Ceiling of Russian oil prices: the mechanism and its consequences

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One of the perplexing things right now is that there is no clarity on how life will be lived in the coming year from an economic perspective. In 2023, the Indonesian Finance Minister and the Indonesian President declared that “the world is dark”. Uncertainty on many topics, especially economic concerns, is described as “grim”. Recession that has affected several of the world’s major economies. Today, the most important problems are the shortage of energy and the shortage of food ingredients. Politics no longer focuses on how to gain power, and the attention and authority of the world, but on how to sustain the life of tomorrow and escape the perils of hunger and cold. .

Since the implementation of Western sanctions against Russia, not only has the political game become more attractive militarily and economically, but it has also had an influence on the economy. Due to the high price of oil and gas in Russia, as well as the growing problem of energy shortages, various European countries have taken the initiative to generate electricity by burning coal. This has recently received a lot of media attention. The transfer of energy sources is clearly at odds with the current global commitment to reduce emissions and environmental impacts. In the face of global uncertainty, the availability of coal as an energy source will help emerging countries with coal reserves, such as Indonesia. However, when the time and amount of coal burned are taken into account, it definitely accelerates the environmental impact. According to the BP Statistical Review of World Energy 2021 report, global coal consumption in 2020 was 151.42 exajoules. This figure decreased by 4.2% compared to the previous year, when it stood at 157.64 exajoules. China is the largest consumer, accounting for 54.3% of total global spending, followed by the United States, India and Japan.

How Coal Affects the Environment

According to the Encyclopedia Britannica (2015), charcoal is derived from fossils of animals and plants that perished and were buried millions of years ago; coal is currently the largest fossil fuel in the world compared to oil. requires a number of operations and a fairly large space. It generates a lot of pollution and environmental damage from coal mining to processing, consumption and end use cycle. Here is an example of a coal processing line:

First, when coal is discovered, people and certain groups plan to exploit it. The plan is then carried out by building a mine. At this early stage, coal mining will have a negative influence on the ecosystem, starting with changes in the terrain, which will reduce soil fertility. Biodiversity is at risk.

Second, various chemical reactions occur in nature during coal processing procedures. When fossil fuels are burned to generate energy, the carbon in the fuel interacts with oxygen to produce CO2 gas, the majority of which is emitted into the atmosphere. Not only does burning coal emit CO2, but it also emits methane into the atmosphere. As a greenhouse gas, methane is twenty times more potent than carbon dioxide. Not only does burning coal emit CO2 and methane, but it also emits sulfur in the form of sulfur dioxide (SO2) gas. If these three chemical compounds are released into nature, they have a strong influence on the environment and man, producing soil degradation, air pollution, and the sulfur content released is also particularly toxic to the environment. ‘water. Although there is a new term and breakthrough “clean coal,” according to Michael Economides, professor of chemical engineering at the University of Houston, Texas, it is highly unlikely that clean coal can be created by “Capture and Storage carbon (CCS).”

Third, after a series of procedures, coal mining and burning will also leave visible traces. The craters created by old mine sites and changing landscapes, of course, damage the ecology, and old excavations often cost lives.

Indonesia and coal

Indonesia is one of the countries that has benefited from the current global energy constraint. The Center for Mineral, Coal, and Geothermal Resources reported that Indonesia’s coal reserves stood at 31.7 billion tons as of January 19, 2022. Indonesia not only uses coal for internal purposes, but also exports it to other countries in order to earn foreign currency. When coal prices rise, this contributes to state revenue, but these gains are only transitory as the government provides additional relief to coal utility employees through energy subsidies and offsets.

According to investor.id data source Carbon Brief, the Indonesian government offers energy subsidies and offsets with a budget of Rp. 127.9 trillion. This sum is greater than the total of Rp for the previous year. 74.4 trillion. The government provides subsidies and incentives so that PLN can continue to acquire coal from the company while maintaining stable electricity prices. Mining business owners will benefit the most from this period of energy scarcity. In January-March 2022, one of the coal mines recorded a 457.6% increase in net profit. Through June 2022, Indonesia’s coal production reached 283.57 million tons, about 42.77 percent of the 2022 target of 633 million tons. Meanwhile, domestic coal sales through June 2022, which included both exports and domestic sales, were 175.15 million tonnes.

Climate Commitment Challenge

It is quite difficult to maintain environmental commitment in these times. On the one hand, humans are trying and committed to keeping the environment stable by reducing the greenhouse effect, which can harm the ozone layer, but the current situation has not provided the possibility of obtaining energy that is cleaner and environmentally friendly, and that can be produced in large quantities quickly, other than rocks and coals. The processing and use of coal as an energy source has been known for more than a century, and its influence has been felt in recent decades. However, the use of coal cannot be minimized or eliminated at this time. Germany, Poland and even India in Europe have ordered coal from Indonesia to meet their national energy needs. This has happened since Russia’s sanctions were implemented.

This circumstance shows how the political system affects the food chain. With the increased use of coal in many parts of the world, it is possible that the Paris Agreement and the G20 declaration, as well as other environmental and climate-related commitments, will be revisited. However, the increased use of coal around the world will accelerate the depletion of global coal stocks. Keep in mind that nature takes thousands of years to generate coal, but human progress in this century is so rapid.

Conclusion

The human task of maintaining the adequacy of a place to live in the face of global instability will never diminish. These barriers can come from the environment in which humans live or from outside sources such as government policy, trade, and conflict. The recent increase in the use of coal is a short-term effort for humans to survive and carry out their activities, but in the long term, human dependence on coal must be taken into account, since the capacity of humans to grow and reproduce faster than nature’s ability to produce coal for humans, and even if coal is still used, it will accelerate environmental pollution, which will then affect weather and climate. It is essential to consider how the commitment to environmental protection has been pursued in local and international obligations.

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