It appeared that NS2 could steamroll ahead for now, however, the first fissures in the relationship with Europe had materialized over it.

It’s time to let go…because the sanctions damage the transatlantic relationship with the EU.

This begs the question: what did sanctions achieve in round one? Deriving from a historical context where the efficacy of sanctions rests on a measly success rate of around 4%, a coherent approach could, once again, not be identified. Apart from the initial uncertainty, the effects of the first round of watered-down sanctions did not require any kind of major adjustments from the side of the partners involved and Germany could effectively grant permission for the project’s construction in its territorial waters in January the following year. There were, nevertheless, a few caveats. The sanctions did serve as an attempt to scare off Russia’s European partners and Gazprom did issue a warning to its investors that the sanctions had the possibility of delaying the project. They would also hamper efforts to raise money with an added risk premium demanded by stakeholders.

The initial steps, moreover, appeared to have a principal strategic intention in mind from the part of the U.S. — a type of “CNN Effect”: signaling for greater awareness and visibility of the alleged detrimental impact of NS2, stimulating the desire of American and European policymakers to respond to this perceived threat and opening up another front of pressure against Russia. While, concurrently, evaluating options for the future that would still require intensive lobbying, identifying and acting upon the right legal mechanisms, and providing a strong argument to wary Exclusive Economic Zone (EEZ) nations like Finland, Sweden, and Denmark to put an end to the pipeline. What the U.S. seemed unready for was Gazprom’s hefty lobbying activities on U.S. soil, spending $1 million to shield the pipeline from the sanctions and ensuring that American legislators were “correctly informed about the project”/ At this stage the sanctions had developed into a nuisance at most, however, this initial round sounded the alarm for European and Russian stakeholders that future pressure was to be expected.

It’s time to let go…because they are treated as a nuisance rather than effective policy.

Round Two: Not So Easy, EEZ

In early 2018, it was Poland that assumed re-energized attempts of pushing for additional U.S. sanctions against the project and called U.S. efforts surrounding a new bill, not covering NS2, as “ambiguous and unsatisfactory” for the Polish side. Once again, clarity and concreteness from the U.S. could not be identified in the response. On April 12, despite this renewed talk of sanctions, Finland granted a full set of permits for its construction in its EEZ, the second country to do so after Germany. Sweden followed suit on June 7. However, if Poland wanted another chance for the project’s complete shutdown, they would just have to wait another few months when they were presented with a golden opportunity right at the height of Russiagate following the Trump-Putin Helsinki Summit on July 16. This time Republican Senators John Barrasso and Cory Gardner introduced a bill, which through Section 232 of CAATSA, would be used to “identify and sanction U.S. and foreign entities supporting or expanding Gazprom’s near-monopolist role in providing energy to U.S. allies.” For President Trump, it was an opportunity to slam his fist down on allegations of “bowing down to Putin” at the Summit. The geopolitical theatre now served another domestic purpose. All things considered; this new round was deemed the one — it was the “kill-switch” that its advocates hoped would terminate the project for good. John Barrasso, the chief architect of the bill, had simply had enough of, what he called, “Europe’s addiction to Russian gas”.

It was not to be. Regardless of the buzz surrounding this bill in U.S. Congress, Germany and the companies involved in the project expressed the same position as they had done previously by emphasizing its lucrative economic gains for the European continent. However, ambiguous positions had now started to appear within the U.S. government itself with Trump admitting that Germany had the right to participate in the project just days after the Helsinki Summit, even though he had labeled Germany a “captive” of Russia before the NATO Summit just weeks before. Nevertheless, Nord Stream II gained enough confidence to begin construction in German waters despite not yet having found the last piece of the legal puzzle — Denmark. The year would finish with the intrigue of the Nordic country still not giving the go-ahead after proposed changes to the country’s laws even threatening to block the project back in April. Further U.S. threats took the year to a close.

