Counter to EV ambition, Indonesia runs low on coal for electricity, bans exports

Effective this month, Indonesia has banned exports of coal used for electricity generation as the country runs low on coal supply for its domestic power plants.

Indonesia’s mining industry has been very critical of the sudden ban in exports but the Indonesian government explained that if drastic measures are not taken, the country will soon run out of coal supply and almost 20 power plants providing a total of 10,850 MW of electricity will have to be shut down.

Indonesian miners are bounded by a local regulation that say 25 percent of the total output must be reserved for domestic use, at prices capped at USD 70 per metric ton.

However rising prices of coal in the export market mean that miners earn only less than half of as much when they sell locally.

Indonesia is the world’s biggest exporter of thermal coal used by power plants. The irony is that while the world is moving towards electric vehicles, demand for coal by power plants is at an all-time high, even after accounting seasonal peak-winter demand.

This is because governments in many countries have been scaling back on investments into carbon emitting energy sources but the problem is that renewable energy sources are not coming online fast enough to replace decommissioned coal-fired or nuclear power plants, and the spike on electricity demand post-pandemic is causing a supply crunch.

China’s coal import for November 2021 was its highest ever, while neighbouring Korea hit its peak in October.

Indonesia has said that it will stop building new coal-powered power plants after 2023, but not before the Suralaya coal plant on Java Island, one of the largest in South East Asia, comes online.

Indonesia aims to have renewable energy sources contributing more than 51 percent of its energy needs by 2030 but that’s including hydro power, which due to its nature of destroying huge swatches of forests, is not considered by some metrics as a renewable energy source.

In Malaysia, the previous Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin excluded hydro power plants above 100 MW from Malaysia’s targets for renewable energy (20 percent by 2025). The current government however includes hydro power in its targets, now set at 31 percent by 2025.

Indonesia aims to have 400,000 electric cars and 1.7 million electric motorcycles by 2025, something which Industry Ministry's director Sony Sulaksono recently told the local press that progress to-date is “still quite far off” from the target.