Indonesia’s coal emissions in 2022 have reached a record high, making the country one of the largest emitters of carbon from fossil fuels globally, according to preliminary analysis. The data, analyzed from the Indonesian Ministry of Energy and Mineral Resources (ESDM), reveals that coal consumption in the country has reached its highest level ever in 2022, surpassing any previous year. The consumption has increased by 33%, from 559 million barrels of oil equivalent (BOE) in 2021 to 746 BOE in 2022.
This surge in coal burning has resulted in a significant increase in greenhouse gas emissions from coal and other fossil fuels. The Global Carbon Project, an organization that calculates CO2e emissions from Indonesia’s fossil fuel burning, reports that the rise in coal consumption has caused the country’s GHG emissions to increase by over 20%. This increase is unprecedented among the top 10 carbon emitters, according to a senior analyst from the organization.
The combined increase in oil, gas, and coal emissions brings Indonesia’s total fossil fuel CO2 emissions to 619 million metric tons. Consequently, Indonesia is projected to become the world’s sixth-highest fossil polluter in 2022, up from ninth place in 2021. The top three spots are currently occupied by the United States, Saudi Arabia, and Russia. If this trend continues, Indonesia will undoubtedly secure the sixth spot this year. However, it is worth noting that Indonesia’s CO2e footprint per capita (2.7 tonnes) remains lower than that of the United States (15 tonnes), with the global average for emissions intensity being 7.5 tonnes per capita.
Indonesia is the third-largest coal producer globally and a significant consumer of coal itself. With new coal plants in the pipeline, the country’s coal consumption is expected to continue growing until 2029. Unfortunately, there is a lack of intent and action to slow down coal mining in the country, let alone decommission existing mines. This is concerning, especially considering Indonesia’s commitment to achieving net-zero emissions by 2060.
According to estimates from the ESDM, Indonesia is projected to produce even more coal in 2023, reaching 694 million tonnes, a 5% increase from the 2022 target of 663 million tonnes. This projection is mainly driven by expected high demand from India and China, which are major coal export partners for Indonesia. Additionally, Indonesia’s coal sales to Europe in 2022 reached historical highs due to a shift to coal among European utilities prompted by high gas prices and the EU embargo on Russian coal.
The question arises: Is the energy transition still possible for Indonesia given its growing coal production and carbon emissions? The answer to this question is crucial, as Indonesia’s status as one of the world’s largest emitters significantly impacts the global temperature target of 1.5°C. To address this challenge, Indonesia signed a landmark agreement last year called the Just Energy Transition Partnership (JETP). Under this agreement, developed nations (G7) will invest $20 billion in Indonesia to support its transition to renewable energy. The goal of the partnership is to limit power sector emissions to 29 million Mt by 2030, which can only be achieved if Indonesian coal-fired power plants are retired and new projects are halted.
However, the Indonesian government’s flagship program, led by President Joko Widodo, aims to add 35 gigawatts to Indonesia’s national grid, primarily through the construction of coal-fired power plants. This contradicts the transition to renewable energy and poses a significant obstacle to achieving the country’s climate targets.
Another factor driving the increase in coal production is the growing demand in the metals industry, particularly the nickel sector. Indonesia is the world’s largest producer of nickel, a key element used in making lithium-ion batteries for electric vehicles and renewable energy storage. The current administration aims to position the country as an EV powerhouse, relying on its abundant nickel reserves. However, nickel mining is highly carbon-intensive, contributing to the rise in coal production and emissions. Furthermore, the carbon emissions per kilowatt-hour (KwH) of power generation in Indonesia are significantly higher compared to most other nickel producers. For example, Indonesia produces approximately nine times as much carbon per KwH of electricity compared to Canada. This is due to the fact that processing nickel requires smelters powered by coal-fired electricity plants, known as captive plants. While retiring or replacing these plants is challenging, it is necessary to invest in new infrastructure and halt the smelters critical for processing battery-grade nickel.
Given these circumstances, it appears that Indonesia’s best chance of achieving its climate targets in the power sector is to cease the construction of new fossil fuel plants and instead invest in renewable energy infrastructure. Last month, a group of global experts known as the Coal to Clean Credit Initiative (CCCI) announced the development of a world-first “coal-to-clean” carbon credit program. This program aims to incentivize the transition away from coal-fired power plants towards renewable energy in emerging economies, offering a potential solution for Indonesia’s energy transition challenge.
