July 2009

PF 09-05 Profiles
Estimates for 2008 could
see exports reaching
211 Mt
This report is the first in a series of
country reports on the Far East that
looks at the domestic coal markets and
the possibilities for clean coal power
technologies.
The report introduces the country, its
unique geography and briefly looks at
the turbulent socio-political history of
the economy. The report then discusses
the importance of biomass in the energy
economy, and why its displacement as a
fuel is not as straightforward as some
might think.
The countrys energy resources are
examined, looking at the demise of oil,
the prominence of natural gas and, in
greater detail, the countrys coal
reserves. Coal qualities, geology and
Prospects for coal and clean coal
technologies in Indonesia
7000 Mt will be mined
between 2005 and 2025,
equivalent to current
reserves
geographical location all form
important facets of the countrys coal
industry, making it one of the most
successful exporters of steam coal.
A series of chapters provides an
overview of the structure of the coal
industry and the major players.
Indonesias policy of encouraging
private sector investment has meant that
large energy companies such as Adaro,
Bumi resources, Kideco, and many
others, have emerged. While many of
these companies are geared towards the
export market, the domestic market
particularly the power generating
sector is increasing in importance.
Indonesian coal production has
grown at an astonishing rate and its
Clean coal technologies
are not yet mainstream
steam coal trade, mainly with Asian
importers, now surpasses every other
steam coal exporter in the world.
Exports grew fivefold in the ten years
between 1995 and 2005 rising from
30 Mt/y to more than 150 Mt/y. By
2007, steam coal exports were
estimated to have reached around
194 Mt while annualised estimates for
2008 could see exports reaching
211 Mt.
Indonesia consumes around 20% of
the countrys coal output for power
generation and industry the remaining
80% is exported. The growing demand
for electricity means that the prospects
for domestic steam coal are good. One
of the central tenets of the countrys

500
exports
450 others
UBC
400 metallurgical, pulp, textiles, briquettes
cement
350 electricity generation

300
Coal, Mt

250

200

150

100

50

0
2005 2006 2007 2008 2009 2010 2012 2015 2020 2025

Projected coal demand and exports 20065-35, Mt

energy policy has been the move away
from oil-fired power towards
renewables, gas and coal. In addition to
the replacement programme of oil
plants, the rapid growth in power
demand is also driving the need for
reliable and cost-effective power coal
is seen as being able to deliver this
power.
Clean coal technology prospects are
in their infancy, and a move towards
supercritical power stations is a first
step to enhanced efficiencies and
minimising CO2 emissions. However,
Indonesia is not yet committed to firm,
let alone stringent, carbon emission
cuts although discussions on the
prospects for CCS are under way and
CO2 reduction policies will become
more import in the future. However,
clean coal is not yet a priority.
Meeting the power shortages and
serving the countrys 220 million
people is no easy task. While
economic activity is concentrated in
Java, energy demand is growing across
the archipelago, and blackouts could
become more common.
The international market has been
the primary driver for the production
of coal in Indonesia for many years,
and interest remains strong because of
the coal properties. Very low sulphur
and low ash are typical traits of
Indonesias current production and,
with modest heating values, the coals
are perfect for blending. Indonesian
coal producers still operate with a low
cost base compared to many other
exporters around the world, and are
well situated to access the massive and
ever-growing Asian coal-consuming
markets. However, the future could be
different.
Indonesias economy has been
growing at a pace that has driven
demand for coal internally in the
power and industrial sectors. The
economy produced around 630 Mtce
of energy in 2006, but consumed just
260 Mtce, clearly showing the export
nature of the energy business that
exists today. However, some energy
reserves are reaching, or will reach,
critical depletion within the next
twenty years. About 7000 Mt of coal
will be mined between 2005 and 2025.
This is the same as the current
mineable reserves which therefore
could be depleted by 2025. This
clearly brings about a need for further
exploration of the countrys reserves
base, and to bring forward resources
into the mineable reserves category.
Without expansion there may be a
failure to meet domestic demand or
exports, depending on whether the rise
in demand materialises.
If new resources are not brought
forward, there is a risk that the
domestic and/or export markets will
need to compromise. Export operations
may need to provide some of the coal
for domestic usage, but how much is
not yet certain. At the same time,
Indonesian producers are also
considering upgrading lower rank coals
and the government may even promote
liquefaction in order to supplement the
dwindling reserves of oil and increasing
oil imports. IEA Clean Coal Centre is a
It is possible domestic market collaborative project of member
obligations will be required for fuelling countries of the International
domestic power stations and growing Energy Agency (IEA) to provide
industry needs, but this requires some information about and analysis of
degree of certainty amongst the policy coal technology, supply and use.
makers. A plausible, albeit unlikely, IEA Clean Coal Centre has
solution is that Indonesia continues to contracting parties and sponsors
export low sulphur, low ash coals to the from: Australia, Austria, Brazil,
rest of Asia at a price premium, while Canada, China, Denmark, the
importing cheaper higher sulphur and European Commission, Germany
higher ash products to blend in with its India, Italy, Japan, Republic of
domestic products. South Korea, the Netherlands,
The report concludes that the coal New Zealand, Poland, Russia,
prospects for Indonesia are incredibly South Africa, Sweden, Spain,
strong, and the prospects for future coal Thailand, the UK and the USA.
production and domestic demand
remain good. However, clean coal
technologies are not yet mainstream as
the country struggles to meet the most
basic demands for power across the
entire economy.
Each issue of Profiles is based on a
detailed study undertaken by IEA Gemini House
Clean Coal Centre, the full report of 10-18 Putney Hill
which is available separately. This London SW15 6AA
particular issue of Profiles is based on United Kingdom
the report:
Tel: +44 (0)20 8780 2111
Prospects for coal and clean coal Fax: +44 (0)20 8780 1746
technologies in Indonesia e-mail: mail@iea-coal.org
Paul Baruya > Internet: www.iea-coal.org
CCC/148, ISBN 978-92-9029-468-9,
70 pp, June 2009,
255*/85/42.50
* non-member countries
member countries
educational establishments within member
countries