Observer: Coal production increases, not in line with energy transition commitment

Jakarta – Observers are sceptical of the government’s policy, which, despite pushing for a transition to green and sustainable energy, on the other hand, also applies policies that continue to spur coal production, even with a target that is close to one billion tons this year.

Bhima Yudhistira, director of the Center of Economy and Law Studies and Economist of the Institute for Development of Economics and Finance (INDEF), considers that the continued increase in coal production does not align with the commitment to energy transition and climate change.

“There is inconsistency in Indonesia’s energy policy, which continues to encourage coal production even though the global trend is shifting to clean energy,” he said on Wednesday, March 20.

The Managing Director of the Energy Shift Institute, Putra Adhiguna, emphasised the need for a more holistic approach to managing energy resources. He highlighted that the continued increase in coal production shows the need for a paradigm shift in how energy resources are viewed to align with sustainable development goals.

Coal production continues to rise

Acting Director General of Minerals and Coal, Bambang Suswanto, confirmed this and said that the Work Plan and Budget (RKAB) approval achieved a very high tonnage of coal production for the next few years.

Although coal production has exceeded targets in recent years, the government continues to spur production to meet demand for export and domestic consumption. In 2023 alone, the realisation of national coal production reached 775 million tons, exceeding the target set at 659 million tons. Coal is still Indonesia’s primary energy source of power generation, reaching 67.21 per cent of the primary energy mix in 2022.

Representatives from the coal industry emphasized that the mineral still has an essential role in meeting Indonesia’s energy needs, especially in the power generation sector. Chairman of the Indonesia Mining Association (IMA) Rachmat Makkasau said, “Indonesia is blessed with coal reserves and resources that can still be utilized for the next 200-500 years”.

He said that national coal reserves currently reach 35 billion tons and resources of 134 billion tons and are estimated to be used for the next 500 years. Makkasau said, “Until now coal is the cheapest energy compared to others. … Moreover, various ways have been done by the coal industry to reduce emissions.”

Hendra Sinadia, Executive Director of the Indonesian Coal Mining Association (APBI), said that the RKAB’s coal production target of nearly one billion tons could potentially suppress market prices. “Amid coal over-supply conditions, coal prices will certainly be depressed. Prices will fall when more is produced,” he said. (Hartatik)

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