Jakarta – A report by the Energy Shift Institute (ESI) assesses Indonesia’s efforts to shift coal exports to Southeast Asian countries as nothing more than a temporary respite amid declining demand in China. Currently, the ASEAN region is increasingly aggressive in reducing the share of coal-fired power plants due to clean energy policies, thereby narrowing the potential market for coal in this region and intensifying competition with major global exporters.
The latest ESI report, entitled “Indonesia’s coal exports: courting Southeast Asia is a stop-gap measure”, asserts that Indonesia’s dependence on coal exports leaves the country vulnerable when major markets such as China accelerate their energy transition and significantly cut their coal imports.
ESI states that Indonesia must now not only compensate for the decline in demand from China, but also contend with other major exporting countries vying for the ASEAN market, including Australia, Russia, and South Africa. This situation means that the strategy of shifting exports to Southeast Asia cannot provide long-term protection.
ESI Coal Transition Leader Hazel Ilango emphasised that the decline in exports to China cannot be offset by sales to the four ASEAN countries—Malaysia, the Philippines, Thailand and Vietnam. She said that by comparison, China’s 23 million tonne decline in coal imports from Indonesia in the same period in 2024 alone is equivalent to 43 per cent of Indonesia’s total exports to the four ASEAN countries. This shows that the scale of China’s coal consumption and energy system is unmatched.
Based on data compiled by the International Trade Centre (Intracen) and ESI, Indonesia’s coal exports to China in the first half of 2025 were only 84 million tonnes, down 21 per cent from the same period last year. Meanwhile, exports to the four ASEAN countries amounted to only 55 million tonnes, insufficient to offset the decline in Chinese imports.
ESI also pointed out that the growth in coal demand for the electricity sector in ASEAN is minimal. When combined, the additional potential demand for coal-fired power plants in Indonesia, Vietnam, the Philippines, Thailand and Malaysia does not even reach 25 gigawatts (GW). In contrast, the potential increase in China’s coal demand for the electricity sector could reach 484 GW the report said.
The low coal absorption in ASEAN is consistent with clean energy policies. Countries in the region are increasingly discouraging the construction of new coal-fired power plants, increasing the use of renewable energy, and converting old power plants to gas or other efficient technologies. Vietnam is the most obvious example, having gradually phased out inefficient coal-fired power plants and restricted new coal-fired power plant projects.
In this situation, ESI warns that shifting coal exports to ASEAN will only provide temporary breathing space. The ESI report said that although domestic demand is projected to increase by around 14 million tonnes or 6 per cent in 2025, coal producers remain reluctant to shift sales to the domestic market, especially for PLN power plants. This is due to the Domestic Market Obligation (DMO) policy, which sets domestic sales prices much lower than those in export markets.
The report recommended that the Indonesian government use the short-term benefits of the ASEAN market as a stepping stone to develop a low-carbon economy in coal-producing regions and accelerate the transformation of the energy industry. Without a change in policy direction, Indonesia would face deeper economic risks due to the inevitable structural decline of the coal market. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
