In April 2022, Garibaldi Thohir, the CEO of Adaro Energy Indonesia, said, “We want to cease our dependence on coal,”… “move to renewable energy with the final goal of having an entity called Adaro Green Energy.” However, two years later, there is no evidence of Adaro living up to its promise.
Adaro Energy continues to derive 70% of its profits from coal (according to analysis in the Global Coal Exit List) and has no credible plan to transition away from coal. Although Adaro claims to commit to decarbonisation and has released a Net Zero Emissions (NZE) statement, it offers no credible transition plan and remains misaligned with internationally-agreed climate goals.
Here’s why Adaro’s business practices directly contradict its rhetoric on a green transition.
Exposing Adaro’s coal expansion
In its 2023 financial report, Adaro recorded a 7% increase in thermal coal sales (reaching 65.71 Mt), a 5% rise in coal production (totaling 65.88 Mt), and a 39% growth in metallurgical (“met”) coal sales (amounting to 4.46 Mt). The bulk of Adaro’s CAPEX investments in 2022-2023 were directed toward the coal supply chain, including barges and heavy equipment, as well as its coal-powered aluminium mega-project.
Thohir cited “the green economy [and] decarbonization” to justify the company’s metallurgical coal production capacity. And to achieve expanded met coal production, the company has restarted operations at PT Lahai Coal (LC) and expanded the PT Maruwai Coal’s Lampunut mine. This is despite calls from the International Energy Association to halt the development of new metallurgical coal mines, stating that existing mines are sufficient to supply demands until 2030. However, Thohir is justifying the expansion by citing Lampunut Coal’s ‘low ash, low phosphorus content” and claiming that it produces “low emission”. However, new metallurgical coal mines would add an additional 400 million tonnes of coal per annum (Mtpa), equivalent to Poland’s 2022 GHG emissions, according to an analysis by BankTrack.
Adaro’s net zero statement is vague and non-committal
Adaro claims to have assessed its four subsidiaries’ roadmap toward a low-carbon future, Adaro Indonesia, Maritim Barito Perkasa (MBP), Makmur Sejahtera Wisesa (MSW), and Saptaindra Sejati (SIS). Its Environmental, Social and Governance (ESG) policy says, “Based on the subsidiaries we have assessed, AEI will adopt the best-available technologies in low-carbon fuels and operations, renewable energy provision, and carbon sequestration to keep on track with the pathway toward a low-carbon future.” Adaro’s renewable energy capacity is limited and its focus remains on conspicuously vague “best available technologies,” with a focus on carbon capture rather than actual emissions reductions. This amounts to greenwash.
Additionally, Adaro is also using carbon trading to report reduced emissions, with three of its subsidiaries listed on Indonesia’s Carbon Exchange. Among other issues, Adaro has also not set quantitative targets for reducing its greenhouse gas emissions. It has not had its operational (Scope 1 and/or 2) greenhouse gas emissions data verified nor does it report on Scope 3 emissions, according to an analysis by Transition Pathway Initiative.
Adaro’s investments in renewables are comparatively minimal.
In 2023, Adaro’s single solar PV plant produced 794 MWh, while its three coal power plants generated 11,311,912 MWh (Central Java plant), 82,396 MWh (MSW plant), and 1,297,555 MWh (Tanjung plant), respectively. The capacity of the coal plant under construction for the aluminium smelter will exceed that of the Central Java project by 300MW. Adaro’s other “renewable” operations include biomass co-firing, a form of decarbonization with questionable benefits, significantly less favourable than genuine decarbonization and renewable energy investments. This shows that despite Thohir’s claims, Adaro is far from reducing its reliance on coal and transitioning to renewable energy in a substantial manner.
The stark disparity between Adaro’s rhetoric and its expansion in high carbon-emitting technologies suggests the company is engaging in greenwashing, attempting to improve its environmental image while profiting from coal.