With Barrasso’s bill and the unanimous efforts by U.S. policymakers, the sanctions now had further backing domestically, although questions about their potency were now a concern upon the realization of the steadfastness of the EEZ countries. Three out of four of them were, until that point, not swayed by U.S. pressure. To put an end to the project would not solely be in the hands of the U.S.

It’s time to let go…because key variables are beyond U.S. control.

Round Three: Loopholes, The Deciding Factor?

If the U.S. had hoped that 2019 would be the year for the project’s shutdown, such wishful thinking would see a reality check early on. In February, Nord Stream II scored a partial victory that was handed to it by the EU itself in the form of a new deal governing import gas pipelines. The catch was not in the deal itself, which was aimed at ensuring that the principles of EU energy legislation apply to all gas pipelines to and from third countries, but in the loopholes that were created because of it. The intrigue of Denmark had become relevant again and its threats to block the project would now seemingly not matter as the Danish regulatory authority would be denied a decisive say. It would now practically be in the hands of German regulators. However, while it initially seemed favorable to NS2, the pipeline project company would launch a notice of the dispute to the EU as it claimed it was in breach of the Energy Charter Treaty and discriminated against the project, which resulted in successive failed agreements over the next few months. NS2 and the partners involved were determined to put up a fight wherever it arrived.

In May, the leadership of Nord Stream II signaled that it was so confident in the project’s completion that it did not even need a “Plan B” against the sanctions. It was also this month that saw further justification efforts from the side of the U.S. for ramping up their implementation, and it would involve Russia’s neighbor to the West – Ukraine. Due to the diversion of gas around the country made possible by the project, major U.S. statements about its plans for further sanctions tend to surround official visits to the country. The U.S. Energy Secretary at the time, Rick Perry, during the inauguration of President Vladimir Zelensky, was firm in his assessment that the pipeline will be used to “split eastern European nations away from those of central and western Europe.”

The split was very real but not what Rick Perry had in mind. The Visegrád Group, initially solid in opposing the project and creating a united front against it in the European Commission, had seen a divergence of opinion from 2016 when the project was in its early stages and before the wave of successive Russian lobbying efforts. Czechia, Hungary, and Slovakia have diverted or hushed up their positions about the project for various reasons and it had now become, as some describe, an “imaginary unity” against it. Out of these four countries, only Poland has maintained a persistent position.

It’s time to let go…because old partners have moved on, losing interest in rallying against it.

In October and November, NS2 scored two major victories. One, by claiming victory in Denmark when the country finally approved the construction of the pipeline in the waters that are part of its economic zone. Two, Germany’s parliament effectively allowing the project to “skirt European rules that forbid one entity from the being both the producer and the supplier of natural gas.” The nervous U.S. response came in the form of a U.S. Energy Department official stating that “The United States will examine all tools at its disposal regarding the project.” One of these tools would arrive in December.

On the 21st, Donald Trump signed a new package of sanctions, part of the National Defense Authorization Act (NDAA) for 2020, that were labeled by the U.S. Ambassador to Germany, Richard Grenell, as being “pro-European.” The problem was that Europe, now as clear as ever, had started to see it in a very different light with the German finance minister, Olaf Scholz, reiterating Germany’s position by calling it a “serious interference in German and European affairs.” Most alarmingly, moreover, was not the European reaction to this round but the Trump administration had now shown a major sign that was the culmination of this failed years-long effort to see its demise. Two anonymous Senior U.S. Administration officials admitted, in a rare concession, that this move was too late to have any effect.

Despite these statements, this new round did complicate the situation for the project with the main contractor of the pipeline, Swiss group Allseas, suspending its operations in light of their announcement. The language of the NDAA targeted “vessels that engaged in pipe-laying at depths of 100 feet or more below sea level for the construction of the Nord Stream 2 pipeline project.” As such, the project would have to find alternative contractors and vessels for the remainder of it. To date, it can be regarded as the most convincing move in this chronicle of sanctioning efforts. A nuisance, financially and temporally, but far from project-terminating. Despite this setback, the next year would require something extraordinary in a last attempt to derail the project completely. Could the U.S. find another one of these tools? It was the eleventh hour and the project was 90% complete.

