Jakarta – The government needs to anticipate the potential decline in Indonesia’s coal exports by ensuring that the energy transition takes place justly to achieve sustainable economic transformation, according to the energy and environmental research think-tank Institute for Essential Services Reform (IESR). According to them, this can be achieved by collecting data on the impact of the decline in coal consumption on various aspects of life, such as the economy, society, and environment.
IESR Executive Director Fabby Tumiwa, in the seminar “Sunset PLTU and Coal Industry: Reviewing the Direction and Multisectoral Impact in the Equitable Energy Transition”, estimates that domestic coal demand will peak in 2025-2030. After that, domestic coal demand will drop significantly.
“If you look at the trend of coal export demand, it is predicted that coal exports will decline after 2025,” said Tumiwa.
IESR estimates that Indonesia has 5 to 10 years to make adjustments by transforming the economy in coal-producing regions in Indonesia. The condition is caused by the decline in coal production, affecting the reduced demand of coal-producing countries and regions.
Tumiwa emphasised that in ensuring an equitable energy transition, at least three factors need to be considered: the link between the local economy and coal, the readiness of existing human resources, and mitigation plans by considering alternative economic options that can be developed in the area.
IESR Environmental Policy Analyst Ilham Surya said that the energy transition will impact coal-producing regions in Indonesia, such as Muara Enim Regency, South Sumatra and Paser Regency, East Kalimantan.
An IESR report titled “Just Transition in Indonesia’s Coal Producing Regions, Case Studies Paser and Muara Enim” found that coal’s contribution to gross regional domestic product in the past decade was around 50 per cent to 70 per cent in Muara Enim and Paser.
According to him, revenue-sharing funds from coal mining taxes and royalties contribute significantly to regional government revenue, up to 20 per cent in Muara Enim and an average of 27 per cent in Paser. “Coal-producing regions need economic transformation to cut the high dependence on the coal-derived economy,” Surya said. (Hartatik)