IEEFA Asia: The need for RE in Indonesia’s nickel companies and South Korea's AI & semiconductor sectors, power wheeling in Indonesia, and more

Over the last month, our team has continued exploring the developments, challenges, and opportunities in national policies and corporate investment strategies across key sectors, emphasizing the urgent need for an accelerated #energytransition.

We have investigated key topics related to the energy transition in the region:

• Ghee Peh (Energy Finance Specialist, Asia Coal Markets) shared that #Indonesia produces 51% of the world’s nickel and has four listed #nickel companies that aim to more than double their production in the next 3-5 years. Our report analyzes the greenhouse gas (GHG) emissions of these companies and finds that the GHG intensity of production can be reduced by using hydropower or other #renewableenergy sources.
• Mutya Yustika (Energy Finance Specialist, Indonesia) explained that the Indonesian government also plans to expand the #cleanenergy market by proposing power wheeling in its renewable energy bill. This would allow private companies to sell renewable electricity directly to customers through transmission systems owned by the state utility. Our analysis suggests that power wheeling could enhance Indonesia’s attractiveness as an investment destination and accelerate renewable energy development.
• Michelle (Chaewon) Kim (Energy Finance Specialist, South Korea) said that the decarbonization efforts of global Big Tech companies are driving renewable energy demand from the Artificial Intelligence (#AI) and semiconductor sectors. However, South Korean companies are lagging in the clean energy transition. Our analysis shows that tripling renewable energy capacity by 2030 could meet projected electricity demand from these sectors, assuming existing power plant buildout plans remain on track.
• Sam Reynolds (Research Lead, LNG/Gas, Asia) and Christopher Doleman (LNG/Gas Specialist, Asia) highlighted that Canadian liquefied natural gas (LNG) exporters are building new projects aiming to sell gas to #Japan, which has emphasized the need for more #LNG to provide #energysecurity. However, Japan’s LNG imports have fallen every year since 2014. The push for Canadian LNG appears to be more about #gas expansion opportunities rather than domestic energy security.

We invite everyone to stay engaged with our research, publications, and events.

Indonesia’s nickel companies: The need for renewable energy amid increasing production

KEY FINDINGS

• Indonesia accounts for 51% of the world’s nickel mine production and has four listed nickel companies, PT Aneka Tambang (Antam), Merdeka Battery Materials (MBMA), Trimegah Bangun Persada (TBP Harita), and PT Vale Indonesia (Vale), that are growing in scale and profit. These companies aim to more than double their production in the next 3-5 years.
• The four Indonesian nickel companies produced 353,000 tonnes of nickel metal along with 15 million tonnes (mt) of greenhouse gas (GHG) emissions in 2023.
• One of the four companies, Vale, had the lowest GHG emissions at 29 tonnes of carbon dioxide (CO2) per tonne of nickel (tCO2/tNi), due to 365 megawatts (MW) of hydropower capacity. The other three companies used coal-fired power mainly and had a GHG emissions range of 57-70 tCO2/tNi.
• The four nickel companies could expand output to 1.05mt of nickel metal by 2028. However, at current rates of GHG emissions for all companies, this could result in 39mt of GHG emissions or 5% of Indonesia’s total 2023 emissions. Nickel companies can reduce the GHG intensity of production by using hydropower or other renewable energy sources.

“As Indonesian nickel companies experience significant growth in profit and scale, with plans to more than double production in the next three to five years, now is the time to accelerate the transition from coal.” Ghee Peh, author of this report

2023 Production and 2028 Target for Indonesian Nickel Companies

Read the report

Latest analyses from Asia:

South Korea needs to accelerate renewable energy adoption to fuel Artificial Intelligence (AI) and semiconductor sectors

By Michelle (Chaewon) Kim

Unlike the rapid adoption of renewable energy in global industries, South Korean companies plan to build a combined capacity of around 4,700 MW of new LNG fired power plants for semiconductor clusters, AI #datacenters, and various industrial complexes.

“Using LNG-fired electricity and heat to meet the energy demands of semiconductor clusters and AI data centers could expose the country to substantial industry-trade and finance-capital risks.”

Read the commentary

Power wheeling can drive corporate investments and advance Indonesia’s renewable energy goals

By Mutya Yustika

Power wheeling in Indonesia can boost economic growth through investments, create new jobs, and help the country meet its #decarbonization targets without burdening the national budget. It would also help the state utility focus on grid modernization and improvements to facilitate energy transition.

“Indonesia needs to provide large-scale access to clean energy to offer companies like Google and Microsoft options to establish their data centers and meet corporate global sustainability goals.”

Read the commentary

Canadian LNG will not boost Japan’s energy security or Asia’s decarbonization

By Sam Reynolds and Christopher Doleman

Canadian LNG exporters aim to sell gas to Japan, which has emphasized the need for more LNG to provide energy security. Despite falling Japanese LNG demand, the country is still buying gas in hopes of reselling to South and Southeast Asian markets.

“Japan’s push for Canadian LNG is more about cementing gas expansion opportunities than ensuring domestic energy security."

Read the commentary

More Asia Research:

• Sustainable finance in Asia: A comparative study of national taxonomies by Ramnath N. Iyer
• Energizing sustainable bond markers in Asia by Shu Xuan Tan and Ramnath N. Iyer
• The future of net-metered solar power in Pakistan by Haneea Isaad and Syed Faizan Ali Shah
• Japan’s persistent fossil fuel subsidies threaten industry competitiveness and decarbonization goals by Michiyo Miyamoto and Sam Reynolds

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