It’s time to let go…because, after four years, the U.S. has come to the realization: it’s too late.

Round Four: The Present

In light of the situation with Allseas and the suspension of the work of contractors, the year began with Russia’s announcement that the country would seek to complete the pipeline without the assistance of these foreign companies. It would simply need a pipe-laying vessel equipped with a dynamic positioning system, additional organizational work, and a permit from Denmark on the use of pipe-laying vessels with an anchor, which would seek to expand on their ability to complete it on their own. The vessel, the Akademik Cherskiy, would be found, but it was months away on the other side of the world docked at Russia’s Pacific port of Nakhodka. It was acquired in 2016 as part of a contingency plan should European companies drop out of the project. The issue, however, was that it had no relevant experience conducting such large-scale work and would need months to complete it, delaying the expected completion time to the end of 2020 or even the first quarter of 2021.

In February, Donald Trump’s top energy official, Dan Brouillette, dismissed any talk of delay and put forth the most confident U.S. stance on the project yet: the project will not be completed. Citing Russia’s “absence of technology,” Brouillette was adamant that the current phase was too difficult for Russia to get out of. Especially as a bipartisan group of U.S. Senators, spearheaded by Ted Cruz, was preparing the next round of sanctions that made one question what even there was left to target. It would become known in June that the bill would expand on the scope of the sanctions enacted in December and extend beyond vessel-owners; it would target insurance, tethering-facilities, equipment, and other firms having any involvement in the project. It has been hailed as a “super-sanctions” bill. Another case of being the one. Russia’s immediate response was in direct contrast to Brouillette: nothing will stop it from being built. As the chronology reaches the present, three major events have occurred in July and August.

The first being Denmark’s green light allowing for less technologically advanced ships to continue laying the pipeline off the coast of Bornholm, which would potentially negate the impact of the sanctions. The need for such an allowance relates to the toxic warfare substances left at the bottom of the Baltic Sea after WWII and thus, because of Denmark’s obligations to the Law on the Continental Shelf and under the United Nations Convention on the Law of the Sea (UNCLOS), a permit was needed for pipe-laying vessels with an anchor as these carry a greater element of risk. Russia has one such vessel — the Fortuna. This move expands Gazprom’s freedom of choice in vessels for finalizing the construction as these are not affected by the sanctions.

The second, the U.S. House of Representatives passing the NDAA amendment of sanctions, which would still need to be approved by the Senate and the President before becoming law. As the opposing sides claim victory with these events, the war of words has ramped up with the U.S. Secretary of State, Mike Pompeo, threatening the companies involved and telling them to “Get out, or risk the consequences.” On the other side, the harshest response has come from the German Eastern Business Association (OAOEV) that has, for the first time, started planning for retaliatory measures and the German Defense Minister, Annegret Kramp-Karrenbauer, calling the latest move as running afoul of international law. In August, a letter was additionally sent by three U.S. senators to the operator of Mukran port, threatening “crushing legal and economic sanctions” if it continues its support for the project, which was harshly responded to by German policymakers. This has, undoubtedly, galvanized a scene of tension as both parties look towards an uncertain future of the transatlantic partnership.

The third, a domestic issue concerning Russian opposition blogger and activist, Alexey Navalny — German allegations of his poisoning with a Novichok-class nerve agent during his journey from Tomsk to Moscow. It would’ve seemed far-fetched to assume that an internal matter of the Russian Federation would uproot calls to cancel an unrelated project from the side of European and American policymakers, but the year is 2020 and anything can be used as leverage. Merkel was immediately bombarded with pressure to scrap it, but her cabinet has been adamant in their assessment that its completion should not depend on the case of Navalny.

It’s time to let go…because it is the right opportunity to save face concerning international law.

