Conditioning a stable sustainability fix of ‘ungreen’ infrastructure in Indonesia: transnational alliances, compromise, and state’s strategic selectivity

Abstract

This paper is the first academic attempt to critically bridge the politics of sustainability fix with social conflict theory (SCT) focusing on Indonesia’s foreign-sponsored development of Ultra Supercritical (USC) coal power plants. I examine the contradictory development of ‘green’ projects in Indonesia and specifically unpack: how transnational politico-economic forces have secured a stable sustainability fix for the USC and how they have tamed opposition forces and reshaped governance strategies for intensified accumulation. I attempt to empirically demonstrate how such process unfold through two case studies – Cirebon II developed by Japanese and Korean companies and the Java 7 project funded by China. Albeit each have different alliance formations and strategies, both cases demonstrate that the safeguarding of stable conditions for sustainability fixes of USC power plant development is primarily determined by contestation, conflicts, and compromises between socio-political forces – international fractions of capital, state apparatuses, Indonesia’s PLN and coal oligarchy as well as broader civil society actors. They reshape governing strategies that are ultimately organised through the Indonesian state and react to the selectivity of state strategies which privilege dominant forces. The paper contributes to the existing literature on the political economy of infrastructure and serves to take state transformation into account and to dispel the ‘methodological nationalism’ view that presupposes policy outcome and institutional features are inherent to the mode of capitalism of the investor’s country of origin.

Key words:

• China
• green development
• Indonesia
• Japan
• political economy
• sustainability fix

Acknowledgements

I would like to thank anonymous reviewers for their valuable comments and suggestions. Special thanks are due to Kanishka Jayasuriya and Lian Sinclair who helped me improve earlier drafts of this paper. I am also grateful for the valuable assistance provided by Henrico Saeran. I would also like to thank all respondents for their time to help out with this research.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Ultra-supercritical (USC) thermal power generation is the latest coal thermal power generation method employing higher pressure and temperature steam than traditional methods to rotate the power generating turbines. It enables highly efficient power generation and reducing the volume of fuel required and CO₂ emissions.

2 In 2006, the country started Fast Track I, an energy infrastructure programme aimed at developing 16 GW of coal-fired power generation. In 2010, Yudhoyono’s government announced Fast Track II, to develop a further 10 GW.

3 For example, in the case of Japan, the use of USC is inseparable from dominant coalitions of industry, including Keidanren and Japan’s Ministry of Economy, Trade, and Industry (METI) who have continued to support fossil-based infrastructure, especially since the 2008 crisis and Fukushima disaster (see Trencher et al., 2019).

4 The first unit of the Cirebon power plant with 660 MW capacity is developed by same joint venture company, CEPR and was already put in operation in July 2012. It was also financed by JBIC and KEXIM along with commercial banks including Mizuho Bank, ING Bank, Sumitomo Mitsui Banking Corporation, and Bank of Tokyo-Mitsubishi.

5 For Japanese part, JBIC signed the loan agreements for about $1.6 billion for the construction of the 815 MW Paiton 3 expansion project and the 660 MW coal-fired Cirebon power plant, both located on densely populated Java island. The IPP holder for Paiton 3 comprised trading company Mitsui and Tokyo Electric Power Company while Marubeni Corp took a 32.5 percent stake in the Cirebon project. Both projects were subsumed under the Japan-Indonesia Economic Partnership Agreement (JIEPA) that was signed by SBY and Prime Minister Abe in the 2007 Indonesia-Japan Business Forum.

6 This has origins in Presidential Decree No. 63 Year 2004 on Security of National Vital Object, the definition of national vital object is an area/location, building/installation and/or attempt related to the lives of people, the interest of the state and/or strategic source of the country income.