China’s Coal Plant Expansion in Indonesia Contradicts Climate Promises Despite Official Fossil Fuel Pledge

Despite President Xi Jinping’s high-profile 2020 pledge to end China’s overseas coal financing, a new study reveals that Chinese-backed coal power plants are still proliferating in Indonesia—just not in the way most people expected. The November 3 report from the Centre for Research on Energy and Clean Air and People of Asia for Climate Solutions shows that while China has significantly reduced official government financing for traditional coal projects worldwide, private Chinese companies are finding workarounds through Indonesia’s booming nickel industry.

The surge centers on “captive” coal plants—facilities built specifically to power nickel mining and processing operations rather than supply electricity to the general grid. Indonesia’s newly installed coal capacity nearly tripled to over 7 gigawatts in the year following Xi’s UN announcement, with two major coal plants beginning operations in North Maluku province as of July 2024. This expansion directly supports Chinese investment in Indonesia’s metal processing sector, which supplies critical raw materials for electric vehicle batteries.

The growth is fueled by Indonesia’s strategic 2020 ban on raw nickel ore exports, forcing companies to process the metal locally if they want access to the world’s largest nickel reserves. While this policy aims to develop Indonesia’s domestic industry, it’s creating an environmental paradox: the transition to “clean” electric vehicles is driving increased coal consumption in Southeast Asia. The findings highlight how climate commitments can be undermined by economic loopholes, as private Chinese companies continue expanding fossil fuel infrastructure under the banner of green technology supply chains.