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When even Europe is hunting for coal, what should Indonesia do?
The European Union has to work hard to find coal during winter this year. The situation became more critical after Russia decided to decrease its gas exports to the region.
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Europe is flocking to Indonesia as coal has become a valued commodity after Russia cut off gas supplies.
J
AKARTA – The European Union has to work hard to find coal during winter this year. The situation became more critical after Russia decided to decrease its gas exports to the region. Europe is known to have started targeting a number of countries to obtain coal supplies as fuel for its coal-fired power plants. Even though they had committed to stop such operations, the fossil-fuel power generators have been reactivated.
This is the impact of the Western bloc’s policy of embargoing coal from Russia. The pressure increased after Russian President Vladimir Putin cut off gas supplies to Europe through the Nord Stream I pipeline, a reduction of more than 60 percent. This dwindled the supply of oil and gas in Europe.
Other than that, Europe is about to face the winter season when energy consumption is higher than usual. This is because Europeans are accustomed to use heating throughout the season.
Director General of Mineral and Coal at the Energy and Mineral Resources Ministry Ridwan Djamaluddin has said that a number of EU countries have approached local coal producers to obtain supply.
Germany has officially requested 150 million tons of coal from Indonesia. This will affect the revision of the 2022 work plan and budget (RKAB).
"Demand figures are already at 150 million [tons]. That's the German figures I know of," he said.
Meanwhile, head of the Communications Bureau of Public Information Services and Cooperation at the Energy and Mineral Resources Ministry, Agung Pribadi, said that the German coal association held a meeting with the Energy and Mineral Resources Minister Arifin Tasrif some time ago.
"At the meeting it was stated that 50 percent of Germany's coal supply comes from Russia and with the current situation, Germany wants to develop cooperation in coal supply with Indonesia," he explained.
Coal trade data show the commodity trading at US$395.50 per ton on Tuesday. The price rose 3.47 percent compared with the previous day.
Meanwhile locally, the production of coal reached 284.41 million tons, 42.9 percent of the target set in the beginning of the year, which was 663 million tons.
In the midst of this high demand, the government is ensuring that domestic supply is not disrupted by current conditions.
Responding to this need, Energy Watch executive director Mamit Setiawan believes that the banks still very much need to channel credit to the fossil fuel sector, including coal.
According to Mamit, this has become a strong basis for banks to continue to support fossil fuel-based energy because it is still crucial for both economic growth and the welfare of the Indonesian people, even though it is caused by a surge in energy demand from abroad.
"So far, there is no prohibition for the domestic banking sector on domestic coal financing, including what is currently being discussed when banks provide loan facilities to companies in the coal sector," he said.
According to him, banks in Indonesia have been using the right business scheme in supporting the performance of the coal companies.
In fact banks in Indonesia, especially Himbara banks, have strict standard operating procedures for financing the fossil fuel sector.
In addition to that, Mamit said that coal had become a source of natural wealth that is needed by Indonesia and the world. The use of coal has increased this year, in line with the uncertainty of other fossil energy supplies due to the Russia-Ukraine war.
In recent years, Indonesia has continued to optimize its natural wealth, including coal. This effort is carried out while preparing for net-zero emissions by 2060.
"This is an opportunity for us as the largest coal exporter. We should optimize the potential of our coal," he said.
On the other hand, local banks are going after green financing to accelerate the use of renewable energy in the country.
"Green financing is currently ongoing and I support it. Just don't allow our natural wealth not being optimized due to funding constraints," he explained.
