Jakarta – The Publish What You Pay (PWYP) Indonesia coalition urges the government to immediately implement its plan to reduce Indonesian coal production. However, PWYP Indonesia emphasizes that this policy should not stop at pragmatic efforts to stabilize commodity prices in global markets; it must be embedded in a long-term strategic policy framework to end dependence on fossil fuels.
The government’s plan to reduce coal production is based on the decline in coal and nickel prices. This price decline is due to oversupply on the global market. According to the Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, Indonesia accounts for almost 50% of global coal supply, representing 500-600 million tons of global trade, valued at Rp 1.3 trillion.
The National Coordinator of PWYP Indonesia, Aryanto Nugroho, emphasized that this production cut represents a crucial step that should have been implemented long ago, as outlined in the National Energy Master Plan (RUEN).
“The government shouldn’t simply react when prices plummet due to oversupply. If the motive is simply to raise prices to maintain state revenue, it’s not a strategic policy but merely a matter of market stock management. We need a transformative vision: cutting production to protect the environment and accelerate the energy transition, not just to protect corporate profit margins,” Aryanto emphasized.
Aryanto explained that the surge in coal production, projected to reach 800 million tons by 2024, is clear evidence of obstacles to the energy transition in Indonesia. Reckless production weakens incentives to switch to renewable energy. Production cuts are a must to achieve the Net Zero Emission target. We cannot talk about an energy transition if upstream coal supply continues to be boosted unchecked. Gradual reductions in production towards the 400 million ton target mandated by the National Energy and Mineral Resources Development Plan (RUEN) must be a binding commitment in Indonesia’s decarbonization roadmap. This is a concrete step to align energy policy with global climate commitments,” he added.
Momentum to Fix Governance Chaos
PWYP Indonesia noted that increases in coal production have always been accompanied by unresolved governance issues, ranging from corruption in quota allocation to land conflicts with indigenous communities to numerous abandoned mine pits without reclamation.
“These production cuts must be paralleled by a major audit of mining sector governance. Many law enforcement issues and weak environmental oversight continue to be neglected in pursuit of production targets. This momentum must be used to eradicate illegal mining practices and ensure that companies that continue to operate truly meet strict compliance standards without compromise,” said Aryanto.
PWYP Indonesia also warned of the risk of corruption behind the production quota policy.
“When production is cut, quotas become a ‘pricey’ commodity. This creates the potential for rent-seeking in the lobbying process for production quotas. These cuts must not become a mere tool for a small elite to maintain production privileges. The reduction process must be carried out transparently, accountably, and based on strict environmental compliance criteria,” he said.
Preparing Economic Diversification: Escaping the Commodity Trap
Furthermore, PWYP Indonesia warned that current global price fluctuations are a wake-up call about the fiscal risks plaguing Indonesia due to its dependence on fossil fuels.
“We cannot continue to depend on the fate of the national economy for fluctuating global market prices. The government must immediately prepare an economic diversification strategy, especially in mining-producing regions. In parallel, an economic transition must be prepared so that regional revenue dependence on coal revenue sharing begins to shift to more sustainable and low-emission sectors.”
PWYP Indonesia urges the government to focus not only on production reduction figures, but also to ensure that this policy is followed by:
- New Permit Moratorium: Permanently halting the issuance of new coal mining permits.
- Just Transition: Preparing a protection scheme for workers and economic transformation in mining areas.
- Transparency and Accountability: Open production and revenue data transparently to avoid rent-seeking practices in the distribution of remaining production quotas.
“The 2026 production cuts are a test for the government: will we truly transition, or will we simply engage in ‘stock management’ while waiting for prices to rise and continue damaging the environment?” Aryanto concluded.
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