Eminent economist Milton Friedman must be turning in his grave right now after President Joe Biden and US allies handed over $20 billion of taxpayer money to Indonesia. Friedman famously wrote in Free to Choose and espoused in interviews and lecture halls that "spending other people's money on someone else is the least efficient way." Unfortunately for the peasants of the G7 nations, politicians aren't just confiscating the people's wealth, they're also using those funds on an entirely different nation. But it is justified because it is all for green energy and climate change purposes. It's what one might call the Greta Thunberg Doctrine.
Billions for Indonesia
Biden, European Commission President Ursula Von Der Leyen, and Indonesian President Joko Widodo unveiled a $20 billion climate financing deal to facilitate Jakarta's push to abandon coal power. US officials say this is the largest climate-related financial transaction on record, and Special Presidential Envoy for Climate John Kerry noted that the vital money can support the nation's transition to renewables and adopt a clean economy "that works for the people of Indonesia and attracts investment."
The financing commitment includes phasing out coal-based electricity generation, renegotiating debt for existing coal power plants, and developing renewable energy (geothermal, nuclear, and solar). This is all part of the Southeast Asian country's broader objective of reaching net-zero carbon emissions by 2060.
Details of the financial package will not be made clear for another three to six months, and the obligations will be delivered within three to five years. Government funding will come from the United States, Canada, the European Union, Japan, Denmark, France, Germany, Italy, Norway, and the United Kingdom. The money will be extended through concessional loans, equity, and grants. Financial institutions will also have roles in the agreement, such as Bank of America, Citigroup, Deutsche Bank, Macquarie Group, and HSBC.
“The Partnership for Global Infrastructure and Investment brings together partners — from governments, the private sector, and beyond — to deliver real results for people around the world, including here in Indonesia. Today, G20 leaders highlighted the importance of investing together and investing stronger to fill the enormous need for better infrastructure in low- and middle-income countries around the world, and we welcome all who share this vision to join our efforts,” Biden said in a statement. "Together, we hope to mobilize more than $20 billion to support Indonesia’s efforts to reduce emissions and expand renewable energy and support workers most affected by the transition away from coal.”
Taxpayers can expect more of their hard-earned dollars to be transferred to other nations to combat global warming. G7 states are working on similar arrangements with Egypt, India, Senegal, and Vietnam. Because Indonesia essentially received everything it demanded, notably lower interest rates, these governments will likely be more aggressive in their negotiations with G7 leaders desperate to hand out money to construct solar panels and windmills in foreign territories.
Indonesia's share of global CO2 emissions represents just 1.48%. Nearly every sector of the economy contributes to the 2.03 tons per capita, led by the power industry (32%), transportation (30%), and industrial combustion (23%). By comparison, China, the United States, and India account for half of the world's CO2 emissions.
No Coal Country for Old Men
Joe Biden (Photo by Nathan Posner/Anadolu Agency via Getty Images)
Biden has been clear that he wants to eliminate close to 40,000 US coal jobs. Speaking in California to promote his CHIPS and Science Act, he promised that "we’re going to be shutting these plants down all across America and having wind and solar also providing tax credits to help families buy energy-efficient appliances." It is comparable to when the president purported to an audience member during a campaign rally in New York State that there would be "no more drilling."
Despite Biden's anti-fossil-fuel message, coal-powered generation has been on the rise during the global energy crisis. Energy Information Administration (EIA) data show that coal accounts for 22% of America's power generation, behind natural gas' 38.4%. In 2021, coal production levels rebounded from their 50-year low, and exports rose 21%. But the output levels are projected to be flat from 2022 to 2026 as there has been a wave of retirements of US coal plants, with a quarter of the country's remaining outfits shut down by the end of 2029. At the same time, the country continues to import hefty volumes from Colombia, Canada, Indonesia, Russia, and China.
The world's second-largest economy persists in depending on coal to keep the lights on. Despite the International Energy Agency (IEA) proclaiming that China reducing its coal consumption is critical to combat climate change, Beijing's climate advisers contend that the nation requires more coal for energy security. “We need an energy transition that’s high-quality and secure so it can be sustained,” said Li Zheng, a climate-change and energy professor at Tsinghua University. “We don’t want to be like Europe and transform at the cost of energy security. They are now declaring that they are taking a step back in order to take two steps forward later.”
Free Money
Indeed, the world has been relying more on coal because renewable energy has failed to do its part during times of extreme cold and military conflicts. In Canada, for example, the province of Nova Scotia touted a green hydrogen energy plant to ship ammonia to Europe. The problem? It is powered by coal. The environmental utopians in Germany are now taking down a wind farm to construct a coal mine. Despite being given $8 billion by the United Nations to be more green last year, South Africa cannot stop producing or using coal because demand is too immense. When $200 per ton is at stake, what major coal producer would want to keep the rock in the ground anyway? The United States is vulnerable, Europe is desperate, China sees what is happening everywhere else, and the rest of the planet plays the game of green pledges in exchange for free money.
