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Tag: Vietnam

Proposed Indonesian coal power plant not financially viable, study finds

Posted on by dishanth
Proposed Indonesian coal power plant not financially viable, study finds

Green groups have long criticised the Jawa 9 & 10 coal power project over its devastating impacts on public health and the environment. Now, a study has revealed the project would also be unprofitable for its investors.

The 2,000-megawatt Jawa 9 & 10 coal-fired power project planned to be built near the Indonesian capital city Jakarta would result in significant losses for investors if it goes through, a new pre-feasibility study released on Thursday (18 June) has revealed.

The analysis conducted by Korea Development Institute (KDI), an autonomous policy-oriented research organisation, shows the present value of cash flows pumped into the power project would exceed that of inbound cash flows by US$43.58 million over the station’s lifetime.

Almost three-quarters of the project volume is financed through loans provided by lenders such as Singapore bank DBS, Siemens Bank, Korean public banks, as well as Malaysian and Indonesian banks, which include Maybank, CIMB, Bank Negara Indonesia, Exim Bank of Indonesia and Bank Mandiri, among others.

However, South Korean utility Korea Electric Power Corporation (Kepco) is the only foreign firm backing the project that will hold a share of ownership in the plant. It is poised to lose US$7.08 million in equity investments, according to the study, which was obtained by Seoul-based non-profit Solutions for our Climate.

Other equity investors associated with the venture include Jakarta-based power and petrochemical firm Barito Pacific and Indonesia Power, a subsidiary of Indonesia’s state utility Perusahaan Listrik Negara (PLN), which provides the land for the station.

Solutions for our Climate director Youn Sejong said while loan investors were less at risk because their investment would be paid off first, the fact that the project itself was valued negative should still be a wakeup call for the banks supporting it.

“Investors backing the project should pull out given the estimated unprofitability. Because the construction has not commenced, this is the best time to withdraw from the project with no sunk cost involved,” he told Eco-Business.

The project, which is to add two power plant units to the Suralaya coal-fired power station in Cilegon, a city in Indonesia’s Banten province, is expected to be in operation from 2024. The new plant units will use ultra-supercritical technology to enable higher efficiencies and lower emissions.

Besides the Jawa project, Kepco is planning to acquire a share in the planned Vung Ang 2 project in Ha Tinh province, Vietnam. Its stake in the venture would see the company build two 600-megawatt coal plants carrying a price tag of US$2.24 billion.

This is despite a recent estimate by the KDI that the net value of the Vung Ang 2 project stands at negative $158 million, with Kepco’s planned investment valued at negative $80 million.

Around the globe, pressure is mounting on governments and companies to drop coal, the world’s single-biggest contributor to man-made global warming, amid increasingly dire warnings of climate change.

Both the Jawa and the Vung Ang ventures have received heavy criticism from environmental activists and health experts in recent years, who have urged the corporations backing them to recognise the reputational, legal and environmental risks involved in the investments.

A 2019 report by environmental campaigners Greenpeace that modelled the health impacts of the Jawa project concluded the station would cause 4,700 premature deaths over its lifetime.

The new assessment comes as the Korean government puts together its Green New Deal package, a collection of sweeping policies geared towards ending South Korea’s contribution to climate change. The move was announced as part of the Liberal Party of Korea’s election manifesto earlier this year.

Following Moon Jae-in’s recent landslide victory, the government is expected to implement a carbon tax, foster investment in clean energy, and phase out domestic as well as overseas coal power financing.

Last month, the world’s top asset manager BlackRock, which owns shares in Kepco, raised concerns over several coal projects the utility firm is involved in.

According to the KDI, Kepco’s financial plan for the Jawa project takes an overly optimistic view of the expected amount of power sales and potential power transmission rates.

The firm has also likely underestimated engineering, procurement and construction (EPC) costs and not taken into account the financial difficulties currently facing Korean company Doosan Heavy Industries & Construction, the venture’s EPC contractor, amid the coronavirus crisis.

This increases the risk of budget overruns and project delays, although they would only indirectly affect Kepco as the EPC contractor would be required to bear the added costs.

The KDI pointed out the global transition to renewables indicated coal’s decline and could entail negative consequences for the Jawa power plant units.

At the same time, the ongoing coronavirus pandemic, which has yet to peak in Indonesia, may affect the project as it wreaks havoc on supply chains and project timelines while reducing electricity consumption. Youn said: “Planning of the Jawa 9 & 10 project was based on a gross overestimation of power demand growth.”

“Kepco should consider participating in the project only after closely examining the particular economic and market conditions in Indonesia,” reads the KDI’s report.

Despite the bleak profitability outlook, however, Kepco pursues its investment plans and seeks to obtain its board’s approval on the investment in the next board meeting scheduled for the end of June, according to Solutions for our Climate.

