Jakarta—Coal continues to play a vital role in Indonesia’s economy, serving as a significant source of state revenue. According to the Ministry of Energy and Mineral Resources (ESDM), as of November 2024, coal remained the most critical contributor to non-tax state revenue (PNBP) in the mineral and coal subsector, accounting for approximately 75% of total royalties from all commodities.
Coal royalties and mining product sales have contributed 75% and 85% of mineral and coal-related PNBP over the past four years (Ditjen Minerba, 2023).
In terms of production, coal output has steadily increased over the past four years and is projected to continue growing for at least the next three. Based on data from the Minerba One Data Indonesia (MODI) system, coal production was recorded at 565.69 million tons in 2020, rising to 606.28 million tons in 2021, 685.80 million tons in 2022, and 770.90 million tons in 2023. As of December 29, 2024, production had reached 807.34 million tons.
This dependence on coal raises serious concerns as Indonesia moves toward energy sovereignty. Reducing this dependency is critical—particularly as coal reserves continue to deplete—while the urgency of climate change mitigation makes a shift from fossil fuels all the more necessary. Although energy transition is not an easy path and presents many challenges, moving away from fossil fuels like coal is inevitable in building a sustainable and resilient economy.
These issues were central to a policy discussion hosted by Publish What You Pay (PWYP) Indonesia, titled “The Direction of National Coal Policy Amid the Challenge of a Just Energy Transition,” held in Central Jakarta on March 21, 2025.
Speakers included representatives from the National Energy Council (DEN), the Ministry of Energy and Mineral Resources (ESDM), the National Development Planning Agency (Bappenas), the Indonesian Association of Mining Professionals (Perhapi), and PWYP Indonesia.
Dody V. R. Sinaga of Bappenas presented the coal policy direction outlined in the 2025–2029 National Medium-Term Development Plan (RPJMN). This plan operationalizes the president and vice president’s vision and priorities and guides all ministry and agency programs. Officially adopted on January 20, the RPJMN emphasizes sustainable growth, poverty alleviation, and human capital development across all regions, with ongoing monitoring. The energy sector is expected to be a key driver of these goals.
Coal continues to be central to Indonesia’s energy security, mainly due to its low cost. It remains a cornerstone of the domestic energy supply and an essential resource for industrial development. However, its environmental impact—particularly greenhouse gas emissions—poses a significant challenge. The goal is to shift toward cleaner energy sources while optimizing coal’s role in the interim.
As acknowledged by government officials, coal is both “loved and hated.” It is still considered a strategic commodity, valued for domestic energy use and its economic contribution. From the perspective of Asta Cita—the government’s development vision—the priority is to provide affordable, readily available energy to support economic growth. Among all available resources, coal remains the most accessible. Surya Herjuna, Director of Coal Business Development at ESDM, emphasized this point during his presentation on the strategic outlook for coal production and utilization.
Surya noted that domestic coal demand now stands at 232 million tons—significantly higher than in previous years. While this increase could drive further production, the government is working to meet domestic needs by reducing exports rather than raising output. “That’s our main target,” he said.
In addition, coal’s competitive pricing is being leveraged to reduce the country’s reliance on natural gas. This includes continued mining of low-calorific value coal (around 3,000 kcal/kg), particularly for downstream processing to substitute gas imports. “We’re still mining 3,000 kcal coal because it’s economically viable compared to gas, especially for electricity generation,” Surya explained.
Despite efforts to diversify, coal still dominates Indonesia’s energy mix. In her remarks, Dina Nurul Fitria of DEN highlighted that the newly approved National Energy Policy (KEN)—aligned with Asta Cita and aimed at achieving 8% annual economic growth—relies heavily on coal. “To reach 8% growth and meet other development goals, we simply can’t avoid coal,” she said.
Even so, the government is attempting to regulate production. Domestic coal usage is increasingly being integrated with other energy sources. For example, solar power (PLTS) is often backed by coal to ensure supply stability. Overall, Indonesia is not yet ready for full-scale green energy adoption—it is still in the early stages of transitioning to cleaner energy. This is also true for coal-fired power plants (PLTUs), which are beginning to shift toward cleaner technologies.
The government also plays a critical role in facilitating coal downstream and supporting the development of alternative energy sources during this transition. A reliable electricity supply is essential to the energy transition, and coal remains a key pillar.
Ardi Ishak of Perhapi emphasized the need for improved technological capacity in coal processing, supportive regulatory frameworks, investment guarantees, and clear incentive schemes. “We need a national roadmap for the coal industry that producers can follow. With over 900 coal companies in Indonesia—each with varying reserves—how can they plan long term without clear guidance? That’s what they need,” he said.
Effective coal production control is essential to the energy transition agenda. Unfortunately, coal production continues to exceed the targets set in the National Energy General Plan (RUEN), casting doubt on the government’s commitment to the transition.
Wicitra Diwasasri of PWYP Indonesia argued that the government has failed to effectively manage coal production in accordance with RUEN. This failure is compounded by the issuance of new mining permits to mass organizations and small businesses. The result has been increased environmental degradation and weakened oversight. The number of permits issued far exceeds the government’s monitoring capacity.
“There are only 492 mining inspectors (based on 2022/2023 data), yet they’re expected to oversee 4,409 permits—a huge imbalance,” Wicitra said. “In this context, we recommend diversifying the economy rather than continuing to rely on coal as a primary source of foreign exchange. We also propose a moratorium on new coal permits and tighter limits on production,” she concluded.