At the beginning of 21st century, the need for change in everyday lifestyle and industrial production has created a space for the development of technologies that will sufficiently serve humanity but that will be environmentally friendly. In this sense, we witnessed an expansion of products that supported sustainable energy such as solar panels, wind turbines, and eco-fuels that have become popular products all over the world. Naturally, in the world after the end of the Cold War, the USA had a monopoly over these trade areas. Companies such as First Solar and Sunpower have dominated the market when German and Japanese companies joined the race(Awatea, Ajith, & Ajwani-Ramchandani, 2018, str. 181).
In the most recent times, the evident expansion of the Chinese dominance in economy and technology, present throughout in the trade war with the USA, has transcended into the sphere of renewable energy where Chinese company JinkoSolar holds the number one position in manufacturing. Because this topic has somehow stayed in the shadow of more popular conflict and competition in the sphere of technology, solar power, and production of solar panels have not been noted as a possible feature of expansion tactic China has been implementing. Therefore my research question is related to the factors that created the ground for Chinese companies to dominate the solar panel market. The arguments used in the paper include several instances correlated with the influence that the Chinese government had in special policies to assure companies’ competitiveness, their overall economic strategy, domestic factors that pushed the development of this field, and ideological standpoint for governmental support. In the end, I conclude with the claim that the Chinese strategy can have significance in the dominance of the European market in the same way it dominates the South Asian region.
From rural-oriented solar programs to world champion
Before the 1990s, the Chinese companies have not been very active in solar power industry. Because of the shift in world agenda and the excessive need for the affordable workforce and technology in this area, China started to develop industrial capacities for it. When it comes to the beginnings of Chinese involvement in solar power, the primary focus was the know-how and skilled labour that was sent to other countries. This eventually resulted in China starting companies that deal with solar power and inviting others to move to China, where they could found cheap, skilled labour but instead of paying taxes, they received tax credits. This, combined with expertise gained in the work of German companies in this field helped the growing trend of Chinese enterprises, and soon the production of solar panels exceeded the demand of the domestic solar power market. Today in the top 10 of the companies that deal with solar panels and solar energy, there are 4 Chinese companies, among which the first place is held by Chinese JinkoSolar Holding Co. Ltd. Several factors can be distinguished which impacted this dominance in solar energy industry. Besides the demand created by other countries and their extensive search for cheaper alternatives to the USA monopoly in this area, the Chinese developing economy found the reasons to create a more beneficial domestic atmosphere for the development of solar power and green energy. Overall narratives in world affairs that started to focus more on climate change and renewable energy resulted in several international agreements extensively supported by most states. This was recognized by China, which was at the same time starting to reshape its international position and to build preconditions for becoming the global hegemon. Under the last two Chinese “5 year-plan“,a strategical need was created by the local governments from rural and underdeveloped areas to create solar power manufacturing facilities precisely since they had space and labour force to develop this industry.
These kinds of trade incentives can be connected to another factor that influenced the development of the solar power sector – domestic pollution. The 11th Five-Year Plan (2006-2010) aimed to increase the consumption of renewable energy sources on the domestic market to fight this problem and to point out the quality of Chinese companies and the countries progress in environmental protection. Total investment in treating environmental pollution increased by 15% annually and environmental investment reached 1.33% of the GDP by 2009, which further continued in the 12th plan resulting in government establishing a credit rating system for enterprises’ environmental behaviours, building a green rating system in banks, and exploring mechanisms for earmarked funds for national ecological compensation. As a result, the Chinese domestic market has been growing consistently ever since (Zhang & He, 2013) which also impacted the changing of the image of China has as a polluted country. The factor that also influences the growing solar power manufacturing industry of China and its dominance in the world is the momentum in which the revolution happened – the 2008 economic crisis when the Chinese government recognized the growing need for sustainable technology and its development, and which it supported by extensive policies(Awatea, Ajith, & Ajwani-Ramchandani, 2018)that helped preserve these companies on the market. Talking about the norms that the Chinese government implemented, the reasoning behind them could be seen as the combination of economic benefits as well as political ones.Thanks to the recognition of the Chinese Communist Party, solar power companies such as JinkoSolar become one of the most valued corporations that exported Chinese solar power products. Here lies the most important factor that pushed Chinese companies to dominate – governmental involvement and policy push for the companies to be more competitive and which save them from the economic crisis.
These policies have been deemed problematic by the European Union and the USA for several years, which eventually lead to the dispute that was resolved in 2013. Chinese government instituted several consumption policies to increase competitiveness with the USA manufacturers and to expand over the domestic market. Policies such as feed-in-tariffs, renewable portfolio standards, large scale solar power generation projects, easier grid connection, and set targets for cumulative installed capacity(Zhang & He, 2013) created problems for the EU firms to be competitive against the Chinese ones which lead to imposed tariffs terminated by mentioned dispute settlement. Even though tariffs were imposed, China managed to surpass the German production by 2015 as well as the USA`s because of its enormous capacities and a developed market for its products. China become the leader in the trade of solar energy and in establishing its technology all over the world, while managing to become pioneer in patents related to solar power(Awatea, Ajith, & Ajwani-Ramchandani, 2018, str. 184-185).
Chinese dominance in the field of renewable energy come at the same time as the USA withdrawal from the Paris Climate Agreement. This opened up new opportunity for China to become more engaged in the policies related to environment within international organizations and become a way of a „posterboy “for others to see. This comes as no surprise because green policies have a big say in developing countries in Africa or member state of the European Union which is precisely where China is trying to expand its presence. On the other note JinkoSolar and other corporations have created some controversy on being highly involved with the Chinese Government which slowed their progress in these regions, but then again not in the same volumeas in the case of Huawei in IT sector. Meanwhile, Chinese strategy behind it may be the same – spreading its presence and creating soft power.
