The Indonesian government is starting to encourage coal downstreaming in the energy transition.

The Indonesian Minister of Energy and Mineral Resources, Bahlil Lahadalia, told coal producers that the use of coal as a superior commodity is in line with increasing added value through downstream programs. This can help the government’s target of achieving net zero emissions by 2060.

Bahlil assured that the government continues to support coal as one of the main commodities. However, he emphasized the importance of a gradual energy transition.

“I want to assure all of you that in the future the government will continue to encourage coal as one of the leading commodities in line with the ongoing energy transition. So, you must get sufficient capital first as an instrument to carry out the transition process to green technology. Because if we “Just force it without sufficient capital, we won’t be able to do it,” said Bahlil at the Coaltrans Asia 2024 event in Bali, Monday, September 9 2024.

Just as the world community thinks creatively to increase growth without ignoring the global consensus regarding reducing emissions, Indonesia is also committed to reducing emissions to zero by 2060 in stages.

“Almost all countries in the world continue to think creatively to create growth without ignoring the global consensus regarding net zero emissions (NZE) which must be implemented by 2050, and Indonesia itself has planned the same thing in 2060 in stages,” stressed Bahlil.

Minister Bahlil asked coal producers to start increasing the added value of coal products through downstream programs.

“We continue to provide space for national entrepreneurs, especially coal entrepreneurs, to continue mining by paying attention to environmental standards, governance and good community involvement. However, it is hoped that within a certain period of time, they will immediately make the transition because the state cannot do this continuously,” asked Bahlil.

Bahlil also revealed that currently Indonesia is encouraging the downstreaming of coal into other products that have added value, such as Dimethyl Ether (DME), Liquefied Petroleum Gas (LPG), and fertilizer raw materials.

“For coal in the future, we will not only export raw materials, but also encourage DME as a substitute for LPG. Because LPG imports reach 6 million tonnes per year, one of the raw materials to replace LPG is coal through DME, as well as as a raw material for fertilizer ,” said Bahlil.

As one of the largest coal producers in the world, Indonesia contributes significantly to state income. In 2023, coal production will reach 775.2 million tons with total exports of 518.05 million tons. Based on the published Work Plan and Budget, coal production this year is estimated to reach 900 million tons.

The Indonesian government itself has offered cooperation to the Chinese government to develop and increase the added value of coal in the form of other products, such as coal quality improvement (coal upgrading), coal briquetting, coke making and coal liquefaction.