Forecast: Observations and Russian Counteractions

160 kilometers remain. A Danish green light. A new round awaiting approval by the Senate and President. Backlash from Europe. An American election. An alleged poisoning. These are the current circumstances of a project that has seen a cliff-hanger of a journey that is ready for its grand finale. As we approach it, several observations can be made about what to expect considering this complex reality and what Russia’s availabilities are for effective counteraction.

Nord Stream II Will be Completed Despite a Delay

It has become clear that, due to the amount of time and resources invested in the project and being this close to the finish line, Russia is going to seek to complete it regardless if the new round of sanctions pulls through, be it alone or with the assistance of its European partners. The Danish green light has facilitated this move significantly, however, it is up to the latter to decide on whether to prioritize these deemed lucrative economic gains through making this process even smoother by standing firm and actively counteracting the ongoing sanctioning efforts. Bolstered EU efforts would be an advantage, pragmatically and symbolically.

As Germany grows increasingly displeased with the sanctions and business entities already considering the pursuit of retaliatory measures, it is likely that it will do so. Nevertheless, a delay is expected due to the technological lag of the Akademik Cherskiy and because of the sanctions in December of last year, as has been admitted by the Russian President. This is without factoring in the consequences of the new round that could create a further temporary cessation of activities. The added issue of using the case of Navalny as leverage and as a pressure tool with the intention to scrap it should also be expected from the side of both European and U.S. policymakers. Germany has given mixed signals in this regard, suggesting that it should not be used as a factor in the completion of the pipeline, but has recently pressured Moscow to cooperate in the investigation for the country not to “force it to rethink the project.” Regardless, further debate and pressure from this angle can be forecasted.

For Russia, such an effort to complete it continues to be necessary, not only due to the prospective economic gains but as yet another way to reiterate Russia’s rejection of unilateralism in international politics. Should Russia succeed, it would further its reputation of maintaining resilience in the face of the long-standing reality of U.S. sanctions and would allow the country to continue the tradition of being a reliable supplier of natural gas to Europe. Anthony Scaramucci, the former White House Director of Communications, described such resilience already in 2017: “I think the sanctions had in some ways an opposite effect because of Russian culture. I think the Russians would eat snow if they had to survive.” Furthermore, it would exemplify the failure of current U.S. policy vis-à-vis Russia that would bring it one step closer to realizing that a novel approach is needed.

It’s time to let go…because Russian resilience will allow for the project’s completion, no matter the cost.

Further Damage to the Transatlantic Relationship

Since the initial fissures first perceived in 2017, the deterioration of relations between the U.S. and the EU has been apparent in connection with the project. If the new round passes both the Senate and President, it is to be expected that Europe will respond with more than just words of disappointment. The effects of this years-long tiptoeing around Europe’s reaction to the sanctions are likely to surmount further this year; Germany is now weighing in on countersanctions and so is its wider business community. If these are applied, the ball would be in the American court to respond as it sees appropriate, which will likely become yet another source of contention.

If the EU continues to be ignored in its requests to discuss the issue as allies and U.S. unilateralism continues, the latter may damage its perceived role on the European continent. As the EU expresses its intention to pursue a path of sovereignty and freedom of choice in international trade, by impeding and dictating this want, it treats the former as under-valued and incapable of discerning what is in their best interest. It does not show signs of a healthy alliance or relationship. Should Europe succumb to this pressure, as a matter of principle concerning its multilateral agreements with the U.S., it will set a precedent of continued interference and would demonstrate a complete lack of sovereignty.

For Russia, this entails another scenario of strongly condemning this new round of sanctions as it has done throughout by shattering the link of being a political, rather than an economic, project. Europe, for the most part, is aware of this distinction, however, the focus should be on American policymakers, conveying this message through all possible channels.

