Captive: how the World Bank Group is financing the coal-powered destruction of Obi Island

This case study by Trend Asia argues that the International Finance Corporation (IFC) and the World Bank Group are indirectly financing the expansion of captive coal power on Obi Island, Indonesia. Through investments in financial intermediaries like Hana Bank Indonesia and OCBC NISP, the IFC is linked to nickel refineries and smelters that rely on coal for power. The report highlights a critical loophole in the IFC's Green Equity Approach that excludes captive coal from its 'coal-related projects' definition. The resulting industrial expansion is linked to severe health issues (cancer, respiratory illness), environmental degradation (4 million tons of toxic waste annually), and increased poverty for local women, while generating emissions equivalent to six times those of Timor Leste.

• The International Finance Corporation (IFC) maintains a policy loophole in its Green Equity Approach (GEA) that explicitly excludes 'captive coal-fired power plants used for industrial applications' from its definition of coal-related projects. This allows IFC financial intermediary clients to continue funding new captive coal capacity without violating GEA commitments.
• On Obi Island, captive coal units power nickel processing facilities, including the PT Halmahera Persada Lygend HPAL nickel refinery and the Halmahera Jaya Feronikel smelter, which together utilize 1,260MW of captive coal capacity. These projects are linked to severe environmental and health impacts, including the production of 4 million metric tons of toxic waste annually by the HPAL refinery and increased rates of cancer and respiratory illnesses among local populations.
• The IFC is indirectly exposed to captive coal on Obi Island through its investments in financial intermediaries. Specifically, Hana Bank Indonesia, an IFC client, acted as a mandated arranger for a $530m loan to PT Halmahera Jaya Feronikel to build a smelter powered by six 150 MW captive coal units. Additionally, OCBC NISP, which received a $200m debt investment from the IFC for a Sustainability Bond programme, was part of a $625m investment consortium for the PT Halmahera Persada Lygend nickel refinery.
• Captive coal development on Obi Island has disproportionately affected women, who face increased structural poverty and a 'double burden' of domestic labor due to the need to constantly clean invasive coal dust from their homes.
• The greenhouse gas emissions from the Obi Island nickel industrial park are substantial, reaching nearly 3.5 million metric tonnes in 2022, which is equivalent to six times the total emissions of Timor Leste.
• Indonesia's captive coal capacity is projected to more than double from 14.2 to 32.7 gigawatts (GW) over the next decade if current expansion plans by public and private developers are realized.

APA

Trend Asia (n.d.). Captive: how the World Bank Group is financing the coal-powered destruction of Obi Island. https://trendasia.org/wp-content/uploads/2024/10/Recourse-Captive-coal-on-Obi-Island-2024-1.pdf

Chicago

Trend Asia. Captive: how the World Bank Group is financing the coal-powered destruction of Obi Island. n.d. https://trendasia.org/wp-content/uploads/2024/10/Recourse-Captive-coal-on-Obi-Island-2024-1.pdf.

Wikipedia

{{cite report |author=Trend Asia |title=Captive: how the World Bank Group is financing the coal-powered destruction of Obi Island |url=https://trendasia.org/wp-content/uploads/2024/10/Recourse-Captive-coal-on-Obi-Island-2024-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{trendasiandcaptive, author = {{Trend Asia}}, title = {{Captive: how the World Bank Group is financing the coal-powered destruction of Obi Island}}, institution = {Trend Asia}, url = {https://trendasia.org/wp-content/uploads/2024/10/Recourse-Captive-coal-on-Obi-Island-2024-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }