The Government Should Be Aware Of China And India’s Energy Transition Policy

The government is asked to be aware of China’s and India’s policies towards the energy transition. The reason is, the two countries account for 54 percent of Indonesia’s total coal exports. The chairman of the Indonesian Mining and Energy Forum (IMEF) Singgih Widagdo said that the energy transition policies of the two countries will affect the domestic coal roadmap. Currently, Indonesia is one of the largest exporters of coal. About 75 percent of the total annual production is channeled to export markets with the largest share being China and India.

Meanwhile, the remaining 25 percent is for domestic needs. This year, the government plans to produce 625 million tons of coal. However, IMEF projects that commodity production will only reach 615 million tons by the end of the year. Our coal imports are only limited to China and India by 54 percent. This is critical , how India and China [make an energy transition], and how to respond to our own conditions,” he said during the webinar , Tuesday (12/14/2021).

According to him, the government should take this issue seriously. If it is too late, it is not impossible that coal production will experience a sharp decline starting in 2025. Domestically, coal is the dominant commodity used for coal-fired steam power plants (PLTU). These commodities contribute about 66.1 percent of the total national electricity generation. IMEF estimates that coal consumption for PLTU will reach 153 million tons in 2030. However, in the next 5 years it is projected that coal will experience great pressure due to retirement efforts for old PLTUs. The PLTU retirement plan has the potential to reduce coal demand by 190 million tons, assuming 1 gigawatt of electric power is equivalent to the need for 5 million tons of coal.

Meanwhile, the demand for coal for the cement and similar industries will not help much. This is because the industry is currently experiencing oversupply . In fact, coal demand growth is only around 25 million tons in 2030, a slight increase from the current demand of around 1517 million tons. On the other hand, the downstream efforts that will be carried out by the government are not a guarantee that coal demand will be stable in the next few years. He warned that the decline in coal production would have a broad impact, including environmental damage.

This is because mine owners, including small mines, will leave their exploration or exploitation areas due to a decline in demand. This has the potential to damage the environment due to the absence of reclamation. Meanwhile, China has committed to reducing carbon emissions. The country targets the peak distribution of emissions to occur in 2030. After that, the development of clean energy will be increased. On the other hand, coal demand will decrease significantly. Currently, Panda Country is boosting its coal production. IMEF found that China’s coal production had reached 367 million in October 2021.

This figure was a significant increase from the previous month’s 340 million tons. The optimization was carried out before the massive NRE development began. Meanwhile, India also increased coal production to reach 67 million tons in October 2021, an increase of 10.4 million tons from the previous month. For your information, China is targeting carbon neutral by 2060, and India is determined to achieve carbon neutral by 2070. “So if we talk about the impact of the energy transition on the coal industry, we must talk about the attitude of the importing country. Because 54 percent of those who absorb coal are China and India. “I believe that if China starts coughing [reducing coal use], we will have a serious cold against our industry,” he explained.