U.S. Election Unlikely to Have an Impact on Project Completion

November 3 is fast approaching, and the American domestic situation remains tense and unpredictable. The two front-runners, Donald Trump and Joe Biden, would be welcomed in attempts to settle the issue of sanctions against the project. However, judging by their previous actions, the former evidently having more to judge from, it is unlikely that Election Day will radically transform the overarching U.S. position vis-à-vis the project.

Joe Biden’s critical remarks from the onset as Vice President, right before Trump’s election, demonstrate that the Democratic Party would’ve likely pursued, at least, a similar path. This is more notably evidenced by the mostly bipartisan support of the bills introduced in this years-long process, which is a rare occurrence in the present polarized climate. What is different this time is that Joe Biden is running for President and has been escalating a hostile campaign against Russia in the process. Whether this will convert into a more unbending and obstinate stance on the issue of NS2 can be drawn upon his vital role and previous history of convincing Europe to institute a sanctions regime against Russia — a likely scenario of continuation.

In the event of a Trump re-election, we can simply extrapolate the administration’s actions over these last four years. That is unless Trump can use his second term to pursue the improved Russo-American relations he initially had pursued with Russiagate now losing its appeal. With this freedom to maneuver, dropping sanctions against NS2 can potentially be used as a bargaining chip.

For Russia, the crux of the issue lies in the bipartisan support for the sanctions. Russia should adhere to its current strategic plans and not rely on a favorable outcome in the election for their removal. Even so, the election period itself is unlikely to bring any sharp-pointed tools with the potential to terminate the project, as the result in November will occur at a time when Nord Stream II is projected to be completed. It will be too late, and a “kill-switch” can, therefore, only be found in the actions of the present, which are currently en route to the Senate.

An ideal scenario would entail a tripartite summit involving Russia, USA, and Europe to find a solution to the issue — a push towards an entente. Given the current complexity of affairs, however, it would require a strong willingness from all parties involved, a willingness that has been absent from the American side.

From our partner RIAC

Policy Analyst at The Russian Public Affairs Committee (Ru-PAC). His work is focused on Russo-American relations, the Eurasian space and with a long-term goal of building better relations between Russia and his country of birth, Sweden

Continue Reading
Comments

Energy

Indonesian Coal Roadmap: Optimizing Utilization amid Global Tendency to Phasing Out

Published

on

Authors: Razin Abdullah and Luky Yusgiantoro*

Indonesia is potentially losing state revenue of around USD 1.64-2.5 billion per year from the coal tax and non-tax revenues. Although currently Indonesia has abundant coal resources, especially thermal coal, the coal market is gradually shrinking. This shrinking market will negatively impact Indonesia’s economy. The revenue can be used for developing the country, such as for the provision of public infrastructures, improving public education and health services and many more.

One of the main causes of the shrinking coal market is the global tendency to shift to renewable energy (RE). Therefore, a roadmap is urgently needed by Indonesia as a guideline for optimizing the coal management so that it can be continuously utilized and not become neglected natural resources. The Indonesian Coal Roadmap should also offer detailed guidance on utilizing coal for the short-term, medium-term and long-term.

Why is the roadmap needed?

Indonesia’s total coal reserves is around 37.6 billion tons. If there are no additional reserves and the assumed production rate is 600 million tons/year, then coal production can continue for another 62 years. Even though Indonesia’s coal production was enormous, most of it was for export. In 2019, the export reached 454.5 million tons or almost 74% of the total production. Therefore, it shows a strong dependency of the Indonesian coal market on exports, with China and India as the main destinations. The strong dependency and the global trend towards clean energy made the threat of Indonesian coal abandonment increasingly real.

China, one of Indonesia’s main coal export destinations, has massive coal reserves and was the world’s largest coal producer. In addition, China also has the ambition to become a carbon-free country by 2060, following the European Union countries, which are targeting to achieve it in 2050. It means China and European Union countries would not produce more carbon dioxide than they captured by 2060 and 2050, respectively. Furthermore, India and China have the biggest and second-biggest solar park in the world. India leads with the 2.245GW Bhadla solar park, while China’s Qinghai solar park has a capacity of 2.2GW. Those two solar parks are almost four times larger than the U.S.’ biggest solar farm with a capacity of 579 MW. The above factors raise concerns that China and India, as the main export destinations for Indonesian coal, will reduce their coal imports in the next few years.

