KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL

REPUBLIK INDONESIA

GRAND POLICY ON THE FUTURE OF

COAL MINING IN INDONESIA
AND THE ROLE OF COAL IN
INDONESIA’S ENERGY TRANSITION

The 2024 Indonesia Coal Outlook Conference

Jakarta | 5 December 2023

#TransisiEnergi
www.esdm.go.id
 CURRENT CONDITION
High Potential in Renewable Fossil Energy dominates Primary Indonesia's coal resources and
Energy, Low Utility Energy Mix in Indonesia reserves are currently still abundant
ENERGY
POTENTIAL UTILIZATION RESOURCES
(MW) (MW)
NRE 99,19
SOLAR 400.000 182,3 12,3% billion tons
RESERVES
HYDRO 90.000 6.286,7
35,02
BIOENERGY 45.000 1.916,4
Coal billion tons
Oil
WIND 60.600 154,3 42,4% 2022 31,4%
GEOTHERMAL 23.700 2.175,7 Coal Reserve Remaining life: 60 years
(production rate : 600 million tons/year)
OCEAN 18.000 0
Natural Gas
NUCLEAR 11.000*) 0
13,9% ▪ Coal still be the main energy source in
TOTAL 648.300 10.697,4 Indonesia for the next 10 to 20 years
due to the potential of Indonesia's current
▪ Coal still dominates the national energy coal resources and reserves which are still
▪ The potential of RE has not been utilized utilization sector abundant
optimally. Only 2% of the total potential has ▪ Utilization of NRE as an environmentally
been utilized friendly energy source is still low ▪ Coal is considered a relatively inexpensive
▪ The role of coal needs to be adjusted energy source option compared to other
▪ Potential existing of new energy are still not
related strategy for the use of coal in energy sources
widely developed
the future to support carbon emissions
reduction
*) not included thorium dan thorcon
www.esdm.go.id 2
CURRENT CONDITION
Domestic Coal Utilization Is Increasing

Domestic Coal Production ( millions ton ) Coal Domestic Utilization ( millions ton )
Actual domestic coal production in 2023 is 700 million tons Actual coal domestic utilization in 2023 is 171.5 millions ton
or 100.8% of 694.5 millions ton target atau 97% of 176.8 millions ton target

2022 Target ‘22 : 663 687 2022 Target ’22: 165.7 215,18

Target 2021 Target 2021

2021 614 625 2021 133 137,5

2020 561 2020 132

2019 616 2019 138

2018 558 2018 115

www.esdm.go.id 3
 COAL PROJECTION IN ENERGY MIX Coal is still be the main energy resource
and a buffer for Indonesia until
renewable energy can reach the
expected portion according to the target
of the national energy mix
• Based on projection, Indonesia will still use coal
as an energy source, which accounts for 67 to 59%
of the energy mix
• There are no plans to develop new coal-fired
power plants except those that are already
financially close/under construction
• The future use of coal must be balanced with
environmentally friendly technology (Clean Coal
Technology) to reduce CO2 emissions
• Scenarios for optimizing the use of coal to support
emission reductions :
Sector 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
1. Technological innovations for replacement of
Oil 3.5% 3.0% 1.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
existing PLTU with Baseload NRE generators
Gas 16.6% 18.0% 18.1% 17.4% 15.6% 14.8% 14.9% 15.7% 15.5% 15.4%
such as through Biomass Cofiring
NRE 12.9% 12.8% 13.4% 14.4% 23% 23.1% 23.1% 23.5% 24.2% 24.8%
Coal 67.0% 66.1% 66.9% 67.7% 60.9% 61.7% 61.6% 60.3% 59.8% 59.4% 2. Application of Clean Coal Technology :
Sumber : RUPTL 2021-2030 a) Implementation of Integrated Gasification
Combined Cycle (IGCC)
b) Implementation of Carbon Capture and
Storage (CCS) / Carbon Capture Utility
Storage (CCUS) for reduce emission
www.esdm.go.id 4
COAL PROJECTION : Production, Export & Domestic Consumption (BAU)

Production, DMO and Export Projection of Coal (BAU)

750 729 716 723 720
▪ Coal production will reach 729
700 663 80,5
650 0,6 103,6 141,1
million tons in 2030, and reduced
49,50 157,6
50,36 afterwards due to a decline in export
600
51,55 demand;
550 145 52,85
55,72
500 206
million tonnes

450 ▪ There has been an increase in

265 domestic demand due to the
400
350 329 increase in electricity demand and
300 393 coal demand for the industrial
250 468 sector, including coal downstream
392 industry demand;
200
296
150
200 ▪ By 2060, coal production is
100
113
50 estimated to reach 720 million tons.
2022 2030 2040 2050 2060
Coal Export Electricity Demand for Coal
Non Electricity Demand for Coal Coal Downstream Industry Demand
Coal Production
www.esdm.go.id 5
 COAL PROJECTION : Production, Export & Domestic Consumption
(NZE Scenario)
STRATEGY/POLICY ON THE FUTURE OF COAL
750 729 716 723
699 720
700 663
650 0,6 80,5
49,2 601 Upstream
600 50,4
550 145 103,6 • Coal production starts to decline in
500
175 51,6 2030 following electricity demand;
450 413 • Biofuels (B20&B30) to reduce fossil fuel
400 consumption
150
350 141,1
327 • Reclamation of mined land area
300
250 468 52,8 157,6
200
392 19 Downstream
296
150 55,7
100
200 0 • Biomass co-firing in power plant
113 • Clean Coal Technology (CCS/CCUS & IGCC)
50
2022 2030 2040 2050 2060 for power plant and coal downstream
Coal Export industry;
Electricity Demand for Coal
Non Electricity Demand for Coal • Substitution from diesel and coal to
Coal Downstream Industry Demand renewable energy
Coal Production
www.esdm.go.id 6
NATIONAL COAL UTILIZATION POLICY DIRECTIONS

Increased coal exploration activities for Guaranteed supply of coal for

open pit and underground mines domestic needs

The optimal allocation of coal use is Optimizing the existing PLTU by applying
adjusted to the quality and location of Clean Coal Technology and Carbon
coal resources. Capture, Utilization & Storage (CCUS)

Coal Benchmark Prices, especially for

domestic use Increasing Coal Added Value for
Gasification and Liquefaction

Conservation and mining are in accordance

with good principles with attention to the
environment

www.esdm.go.id
7
 COAL PRODUCT DEVELOPMENT

Source: Oak Ridge National Laboratory, 2021

www.esdm.go.id 8
Greenhouse Gas Emission Reduction Strategy in the Mining Sector
(Coal Downstream)
Optimization of the development of Coal Downstream Industry
integrated with Clean Coal Technology Projected Status of Coal Downstream Up to 2030

• Optimizing coal plants by applying Clean Coal Technology;

Carbon Capture, Utilization & Storage & IGCC;
• Optimization of coal utilization through integrated coal
downstreaming with clean coal technology facilities (CCS and
CCUS).

www.esdm.go.id 9
Greenhouse Gas Emission Reduction Strategy/Policy in Mining Sector

www.esdm.go.id 10
STRATEGIES TO INCREASE COAL UTILIZATION IN INDONESIA

1 • Optimization of existing PLTU and additional PLTU by applying technology:

Clean Coal Technology, Carbon Capture, Utilization & Storage

2 • There is no new PLTU construction in Java. Mine mouth PLTU for outside Java.

• Downstreaming coal to be able to substitute fuel (BBM and BBG), and Chemical
3 Industry Raw Materials, including: Methanol and DME.

4 • Provided fiscal and non-fiscal incentive policies to encourage the growth of the
industry absorbing downstream products

5 • Implementation of Carbon Pricing policy

www.esdm.go.id 11 11
 COAL DOWNSTREAM CHALLENGE
Environmental issues related to CO2
Economic factor: a giant investment. emission reduction
Innovation and
→ Capital investment costs have a large The need for the application of clean
technological capabilities
financial risk. Incentive and regulatory coal technology (such as Carbon Capture
01 of coal downstream: still 02 support is needed to support the 03 and Storage CCS, Carbon Capture,
dependent on imported Utilization and Storage CCUS,
economic viability of the project;
technology. Integrated Gasification Combined Cycle
→ Certainty fiscal and non-fiscal
IGCC)
incentives.
Incentive and Regulatory Support for Coal Downstream Programs
No Incentive and Regulatory Support Institution Description
The principle approval from the Ministry of Finance has been issued,
Reduced coal royalty rates specifically for coal MEMR,
1 but the follow-up is delayed due to the Constitutional Court's
gasification up to 0% Ministry of Finance
decision regarding the Cipta Kerja Law
It is part of the implementing regulations of Government
Special price regulation for coal to increase added MEMR, Regulation No. 96/2021, which will be further regulated in a
2
value (gasification) implemented at the mine mouth Ministry of Finance Ministerial Regulation related to mineral and coal mining
business drawn up in 2022.

Regulation of the specific period of the coal Mining
Business Permit or Izin Usaha Pertambangan (IUP)
3 which is specifically used as a supply of coal for
gasification, the IUP period is given according to
the economic life of the coal gasification industry
The final draft of the Presidential Regulation on the Supply,
Distribution, and Pricing of Dimethyl ether (DME) as Fuel has
MEMR been submitted from the Legal Bureau-MEMR to the Ministry
of Investment/BKPM to be further coordinated to accelerate
its completion with the relevant Ministries or Institutions.
www.esdm.go.id
@kesdm KementerianESDM
12
KEY REGULATORY CHANGES FOR COAL
There will be no changes in the near future, except for what is already underway,
namely Coal Management Agency (MIP).

Coal Management Agency (MIP)

All coal producers will deposit a certain amount of funds into MIP, and the
1 fund will be distributed back to the coal companies that supply coal to PLN
in the amount of the difference between the market price and the price of
coal to PLN.
The coal MIP takes a lot of time because the government has to prepare
2 derivative regulations such as the Ministerial Regulation and Decree. We
strive to ensure that the MIP management mechanism will be effective
before or early 2024.
Currently we are also preparing an application for collecting and distributing
3 coal compensation funds (DKB).

www.esdm.go.id 13
13
 COAL COMPENSATION FUND GOVERNANCE SCHEME (DKB)

4 KAS NEGARA
Setor Royalti DKB Note:
1. Management Agency Partner (MIP) is the
Royalti
(dari HBA Aktual & agency/institution appointed by KESDM to
HBA khusus) manage the DKB
Penyaluran
2. IUP/IUPK/PKP2B must pay compensation
3 Kompensasi
Penjualan Batubara
funds
HBA Aktual (Normal)
3. MIP distributes to IUP/IUPK/PKP2B who
carry out DMO contracts/transactions after
Menunjuk Membayar Dana deducting DKB VAT.
Kompensasi
2 (IUP/IUPK/PKP2B)
KESDM selaku
IP PNBP 1 Pengelola Dana Kompensasi
Mitra Instansi Pengelola (MIP) Penjualan Batubara
HBA khusus
(USD 70 atau 90 per Ton)

www.esdm.go.id
14
 IMPLEMENTIATION OF ESG CONCEPT IN THE MINING INDUSTRY

With these ESG criteria, mining companies

must pay more attention to environmental,
social and governance aspects in each of
their operational activities so that investors
are more interested in investing in mining
companies that meet ESG criteria, while also
supporting good mining practice
implementation efforts.

Sumber: hseinternational.com (2021)

www.esdm.go.id 15
 “NO SCIENCE” BEHIND DEMANDS FOR PHASE-OUT OF FUSSIL FUELS

The president of COP28, Sultan Al Jaber, has claimed there is “no science” indicating that a
phase-out of fossil fuels is needed to restrict global heating to 1.5C. Al Jaber then asked to
show the roadmap for a phase-out of fossil fuel that will allow for sustainable socioeconomic
development, unless people want to take the world back into caves.
As well as running Cop28 in Dubai, Al Jaber is also the chief executive of the United Arab
Emirates’ state oil company, Adnoc, which many observers see as a serious conflict of interest.
His claim is considered as climate change’s denial state, and even more concerning because the
president of COP28 defend the use of fossil fuels. The science of climate change has been clear
for decades that we need to stop burning fossil fuels to rapidly reduce carbon emissions.
A COP28 spokesperson responds that the IEA and IPCC 1,5C scenarios clearly states fussil fuels
role in the future energy system, a smaller one.
With his statements and the controversy of Al Jaber as the president of COP28, there has been
numerous negative responds about how COP28 occurred. Nevertheless, COP28 is expected to
deliver the decision on phasing out fossil fuels in a just and equitable manner, said Harjeet Singh
at Climate Action Network

Source: theguardian.com, 2023

www.esdm.go.id 16
Thank
You
Ikuti kami di akun media sosial:

@kesdm Kementerian ESDM

@KementerianESDM KementerianESDM

www.esdm.go.id 17
www.esdm.go.id