Coal Exports is Declining, It is Time for Energy Transition

Day 4 Indonesia Energy Transition Dialogue 2020, Energy transition in the power sector and its implications for the coal industry

Jakarta, December 10, 2020 – Indonesia’s coal export destination countries in Asia have begun switching to renewable energy. According to research by the Institute for Essential Services Reform (IESR), the coal industry will suffer losses. Energy transition is the only way to prepare for a decline in exports to Asia.

According to the IESR Data and Information Specialist, Deon Aprinaldo, coal export destination countries such as China and Japan began to commit to zero carbon from 2025 to 2050. This indirectly affected Indonesia’s coal export demand.

“Demand from these countries is declining, while Japan has begun to switch to high-quality coal. If we wanted to compete there, we would compete with the United States, Russia, and Canada,” said Deon.

In Southeast Asia, the demand for Indonesian coal exports is still high. However, Vietnam, which has successfully improved its renewable energy transition, is likely to serve as an example for other Southeast Asian countries. That way, the demand for coal in Southeast Asia will decline in the future.

“Meanwhile, currently 27 GW of coal power plant construction is still in progress. In August 2020, the Director of PLN said that PLTU has installed pollution controls to reduce carbon, but it will increase the operating costs,” said Deon.

Special Staff of Coal and Minerals within Energy and Mineral Resources Ministry, Irwandy Arif, said that 2027 would see the peak of the worldwide decline in coal demand. This is a challenge for the Indonesian government because currently, the government is using coal-derived products to handle the budget deficit from LPG imports.

“Therefore, currently the ESDM ministry is preparing a grand strategy with regard to important renewable energy commodities. Coal’s phaseout is largely determined by renewable energy and the overall policy designed by the government,” said Irwandy.

State-owned Companies (BUMN) such as PT Bukit Asam also undergo energy transition. PTBA conducted a green airport program by building solar infrastructure. In addition, they built solar panels in several regencies.

Renewable Energy Policy in Indonesia is Overlapping

Day 4 Indonesia Indonesia Energy Transition Dialogue 2020, Better energy system planning to transition the Indonesian power sector


Jakarta, December 10, 2020 – The climate of renewable energy policies in Indonesia is considered unsupportive towards renewable energy as of yet. Researchers and experts noticed an overlap between the General Plan for State Energy (RUEN) and the Electricity Supply Business Plan (RUPTL) devised by PT PLN.

Chairman of the Indonesian Renewable Energy Society (METI), Dr. Surya Darma, said that the government had detailed the efforts to reduce carbon emissions in the RUEN. But, on the other hand, the government still signed the RUPTL of PT PLN which is not in accordance with the RUEN. “This is a paradox. The target itself is already unsuitable, let alone the achievement?” said Surya.

According to Surya, the targets between RUEN and RUPTL that are not in line with each other will keep creating overlapping policies in the renewable energy sector. The government still has 8 years to revise the RUEN.

However, if it is impossible, the only way to handle that is by accelerating energy transition to make up for the gap between RUEN and RUPTL. “If the renewable energy target in RUEN is 45.2 GW, then the realization scenario could reach up to 22.62 and 25 GW,” said Surya.

Apart from the conflicting targets, the policy climate in Indonesia is still unclear in regard to the party responsible for implementing renewable energy. This was explained by academics from the School of Electrical and Informatics Engineering, Bandung Institute of Technology (ITB), Pekik Argo Dahono.

“In implementing the RUEN, it is unclear who will be responsible, this is what causes many overlapping renewable energy policies. Those who supervise are different each time, ”said Pekik.

Pekik considered the policy revision is too time-consuming. That being said, what can be done is to fulfill the targets written in RUEN. In addition, providing incentives for renewable energy development must also be accompanied by the readiness of the electricity system to receive renewable energy. Pekik said that the government should avoid being unprepared when coal is completely eliminated from Indonesia’s electricity system.

Energy Transition Acceleration Must be Just

Day 4 The 3rd Indonesia Energy Transition Dialogue 2020 | #IETD2020 #TransisiEnergi

Reducing carbon emissions through renewable energy transition needs to consider all aspects other than energy source. The goal is to ensuring just energy transition.

Therefore, the Institute for Essential Services Reform (IESR) published a series of reports outlining scenarios of renewable energy transition model structure for the road map of the National Energy General Plan (RUEN). Based on the national policy changes this year, the model structure would not achieve carbon emission reduction target by 2025. “The renewable energy transition only achieved 15%,” said IESR Executive Director, Fabby Tumiwa.

However, if the plan to stop using Coal Power Plants in 2029 was applied, Indonesia could contribute 24 GW of renewable energy in 2025 and 408 GW in 2050. Using this model structure scenario, greenhouse gas emissions could decrease by 700-750 million tonnes of carbon by 2050.

In the report, IESR also advocated achieving the decarbonization figure. Two main sectors that must be prioritized for transition are electricity and transportation. The government must accelerate the electricity mix in transportation with renewable energy, while in the electricity sector, the government must implement a moratorium on new Coal Power Plant.

Director of Electricity Program Development of the Ministry of Energy and Mineral Resources (ESDM), Jisman Hutajulu, said that limiting coal consumption at coal power plants must be balanced with the government’s efforts to maintain affordable electricity rates. “Coal has a large consumption and that keeps the price of electricity affordable. If the price of renewable energy is close to that price, we can aggressively undergo energy transition,” said Jisman.

Jisman said that for now, the government had implemented blending—using biofuel for power generation. Jisman said 815 GW generated from it had gone well. Up to this point, there has been a potential of 1.8 GW as the result.

Head of the UGM Center for Energy Studies (PSE), Dr Deendarlianto, said that transition from coal to renewable energy should be done slowly. Based on the PSE survey, Indonesia is still in need of massive research and development. With limited research and development, coal restrictions will disrupt electricity system.

“Imports will surge, then the economy will be disrupted. We can do vehicle electrification, but only for new vehicles so that the investment will not be too expensive. According to our study, electric cars that can enter Indonesia are only 400,000 at most and can only increase 2% each year,” said Deen.