Indonesia Feeding China’s New Coal Resurgence

  • Date: 03/06/18
  • Hans Nicholas Jong, Mongabay.com

Indonesia’s coal industry is enjoying a resurgence, driven both by rising demand from China—the world’s biggest consumer of the fossil fuel—and a push by the government in Jakarta to build more coal-fired power plants.

Demand for energy in China and Indonesia continues to drive the resurgence of the latter’s coal industry, setting back efforts in both countries to shift to a greater share of renewable energy.

Mining, freight and trade executives were largely upbeat at what was billed as the coal industry’s biggest event of the year, the 24th Coaltrans Asia, on the Indonesian resort island of Bali earlier this month. Analysts who attended the three-day conference said the outlook in China was still very strong, especially for coal from Indonesia, one of the world’s biggest exporters of the fossil fuel.

Arcandra Tahar, Indonesia’s deputy minister for energy and mines, said the government planned to increase its investment in the coal and minerals sector this year to $6.2 billion. He also told the Coaltrans Asia conference that Indonesia had no plans to reduce coal exports, Reuters reported.

Indonesia’s coal exports are expected to hit 371 million metric tons this year, up 7 per cent from last year.

Domestic demand is also driving the boon for Indonesia’s coal producers, thanks to an ambitious government plan to add 56 gigawatts (GW) of electricity capacity across the archipelago by 2027, mostly through the construction of new coal-fired power plants.

Bambang Gatot Ariyono, the energy ministry’s head of coal and minerals, told the conference in Bali that the government had moved beyond seeing coal as just a commodity. “Coal is now seen as a source of energy to support the national industry growth,” he said as quoted by tambang.co.id.

Demand from China

While China has been at the forefront of the global shift to renewables, spending more on domestic renewable energy than any other country, a report by the Global Carbon Project, an international consortium, projected China’s emissions in 2017 jumped by 3.5 per cent, after declining by 0.3 per cent the year before.

Behind China’s renewed appetite for coal is the robust economic growth in the world’s biggest energy consumer. With the construction of natural gas infrastructure proceeding slower than expected, much of the growing demand for electricity has had to be met by burning more coal. As a result, China’s consumption of coal rose by 0.4 per cent last year, the first increase since 2013.

“We often laud China as the new renewables champion, and indeed, if we talk about quantity and scale, no one can beat India and China,” Adhityani Putri, national director of the Center for Energy Research Asia (CERA), a Jakarta-based think tank, told reporters in Jakarta.

“But on the other hand, they’re still adding substantial coal power capacity, and that’s influencing the coal industry dynamic,” she said. “Until India and China truly stop [burning coal], coal will remain attractive.”

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