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Nadira Asrifa

Hidayatul Mustafidah Rohmawati

Coal is a highly debated topic in the green energy transition. As countries shift towards cleaner and more sustainable energy sources, the role of coal is being questioned because of its environmental impact and how it serves as a disincentive to use renewable energy.
The debate centres on what role coal should play and whether it would be better to hasten its retirement in favour of renewable alternatives. Its reliability as a baseload power source and vast reserves in certain parts of the world make it difficult for some countries to phase out coal entirely.
This balancing act between energy security, economic impact and environmental responsibility makes coal a contentious issue in the global push for a greener future. We will attempt to flesh out this context and illustrate the role of coal in Indonesia’s energy transition.
Indonesia is the world’s fourth-largest producer of coal, and as such this resource forms the backbone of the country’s energy grid and state revenue. This can be seen in the revenue created by the mineral and coal sector, which contributed about 173 trillion rupiah (US$10.9 billion) in non-tax state revenue in 2023, roughly 58 per cent of the national total.
Indonesia relies heavily on coal, a fuel which contributed more than 40 per cent of global carbon dioxide emissions growth in 2021. Even amid global pressure to phase out coal through initiatives such as those put forward at last year’s UN climate change conference, a gradual coal phase-down is more practical for Indonesia.
Indonesian President Prabowo Subianto has announced plans to retire all fossil fuel-driven power plants within the next 15 years. Meanwhile, state-owned power producer Perusahaan Listrik Negara aims to decarbonise electricity generation by introducing alternative fuels such as biomass, hydrogen and ammonia in coal-fired plants.


There are a few reasons phasing down coal, rather than phasing it out, should be the priority in Indonesia during the energy transition. While considering these reasons, note that the main goal is to achieve a smooth transition while avoiding false solutions which end up increasing emissions.
First, maintaining energy security and affordability is crucial for Indonesia. Coal made up almost 43 per cent of the country’s energy mix in 2023, ensuring a steady power supply for homes and industries. Any phasing down of coal should take place alongside developing reliable renewable sources such as geothermal and hydropower to prevent energy shortages while increasing renewable capacity.
Second, Indonesia must maximise its blessing of natural resources and fully tap their potential. The country has proven coal reserves of more than 30 billion tonnes and more than 90 billion tonnes in proven resources. These abundant resources can be optimised for coal downstreaming, such as gasification and liquefaction, while adhering to high environmental standards.
This will enhance the added value of coal and help reduce imports of liquefied petroleum gas (LPG). Government figures indicate that Indonesia’s LPG imports last year reached more than 6.9 million tonnes out of the 8.7 million tonnes sold in the domestic market. Taking advantage of the country’s coal resources will help bolster its energy security in the long run by reducing dependence on LPG imports.


Third, clean coal technologies offer solutions that can help reduce emissions from the coal-fired power plants which currently dominate Indonesia’s power grid by improving efficiency and reducing harmful emissions. For example, the Java 7 coal-fired power plants in Banten have used ultra-supercritical technology to achieve a 15 per cent improvement in efficiency compared to older, subcritical plants.
While implementing these technologies can increase costs, policies such as carbon taxation could encourage businesses to adopt cleaner practices. In the medium term, integrating clean coal technologies with carbon capture and storage can bridge the transition while renewable energy infrastructure develops.
Indonesia must continue expanding the role of renewable energy in its national energy mix. Being a sprawling archipelago presents challenges in meeting electricity demand, especially in the most remote and underdeveloped parts of the country. Harnessing the unique renewable potential of these areas can improve access and support national targets, but they need time to develop renewable infrastructure and local manufacturing to reduce reliance on imported technology.
Taking a leaf from China, Indonesia is making significant investments in renewable energy, but acknowledges that the intermittent nature of wind and solar power makes it unsuitable for continuous energy generation. Last year, China was the major driving force behind the world’s rapid expansion of renewable capacity.


China installed as much solar photovoltaic capacity in 2023 as the rest of the world did in 2022, and its wind energy installations increased by 66 per cent compared to the previous year. Even so, coal-fired power plants still generated 61 per cent of China’s electricity in 2022 while providing a baseload to support renewable sources.
As Indonesia tries to emulate such a strategy, it must consider the economic implications of energy policy. Coal-fired power plants support key industries such as manufacturing, mining and processing of essential materials. Given that Indonesia is facing a middle-income trap, it must carefully manage its coal phase-down strategy to ensure these industries continue to thrive while gradually transitioning to renewable energy.
Indonesia’s energy transition requires a pragmatic approach. Coal remains essential in the short to medium term while the country moves towards cleaner energy. Phasing down coal, combined with investments in renewable energy, can ensure energy security and economic stability while paving the way for a greener future. This balanced approach minimises disruptions and aligns environmental goals with national energy needs.


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Opinion

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Climate and energy

Phasing down coal and investing in renewable energy can ensure energy security and economic stability while creating a greener future


Phasing down coal and investing in renewable energy can ensure energy security and economic stability while creating a greener future.


Energy

Climate change

Renewable energy

Indonesia

China and climate change

Commodities

Climate change science and technology

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Indonesia can’t afford to abandon coal as it shifts to greener energy

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Phasing down coal and investing in renewable energy can ensure energy security and economic stability while creating a greener future

Phasing down coal and investing in renewable energy can ensure energy security and economic stability while creating a greener future