The indications of a global trend towards RE can be seen from the energy consumption trend in the U.S. In 2019, U.S. RE consumption exceeded coal for the first time in over 130 years. During 2008-2019, there has been a significant decrease in U.S coal consumption, down by around 49%. Therefore, without proper coal management planning and demand from abroad continues to decline, Indonesia will lose a large amount of state revenue. The value of the remaining coal resources will also drop drastically.

Besides the global market, the domestic use of coal is mostly intended for electricity generation. With the aggressive development of RE power plant technology, the generation prices are getting cheaper.  Sooner or later, the RE power plant will replace the conventional coal power plant. Therefore, it is necessary to emphasize efforts to diversify coal products by promoting the downstream coal industries in the future Indonesian Coal Roadmap.

What should be included: the short-term plan

In designing the Indonesian Coal Roadmap, a special attention should be paid to planning the diversification of export destinations and the diversification of coal derivative products. In the short term, it is necessary to study the potential of other countries for the Indonesian coal market so that Indonesia is not only dependent on China and India. As for the medium and long term, it is necessary to plan the downstream coal industry development and map the future market potential.

For the short-term plan, the Asian market is still attractive for Indonesian coal. China and India are expected to continue to use a massive amount of coal. Vietnam is also another promising prospective destination. Vietnam is projected to increase its use of coal amidst the growing industrial sector. In this plan, the Indonesian government plays an essential role in building political relations with these countries so that Indonesian coal can be prioritized.

What should be included: the medium and long-term plans

For the medium and long-term plans, it is necessary to integrate the coal supply chain, the mining site and potential demand location for coal. Therefore, the coal logistics chain becomes more optimal and efficient, according to the mining site location, type of coal, and transportation mode to the end-user. Mapping is needed both for conventional coal utilization and downstream activities.

Particularly for the downstream activities, the roadmap needs to include a map of the low-rank coal (LRC) potentials in Indonesia, which can be used for coal gasification and liquefaction. Coal gasification can produce methanol, dimethyl ether (a substitute for LPG) and, indirectly, produce synthetic oil. Meanwhile, the main product of coal liquefaction is synthetic oil, which can substitute conventional oil fuels. By promoting the downstream coal activities, the government can increase coal’s added value, get a multiplier effect, and reduce petroleum products imports.

The Indonesian Coal Roadmap also needs to consider related existing and planned regulations so that it does not cause conflicts in the future. In designing the roadmap, the government needs to involve relevant stakeholders, such as business entities, local governments and related associations.

The roadmap is expected not only to regulate coal business aspects but also to consider environmental aspects. The abandoned mine lands can be used for installing a solar farm, providing clean energy for the country. Meanwhile, the coal power plant is encouraged to use clean coal technology (CCT). CCT includes carbon capture storage (CCS), ultra-supercritical, and advanced ultra-supercritical technologies, reducing emissions from the coal power plant.

*Luky Yusgiantoro, Ph.D. A governing board member of The Purnomo Yusgiantoro Center (PYC).

Continue Reading

Energy

Engaging the ‘Climate’ Generation in Global Energy Transition

Published

on

photo: IRENA

Renewable energy is at the heart of global efforts to secure a sustainable future. Partnering with young people to amplify calls for the global energy transition is an essential part of this endeavour, as they represent a major driver of development, social change, economic growth, innovation and environmental protection. In recent years, young people have become increasingly involved in shaping the sustainable development discourse, and have a key role to play in propelling climate change mitigation efforts within their respective communities.