In line with this, the factor that explains the impact of China is related to alignment of its policies on production as well as target areas with the European Union and their Green New Deal. A couple of years ago, as mentioned, the European Union had a series of tariffs set for China due to state policies that make the Chinese solar panels more competitive on the market, but as time passes it is more than evident that JinkoSolar and similar companies dominates this area both in innovation and outreach, leaving behind the US and German companies. These tariffs have been lifted due to more beneficial products that China had to offer in this field, which can help the EU`s new target in renewable energy. This is more than expected having in mind that China supplies more than 50% of South Asian countries’ needs, and was already at around 20% of supplying European market in 2014 which is by now more than two times multiplied.
Even though the Green Deal itself focuses more on wind energy which is pioneered in the EU member states, China has more impact the solar power area since it has better competitiveness rate due to low prices and low greenhouse gas emissions. Taking a look at a specific company heavily subsidized by the Chinese government as JinkoSolar, their presence in Europe has been seen extensive which reflects on the overall presence of China in the European market in several fields. Argument for this is the fact that JinkoSolar has a lead the biggest up-to-date renewable energy project -the Kozani project built in Greece which is interpreted as a „benchmark“for green energy in Europe. In essence quality of the production has not been put in question due to several world-famous projects completed by the firm which speak for its quality such as the plant Noor Abu Dhabi which will be the largest in the world when completed.
This kind of economic influence in trade and manufacturing can be compared to the impact that Chinese production of toys had at the beginning of the century and which is significantly correlated to the soft power China. As presented in Xi Jinping „ Chinese dream“speech, China has a tendency to spread its influence in international arena for several decades now. We have been aware that Chinese dominance in the South Asian region is not challenged but to fulfil its aspirations, the influence must be spread in both Africa and Europe and it must transcend into the soft power more than in economic one. The Green New Deal and overall increasing significance of green economy and renewable energy can be used as a part of Chinese tactics. Together with this, the engagement of the government in the economy and private corporations can have an immense impact on the future position of China as a great power.
What is left to conclude is that in the essence of the Chinese presence and dominance over solar power production and solar panel manufacturing lays a combination of factors. Solar power and renewable energy have had a peak in the years after the 2000s which China saw as an economic opportunity where it could invest and develop the industry based on domestic resources. Because manufacturing soon satisfied domestic incentives, and the global popularity of these products hit its peak, China started to export its knowledge as well as products on the global market, soon becoming absolute dominant over the Asian region. Having the quality but also seeing that the window of opportunity opened, China used its chance to propagate its production once again.
As an addition, this period of development of green energy and its industry overlaps with the shift China had in its policy towards the world and its intention to become a new global superpower, especially in the aftermath of the 2008 economic crisis. Politically, China has started to be involved in different international agreements connected to the environment which together with the USA withdrawal from the Paris Climate Agreement and the European fight for Green New Deal can be interpreted as the set of fortunate events presenting China as pioneer in environmentally friendly future. All this was seen in a set of policies and subsidies created by the Chinese government to support companies such as JinkoSolar which is only one of multiple examples of successful solar power companies originating from China, while also it presents an example how governmental interests can have a significant say in economic sphere. This may be used as an opportunity to spread both economic and soft power. The attitude of the Chinese government in this sphere may be interpreted as one of the tactics to spread the idea of Chinese world hegemony in Europe, now that the USA has weakened its position. JinkoSolar and its success is a product of the mentioned factors, but moreover the product of aspiration of Chinese Government that managed to put this industry into their framework set for the future.
Indonesian Coal Roadmap: Optimizing Utilization amid Global Tendency to Phasing Out
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).
Engaging the ‘Climate’ Generation in Global Energy Transition
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.
The Urgency of Strategic Petroleum Reserve (SPR) for Indonesia’s Energy Security
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).
Arnab Goswami’s whatsApp leaks show power of propaganda
WhatsApp leaks concerning Arnab Goswami (Republc TV) have brought into limelight some bitter truths. One bitter truth is that the...
Post Trump Palestine
The unconditional United States’ political, financial and military support to Israel enabled the latter to occupy the Palestinian territories. The...
What is a ‘vaccine passport’ and will you need one the next time you travel?
Is the idea of a vaccine passport entirely new? The concept of a passport to allow for cross border travel...
‘Swift action’ needed in Tigray to save thousands at risk
Two months after conflict forced humanitarian workers to withdraw from the Tigray region of Ethiopia, the UN refugee agency (UNHCR),...
World Economic Forum Announces 2021 Crystal Award Winners
The Opening Night of The Davos Agenda on Sunday 24 January at 19.00 CET (rebroadcast at 19.00 EST and on...
Indian Farmers Protest Against the Parliament’s Encroaching Bills
The new agricultural reforms in India aim to permit farmers to offer their produce to private purchasers beyond a state-run...
Israel: ‘Halt and reverse’ new settlement construction
Israel’s decision to advance plans for some 800 new settlement units, most of which are located deep inside the occupied...
Europe3 days ago
The projection of Turkish power in the Eastern Mediterranean
Middle East3 days ago
Morocco Increases Pressure on Hezbollah by Arresting One of its Alleged Financiers
Economy2 days ago
Bitcoin Price Bubble: A Mirror to the Financial Crisis?
Europe3 days ago
Recovery action plan of the Union: On Next Generation EU & a New Independent authority?
International Law3 days ago
Covid third world debt will outlast the virus – it should be relieved
Finance3 days ago
Corporate Boards are Critical Starting Points for Implementing Stakeholder Capitalism
Intelligence3 days ago
Indian Chronicle: Exposing the Indian Hybrid warfare against Pakistan
East Asia2 days ago
Time to play the Taiwan card