Cementing a public-private partnership for sustainable energy in Indonesia

May 4, 2017

Can two environmental problems add up to one economically attractive solution? This is the question that the ADMIRE project, a collaboration between UNOPS and UNEP DTU, is attempting to answer through an innovative public-private program that turns Indonesia’s waste into an efficient fuel for the country’s cement industry.

As the world’s fourth most populous country, Indonesia produces a huge amount of municipal waste, much of which is not disposed of properly.  A large proportion ends up in landfills, creating a host of environmental problems, including the emission of methane, a potent greenhouse gas.  Meanwhile, cement production is on the rise in Indonesia, increasing the use of coal in its kilns and releasing additional GHGs, this time CO2, into our overburdened atmosphere.

Funded by the Danish government, ADMIRE (“Adaptation, Mitigation, and Readiness,”) focuses on developing frameworks and mechanisms that encourage private investment in both mitigation and adaptation. A proposition was submitted to ADMIRE that would convert municipal waste into Refuse Derived Fuel (RDF) that could subsequently be used as alternative to coal for cement processing.  This waste-to-energy project has the potential to not only provide the country an affordable and sustainable source of energy, but also to offer a model for addressing climate change in a way that advances Indonesia’s commitments to the Paris Agreement.

Unlike other programs with similar goals, ADMIRE’s aim is not to fund pilot or demonstration projects, but to develop viable ideas into financeable and implementable opportunities for action.  In Indonesia, ADMIRE brought together nine major privately-owned cement companies with local government waste management agencies to work out a financially viable waste-to-energy project.  The transformation processes involves drying out and converting the waste, which is mostly biological matter with some paper and plastic, into RDF, a fuel that not only has the advantage of being renewable, but with the right technology, burns cleaner than coal.  In addition, converting waste-to-energy reduces the need for landfills altogether.

As stated in Sustainable Development Goal 17, strong partnerships are key to combating climate change. The ADMIRE-fostered partnership between private cement companies and public waste management agencies will help Indonesia deal with the waste issues, reduce dependence on fossil fuels, and even save money. Sounds too good to be true? UNEP DTU is working on the financial models to make it happen. “Basically, the RDF has to be cheaper than coal to get the cement plants to want to use it,” points out Milan Rusnak, a Senior Expert at UNEP DTU in charge of the ADMIRE project. “At the end of the day, it’s the price that counts.”

But ADMIRE’s support goes beyond financial matters.  What makes the project unique is its ability to take proposals and turn them into sustainable business models.  “This is what is usually lacking on the ground,” notes Rusnak. “People come to us with good proposals, but when it comes to moving forward, for example with financial institutions, or designing business models, they usually don’t have the skills.  So this is what we provide.”