Therefore, how might we best engage this new generation of climate champions to accentuate their role in the ongoing energy transition? In short, engagement begins with information and awareness. Young people must be exposed to the growing body of knowledge and perspectives on renewable energy technologies and be encouraged to engage in peer-to-peer exchanges on the subject via new platforms.

To this end, IRENA convened the first IRENA Youth Forum in Abu Dhabi in January 2020, bringing together young people from more than 35 countries to discuss their role in accelerating the global energy transformation. The Forum allowed participants to take part in a truly global conversation, exchanging views with each other as well as with renewable energy experts and representatives from governments around the world, the private sector and the international community.

Similarly, the IRENA Youth Talk webinar, organised in collaboration with the SDG 7 Youth Constituency of the UN Major Group for Children and Youth, presented the views of youth leaders, to identify how young people can further the promotion of renewables through entrepreneurship that accelerates the energy transition.

For example, Joachim Tamaro’s experience in Kenya was shared in the Youth Talk, illustrating how effective young entrepreneurs can be as agents of change in their communities. He is currently working on the East Africa Geo-Aquacultural Development Project – a venture that envisages the use of solar energy to power refrigeration in rural areas that rely on fishing for their livelihoods. The project will also use geothermal-based steam for hatchery, production, processing, storage, preparation and cooking processes.

It is time for governments, international organisations and other relevant stakeholders to engage with young people like Joachim and integrate their contributions into the broader plan to accelerate the energy transition, address climate change and achieve the UN Sustainable Development Agenda.

Business incubators, entrepreneurship accelerators and innovation programmes can empower young people to take their initiatives further. They can give young innovators and entrepreneurs opportunities to showcase and implement their ideas and contribute to their communities’ economic and sustainable development. At the same time, they also allow them to benefit from technical training, mentorship and financing opportunities.

Governments must also engage young people by reflecting their views and perspectives when developing policies that aim to secure a sustainable energy future, not least because it is the youth of today who will be the leaders of tomorrow.

IRENA

Continue Reading

Energy

The Urgency of Strategic Petroleum Reserve (SPR) for Indonesia’s Energy Security

Published

on

Authors:Akhmad Hanan and Dr. Luky Yusgiantoro*

Indonesia is located in the Pacific Ring of Fire, which has great potential for natural disasters. These disasters have caused damage to energy infrastructure and casualties. Natural disasters usually cut the energy supply chain in an area, causing a shortage of fuel supply and power outages.

Besides natural disasters, energy crisis events occur mainly due to the disruption of energy supplies. This is because of the disconnection of energy facilities and infrastructure by natural disasters, criminal and terrorist acts, escalation in regional politics, rising oil prices, and others. With strategic national energy reserves, particularly strategic petroleum reserves (SPR), Indonesia can survive the energy crisis if it has.

Until now, Indonesia does not have an SPR. Meanwhile, fuel stocks owned by business entities such as PT Pertamina (Persero) are only categorized as operational reserves. The existing fuel stock can only guarantee 20 days of continuity. Whereas in theory, a country has secured energy security if it has a guaranteed energy supply with affordable energy prices, easy access for the people, and environmentally friendly. With current conditions, Indonesia still does not have guaranteed energy security.

Indonesian Law mandates that to ensure national energy security, the government is obliged to provide national energy reserves. This reserve can be used at any time for conditions of crisis and national energy emergencies. It has been 13 years since the energy law was issued, Indonesia does not yet have an SPR.

Lessons from other countries

Many countries in the world have SPR, and its function is to store crude oil and or fuel oil. SPR is built by many developed countries, especially countries that are members of the International Energy Agency (IEA). The IEA was formed due to the disruption of oil supply in the 1970s. To avoid the same thing happening again, the IEA has made a strategic decision by obliging member countries to keep in the SPR for 90 days.

As one of the member countries, the US has the largest SPR in the world. Its storage capacity reaches a maximum of 714 million barrels (estimated to equal 115 days of imports) to mitigate the impact of disruption in the supply of petroleum products and implement US obligations under the international energy program. The US’ SPR is under the control of the US Department of Energy and is stored in large underground salt caves at four locations along the Gulf of Mexico coastline.

