The Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, plan to limit coal exports, require the use of the Reference Coal Price (HBA) in the export market, and impose export ban sanctions on companies that violate (Arief, 2025) must be accompanied by efforts to control and even reduce coal production. The Government should look back at the root of the problem in the upstream sector: the failure to control coal production at the national level.
For example, the year 2024 has the highest coal production figure in the last six years, 834.10 million tons (MODI, February 6, 2025). Presidential Regulation (Perpres) Number 22 of 2017 concerning the National Energy General Plan (RUEN) has set a maximum coal production threshold of 400 million tons, which should have been carried out starting in 2019. However, its realization has never been achieved and has even shot up from 2019 to 2024. The massive coal production shows an uncontrolled rate and opens up potential loopholes for corruption and leaks in state revenues.
The Government should not enough if only improving coal economy to increase Non-Tax State Revenue (PNBP) or the interests of the Domestic Market Obligation (DMO) alone, but rather direct it to a more fundamental aspect, controlling the rate and target of coal production. In addition to setting production targets in line with the RUEN, the Government should also align the production volume in the annual Work Budget Plan (RKAB) with the RUEN threshold. Moreover, the Director General of Mineral and Coal admitted that the production target figure is always lower than the Coal RKAB. For example, the Government has set a target of 735 million tons, 3.52% higher than last year. Meanwhile, in the RKAB, the total production volume in 2025 is around 900 million tons. (Perwitasari, 2025).
The Government should have an orientation toward coal downstream policies that are not half-hearted or even part of a fake coal solution, considering that the coal downstream initiative by the Government, including coal gasification, is not the right thing to do. This downstream program will convert coal into dimethyl ether (DME). The Government hopes that DME will be cheaper and that it can be a substitute for imports of liquid petroleum gas (LPG).
In fact, according to the Institute for Energy Economics and Financial Analysis (IEEFA), the production cost of DME is twice as expensive as importing LPG. In total, the cost of building the production facility is IDR 6.5 million/ton or US$470 per ton. It is estimated that the DME project will cost twice as much as the Government’s costs for imports or erode LPG savings of IDR 266.7 billion/US$19 million (Verda, 2025).
Then, the carbon capture technology called carbon capture storage (CCS) and carbon capture utilization and storage (CCUS) for PLTU has not been examined, and it is even considered a failed technology in several countries and is not economical. For example, Dwi Sawung from WALHI National said that the CCS project in Gorgon, Australia, which experienced a carbon dioxide target shortfall of 5.23 million tons, resulted in additional costs of around USD$100-184 million. Then, another CCS project in Algeria had to be stopped in 2011 due to potential leaks triggered by ground movement (Verda, 2025).
Meanwhile, related to coal co-firing, the decarbonization option in the electricity sector using biomass is considered low-cost (Hariana et al., 2022; Mohd Idris et al., 2021; Song et al., 2021) and has been tested in dozens of locations in Indonesia by the Government through the PLN Group in Triani, Anggoro, and Yunianto (2024). The number of projects has reached 52 PLTUs, with biomass requirements reaching 10.2 million tons annually (PLN, 2025).
However, it has not shown a real impact on reducing coal consumption or production. Given that coal mining itself produces high methane emissions. As previously explained, coal production figures for 2019 and 2024 consistently exceed the RUEN threshold. Not to mention the issue of deforestation. Given that the co-firing program requires biomass that utilizes biological resources, it will impact land deforestation. The Trend Asia study estimates that co-firing of PLTUs in 52 PLTUs sourced from wood will have an impact on land deforestation of 629,845-1,099,483 hectares (10% biomass mixture), 314,922-1,049,741 hectares (5%) and 62,984-209,948 hectares (1%) (Sahputra, 2022).
High coal production can potentially hinder the energy transition agenda and renewable energy development. Given that incentives for fossil fuels can lead to disincentives for renewable energy (Painuly, 2001). Coal will always be considered an economical product and easily absorbed by domestic and international markets, especially for the needs of Steam Power Plants (PLTU). This means that the economics of renewable energy in the electricity sector will continue to be at stake by being juxtaposed with coal as a fossil fuel that has been established for a long time.
