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Indonesian coal firms turn to local market as exports flatten
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Heavy-laden: A man returns from fishing as a tugboat pulling a coal barge passes by in Banda Aceh, Aceh, on April 26. The country’s coal exports have declined amid the COVID-19 pandemic. (AFP/Chaideer Mahyuddin)
D
emand for coal from Indonesia, the biggest exporter of the commodity, is projected to grow at less than 1 percent starting in 2021 as global power industry investment shifts away from coal, although not necessarily toward renewables.
Starting next year, demand growth for Indonesian coal will be driven solely by rising domestic consumption, while exports – which still account for the lion’s share of demand – stagnates at 441 million tons a year, according to the government’s roadmap unveiled on Aug. 27.
Domestic consumption will be mainly driven by a new wave of coal-fired power plants (PLTU) being developed by state-owned electricity company PLN, the roadmap shows.
“It’s gonna be a huge demand setter,” said James Stevenson, senior director for coal, metals and mining at IHS Markit, on Sept 9. “Over time, demand of the domestic market will constrain exports.”
The government’s roadmap shows it will embrace new coal plants to electrify Indonesia, despite the country’s purported commitment to diversify into renewables and the world’s gradual withdrawal of financial support for new coal plants. The roadmap does not take into account COVID-19’s impact on Indonesia’s coal industry.
“The domestic market is being forcibly pushed to save the coal mining industry,” said Greenpeace Indonesia climate and energy researcher Adila Isfandiari in an email.