Besides the US, Japan also has the SPR. Japan’s SPR capacity is 527 million barrels (estimated to equal 141 days of imports). SPR Japan priority is used for disaster conditions. For example, in 2011, when the nuclear reactor leak occurred at the Fukushima nuclear power plant due to the Tsunami, Japan must find an energy alternative. Consequently, Japan must replace them with fossil fuel power plants, mainly gas and oil stored in SPR.

China, Thailand, and India also have their own SPR. China has an SPR capacity of 400-900 million barrels, Thailand 27.6 million barrels, and India 37.4 million barrels. Singapore does not have an SPR. However, Singapore has operational reserve in the form of fuel stock for up to 90 days which is longer than Indonesia.

Indonesia really needs SPR

The biggest obstacles of developing SPR in Indonesia are budget availability, location selection, and the absence of any derivative regulations from the law. Under the law, no agency has been appointed and responsible for building and managing SPR. Also, government technical regulations regarding the existence and management of SPR in Indonesia is important.

The required SPR capacity in Indonesia can be estimated by calculating the daily consumption from the previous year. For 2019, the national average daily consumption of fuel is 2.6 million kiloliters per day. With the estimation of 90 days of imports, Indonesia’s SPR capacity must at least be more than 100 million barrels to be used in emergencies situations.

For selecting SPR locations, priority can be given to areas that have safe geological structures. East Kalimantan is suitable to be studied as an SPR placement area. It is also geologically safe from disasters and is also located in the middle of Indonesia. East Kalimantan has the Balikpapan oil refinery with the capacity of 260,000 BPD for SPR stock. For SPR funding solution, can use the state budget with a long-term program and designation as a national strategic project.

Another short-term solution for SPR is to use or lease existing oil tankers around the world that are not being used. Should the development of SPR be approved by the government, then the international shipping companies may be able to contribute to its development.

China currently dominates oil tanker shipping in the world, Indonesia can work with China to lease and become Indonesia’s SPR. Actually, this is a good opportunity at the time of the COVID-19 pandemic because oil prices are falling. It would be great if Indonesia could charter some oil tankers and buy fuel to use as SPR. This solution was very interesting while the government prepared long-term planning for the SPR facility. In this way, Indonesia’s energy security will be more secure.

*Dr. Luky Yusgiantoro, governing board member of The Purnomo Yusgiantoro Center (PYC).

Continue Reading

Publications

Latest

Terrorism2 hours ago

Global War on Terror: Pakistan’s Role and Evolving Security Architecture for sustainable peace

If Afghanistan, according to former president of the United States (US) George W Bush was the center of terror, then...

Africa4 hours ago

What Social Movements Mean for African Politics

Africa’s transition from a continent of colonial protectorates to independent states has been met with developmental and political challenges. From...

Green Planet6 hours ago

Promoting Green Finance in Qatar: Post-Pandemic Opportunities and Challenges

The recent COVID-19 pandemic had significant implications for both national economies and the global financial system, in addition to hindering...

Reports7 hours ago

Thailand: Growth in Jobs Critical for Sustained COVID-19 Recovery

Thailand’s economy was severely impacted by the COVID-19 pandemic and is estimated to have shrunk by 6.5 percent in 2020....

Economy8 hours ago

The Economy Against the Tide

The world evidently grappled with the effects of the Covid pandemic in 2020 and continues to wedge forward against the...

Human Rights9 hours ago

Over 1.9 billion people in Asia-Pacific unable to afford a healthy diet

The economic impact of the coronavirus pandemic and surging food prices are keeping almost two billion people in Asia and...

Energy News10 hours ago

Priorities for improving diversity and inclusion in the energy sector

Prominent energy figures from around the world took part in a virtual dialogue last month on ways to accelerate progress...

Trending