Earlier this month, the company announced through the media that the project passed the new pre-feasibility study, although the project score indicated that investments should be “considered with caution”, said the non-profit in a statement released on Thursday (18 June). In total, the firm looks to commit US$51 million to the Jawa venture.

In its statement, Solutions for our Climate said: “Kepco’s hasty decision to invest in the Jawa 9 & 10 project is likely to undermine the Korean government’s initiative towards a clean energy transition and sustainable economy.”

 

 

Source : https://www.eco-business.com/

By Tim Ha

Coke, Nestlé and Pepsi top plastic polluter audit again as green groups slam recyclable packaging as ‘false solution’.

Posted on by dishanth
Coke, Nestlé and Pepsi top plastic polluter audit again as green groups slam recyclable packaging as ‘false solution’.

Food and beverage firms Coca-Cola, Nestlé, and PepsiCo are the world’s biggest plastic polluters, a study of litter found on beaches, streets, homes, and parks in 50 countries has revealed.

The same firms have topped the global plastic polluter audit, conducted by a collective of environmental groups running cleanup operations, for the second year in succession.

This is despite initiatives the multi-national consumer goods companies have launched to address the chronic plastic pollution problem they have contributed to.

Coca-Cola has launched recyclable bottles made entirely from renewable plant-based materials, aiming to use it in all its packaging by next year. Nestlé has a plan to make all of its packaging recyclable or reusable by 2025, while Pepsi has pledged to develop bottles made from renewable resources.

 

Coke uses PlantBottle packaging, which are bottles made from plants, saves the equivalent annual emissions of more than 315,000 metric tonnes of carbon dioxide, Coke estimates.
Image: Coca-Cola

 

But these measures do not address the root of the problem – the overuse of plastic by consumer goods firms – and so have not affected their standing in the global litter audit, the campaigners noted.

“Commitments by corporations like Coca-Cola, Nestlé, and PepsiCo to address the crisis unfortunately continue to rely on false solutions like replacing plastic with paper or bioplastics and relying more heavily on a broken global recycling system,” said Abigail Aguilar, plastic campaign coordinator for Greenpeace Southeast Asia, the lead group for the Break Free From Plastic campaign, in a media briefing on Wednesday.

“We call them false solutions because they perpetuate the throwaway culture that caused the plastic pollution crisis, and will do nothing to prevent these brands from being named the top polluters again in the future.”

As part of Break Free From Plastic, a global movement of non-governmental organisations advocating against new plastic production, Greenpeace orchestrated 4,384 cleanups in over 50 countries from August 1 to September 30, picking up 476,423 pieces of plastic. Almost half of the plastic waste was marked with a clear consumer brand.

Other companies identified in the study included Mondelez International, Unilever, Procter & Gamble, Colgate-Palmolive, Philip Morris International and Perfetti van Melle.

 

The world’s top 10 biggest plastic polluters in 2019.
Image: Break Free From Plastic.

 

Von Hernandez, global coordinator of Break Free from Plastic, called on corporations to reduce their production of single-use plastic, instead of using recycling or recyclable packaging as a solution.

He cited a 2017 study that found that 8.3 billion metric tonnes of plastic trash have been produced since 1950, but only 9 per cent of it has been recycled globally.

“Even if all plastic packaging were collected to be recycled, it would only be down-cycled or transformed into another inferior product that inevitably becomes waste, ending up in incinerators and landfill, polluting our oceans,” Hernandez said.

“Over the next 30 years, the amount of plastic waste is set to quadruple,” he warned.

A call for ‘alternative delivery systems’

Environmentalists urged the consumer goods companies to invest in different ways to package their products that do not create pollution.

 

unilever hair refilling station

Unilever’s hair refilling station in a mall at the Makati Central Business District in the Philippines.
Image: Unilever

 

Unilever, which ranked as the fifth largest polluter in the audit, launched a shampoo and conditioner refilling station in three high-traffic malls in Metro Manila, Philippines in March.

The hair and skincare giant, which owns brands such as Dove, Sunsilk, and Lux, sells many of its products in single-use plastic sachets in developing countries like the Philippines and Indonesia to make its products more affordable.

While environmentalists lauded Unilever’s intiative, they said consumers in the lower income bracket who mostly use single-use sachets will not use the refilling stations.

“It’s a step in the right direction, but malls especially in the central business district are not that accessible to the common Filipino. In our dialogue with the companies, we told them that if they are to invest and introduce an alternative [to plastics], they need to position them where they are easily accesible, like in sari-sari (retail) stores or public markets,” Aguilar said.

“Solutions must be affordable, simple, convenient, durable, and non-toxic,” he said.

 

Source: www.eco-business.com