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An Assessment on the Implementation of Coal Phase-Out in Indonesia - IESR_page-0001

Briefing Paper : An Assessment on the Implementation of Coal Phase-Out in Indonesia

With 70–80% of the state’s revenue from the mining sector coming from exporting it, coal could be considered one of Indonesia’s bread and butter. According to the IEA coal market update, Indonesia is by far the largest coal exporter, by tonnage, in the world, surpassing Australia and the US, two countries with large shares of global coal reserves. As of November 2022, coal production has already touched 622.97 million metric tons, almost 93.96% of the realised target of 663 million metric tons this year. The export is targeted at 497.25 million metric tons, with a current realisation rate of 53.07%. A recent surge in the global market price would entrench the coal dependence even deeper, having relied on exporting it for more than a decade now.

The coal dependence doesn’t stop there. The cheap domestic coal price has led coal-fired power plants (CFPP) to have the lowest operating cost amongst other forms of power generation. The country’s economic activities have been spurring since its massive development through three government-backed programmes, namely Fast Track Programme Phase 1 and 2 (FTP-1 and 2) and the 35,000 MW programme. To date, almost 70% of Indonesia’s electricity comes from it. Indonesia’s CFPP installed capacity is close to 41 GW, placing the country in the 6th position in the global coal power rank 3. The government’s support in capping the coal price at USD 70/tonne further engrains the country’s reliance on CFPP, as clearly reflected in the expansion plan, which still includes further addition of CFPP capacity up to 13.8 GW by 2030.

Despite its role in driving economic growth, CFPP releases a large amount of CO2 emissions into the Earth’s atmosphere. According to 2019 data, CFPPs have been contributing to one-third of global CO2 emissions. With such caveats, CFPP will surely lose its place in the power generation sector as countries consider stringent climate policies and renewable energy becomes increasingly competitive.

 

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