Indonesian Coal: Declining Demand & Transition Risks
- HANOI, Vietnam — Indonesia's coal industry is under increasing pressure to diversify its energy role as major customers China and India scale back imports of the fossil fuel.A...
- The report, released Tuesday, indicates that the coal sector, contributing roughly 3.6% to Indonesia's economic activity and employing thousands, risks a arduous and costly transition if it delays...
- While Indonesia's coal production reached a record 836 million tons in 2024, nearly 8% higher than the previous year, the long-term demand outlook presents challenges for the nation...
Indonesia’s coal industry faces significant pressure to diversify its energy sources, with major importers like China and india decreasing their demand. This shift toward cleaner energy sources presents both risks and opportunities for teh nation’s economy, which is currently heavily reliant on the primary_keyword, coal. The long-term decline in coal exports,a three-year low,signals a need for swift action.Experts highlight the need for government policies that encourage a strategic secondary_keyword, transition, away from fossil fuels, while the financial ramifications could be significant if the industry is slow to respond. News Directory 3 provides in-depth analysis of these developments, offering the latest insights. Discover what’s next for IndonesiaS energy sector.
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Indonesia’s coal Industry Faces Pressure to Diversify Amid Import Cuts
Updated June 17, 2025
HANOI, Vietnam — Indonesia’s coal industry is under increasing pressure to diversify its energy role as major customers China and India scale back imports of the fossil fuel.A report by Energy Shift, a Jakarta-based think tank, highlights the need for a transition to cleaner energy sources to maintain economic stability.
The report, released Tuesday, indicates that the coal sector, contributing roughly 3.6% to Indonesia’s economic activity and employing thousands, risks a arduous and costly transition if it delays adopting cleaner energy alternatives. Indonesia is the world’s largest coal exporter.
While Indonesia’s coal production reached a record 836 million tons in 2024, nearly 8% higher than the previous year, the long-term demand outlook presents challenges for the nation of 280 million. China and India accounted for nearly two-thirds of Indonesia’s coal exports in 2023.
China, which relies on coal for over half of its electricity, met more than 75% of its increased energy demand in 2024 with clean energy sources. India’s coal imports decreased by 8.4% between April and December 2024, driven by efforts to boost domestic coal production.
Indonesia’s coal exports experienced a three-year low between January and April of this year, signaling a potential long-term decline, according to experts.
“Thes are signs that Indonesian coal miners have to start taking seriously as well,” said Hazel Ilango of the Energy Shift Institute.
The report also notes that most Indonesian coal companies are controlled by insiders,limiting profits through regulations and restricted access to global financing.Inconsistent government policies and a focus on immediate profits over long-term transition plans further complicate the situation, according to Putra Adhiguna of the Energy Shift Institute.
Experts point out contradictions in Indonesia’s energy policy, with commitments to emissions reduction alongside continued expansion of coal production. Subsidies keep domestic coal prices low, while export bans disrupt global markets. The state utility plans to retire coal plants early under a $20 billion deal, even as new plants are being constructed.
Jordan Lee, an energy transition expert at the Tony Blair Institute for Global Change in Jakarta, emphasized the need for Indonesia’s coal sector to plan ahead as major importers reduce their reliance on coal to bolster energy security.
“the reason I say that is basically if you look at what happened with some big oil companies that have tried something similar, we have seen the market not respond too positively,” Lee said.