It is time for the Government to impose a moratorium on new permits for coal mining. Given that 95% of PNBP contributors in the mineral and coal sector are only controlled by a handful of large coal companies, totaling 125 companies (EITI, 2021). Meanwhile, coal production exploitation permits in 2024 amounted to 898 permits, and exploration permits amounted to 11 (MODI, 2024). For this reason, the Government needs to suppress new licenses. It should focus on coaching and supervision for existing permits, including for companies that contribute significantly to coal PNBP, so that they can carry out mining governance with minimal environmental, social, and economic impacts.
Stop Discussing the Minerba Bill to “Distribute” New Coal Permits
In addition, the Government should not continue the House of Representatives (DPR) proposal to make a fourth amendment to Law Number 4 of 2009 concerning Mineral and Coal Mining (Minerba), which is only an arena for distributing mining permits. The Government should reject the reason for inclusivity in regulating the granting of priority permits to religious mass organization and university in Draft Law of Minerba Revision. If they want to be inclusive, the DPR and the Government should include an article in the Minerba Bill on meaningful participation for vulnerable groups, especially women and people with disabilities, who are often very vulnerable to the impacts of mining.
Giving priority permits to mass organizations and university plunges them into a trap of conflict and disputes related to their operations, which negatively impacts the environment and community. The Government should focus on fixing conflicts from existing permits and regulations, for example, strengthening law enforcement institutions (Gakkum) in the energy and mineral resources sector.
Reference
EITI Indonesia. (2021). Ruang Lingkup Pelaporan EITI Indonesia ke-10, Tahun Fiskal 2021. Rapat Forum Multi-Stakeholder Group. https://portaldataekstraktif.esdm.go.id/storage/post-file/20240110121712/Rapat%20MSG%20Agenda%20ke-2_v3.pdf
Painuly, J.P., Barriers to renewable energy penetration; a framework for analysis. Volume 24, Issue 1, September 2001, El Savier Science.73-89
Arief, Andi M. (Februari 3, 2025). Menteri Bahlil Rencana Batasi Ekspor Batu Bara dan Pakai Harga Acuan Pemerintah. https://katadata.co.id/berita/energi/67a0875dd94e1/menteri-bahlil-rencana-batasi-ekspor-batu-bara-dan-pakai-harga-acuan-pemerintah
Hariandja, Ricahldo. (Agustus 8, 2024). Begini Risiko Teknologi Tangkap dan Simpan Karbon. https://www.mongabay.co.id/2024/08/08/begini-risiko-teknologi-tangkap-dan-simpan-karbon/
Sahputra, Eka Yogi. (September 4, 2022). Benarkan co firing Biomassa PLTU itu Transisi Energi Berikut Kajian Trend Asia. https://www.mongabay.co.id/2022/09/04/benarkah-co-firing-biomassa-pltu-itu-transisi-energi-berikut-kajian-trend-asia/
PLN. (Februari 1, 2025). Siaran Pers: co-firing biomassa di PLTU PLN Hasilkan 167 MWH Listrik Hijau Sepanjang 2024
.https://web.pln.co.id/cms/media/siaran-pers/2025/02/co-firing-biomassa-di-pltu-pln-hasilkan-167-juta-mwh-listrik-hijau-sepanjang-2024/
Perwitasari, Suci Anna. (Februari 4, 2025). ESDM Targetkan Produksi Batubara Capai 735 Juta Ton di Tahun 2025. https://industri.kontan.co.id/news/esdm-targetkan-produksi-batubara-capai-735-juta-ton-di-tahun-2025
Setiawan, Nano Verda. (November 11, 2020). Menimbang Efek Berantai dan Ongkos Besar Gasifikasi Batu Bara. https://katadata.co.id/berita/energi/5fac489ae2cec/menimbang-efek-berantai-dan-ongkos-besar-gasifikasi-batu-bara