Jakarta – Publish What You Pay (PWYP) Indonesia held a focused discussion titled “Examining the Direction of Coal Downstreaming Policy Amid Indonesia’s Energy Transition Commitment” in Central Jakarta on April 29, 2025.
Speakers included Muhammad Ansari, Coordinator of Mineral and Coal Downstreaming at the Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources (ESDM), Gita Mahyarani, Executive Director of the Indonesian Coal Mining Association (APBI), Putra Adhiguna, Managing Director of Energy Shift Institute, and Wicaksono Gitawan, Policy Strategist at Yayasan Indonesia Cerah.
The discussion aimed to explore Indonesia’s coal downstreaming policy direction over the next five years, identify opportunities and challenges in implementing coal downstreaming amid the country’s energy transition agenda, and formulate recommendations for coal governance aligned with a just energy transition.
Indonesia aggressively pursues coal downstreaming to enhance value-added production while committing to energy transition goals. One key product being promoted is Dimethyl Ether (DME), aimed at enhancing coal’s value and reducing imports of Liquid Petroleum Gas (LPG). The government argues that coal downstreaming is a cost-effective alternative compared to other energy development options.
However, this plan has sparked controversy. Critics argue that coal downstreaming contradicts the spirit of the energy transition, as it strengthens the role of fossil fuels and prolongs Indonesia’s dependence on them. This is a key reason why coal downstreaming has triggered public debate. Additionally, the process faces complex challenges, including technology, investment, and market availability.
According to Ansari, Indonesia has significant potential to attract coal investment. However, it faces structural issues, technological limitations, and suboptimal cross-ministerial coordination. Efforts are underway to address these challenges.
On the technology front, Indonesia lacks experience in coal-downstreaming technologies. Ansari noted that technology is closely tied to research, but many Indonesian research institutions are not yet focused downstreaming. Despite this, he emphasized the need for optimism in developing and utilizing coal downstream.
“The government views coal downstreaming as a bridge to cleaner energy use,” Ansari said.
Gita Mahyarani highlighted additional challenges from the industry perspective, particularly investment and market availability. Downstreaming requires substantial capital, posing a fundamental challenge alongside technological constraints. “We’re talking about investments, not in the millions, but billions of dollars. While we have skilled experts, the technology for direct application is not yet fully available or adequate,” she said.
Gita stressed that downstreaming must be approached comprehensively across short, medium, and long terms. Clear policy direction is essential, including assessing whether downstreaming projects are viable. A roadmap for downstreaming is critical. Based on APBI’s experience, she noted that many downstreaming plans remain stuck at the feasibility study stage, as some projects are deemed unfeasible. Thorough market feasibility studies are, therefore, vital. Industry players also hope that downstreaming mandates do not lead to financial losses.
Putra Adhiguna emphasized that policy stability is key to accelerating downstreaming. Ensuring economically viable prices for downstreaming products is also critical and should be addressed in policy. Investment inflows will depend on these policies. “Another challenge is commercial contracts—will anyone dare to guarantee them?” Putra asked during his presentation.
Wicaksono highlighted challenges in market demand for coal-derived DME. “One risk is that if DME production moves forward, we might export it, but demand may not be strong. Plus, high carbon export barriers could pose issues,” he said.
He also suggested Indonesia could learn from Canada, where the Canada Pension Plan Investment (CPPI), with assets much smaller than Indonesia’s Danantara (CA$699.6 billion, or about 58% of Danantara’s), has allocated significant funding to energy transition projects, such as Rp 8.4 trillion for wind and solar energy initiatives.