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Explainer: Indonesia’s push for coal downstreaming against all odds
The downstreaming of coal, whose reserves in Indonesia is the sixth-largest in the world, includes the push to transform coal, the dirtiest fossil fuel, into cooking gas, methanol and electricity, among other commodities.
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Workers load coal at Cirebon Port in West Java in this file photo. (JP/Arya Dipa )
I
ndonesia has pulled concerted efforts on coal downstreaming, including through legal means, as it seeks to exploit the country’s vast coal reserves and boost the economy, amid challenges in economic feasibility and the risk of environmental hazards.
The government passed two laws this year that cement the legal foundation for coal downstreaming, namely the new Mining Law and the Job Creation Law, to reaffirm its commitment and introduce incentives.
The downstreaming of coal, whose reserves in Indonesia is the sixth-largest in the world, includes the push to transform coal, the dirtiest fossil fuel, into cooking gas, methanol and electricity, among other commodities.
Coal is among Indonesia’s top export commodities, aside from palm oil, and the mining industry as a whole contributes big money to non-tax state revenue, official data shows.
Miners contributed Rp 45.59 trillion (US$3.24 billion) to the country’s total non-tax state revenue of Rp 405 trillion last year, surpassing the government’s target of Rp 43.27 trillion. The mining sector has contributed Rp 31.41 trillion as of Dec. 10 this year, according to the Energy and Mineral Resources Ministry.
With its downstreaming efforts, the government intends to exploit coal to slash oil and gas imports, supply domestic industries, absorb hard-to-sell coal and bump up gross domestic product (GDP) figures. Officials often draw comparisons to China, a textbook example of a country with commercially successful coal downstreaming.
