Indonesia Urged to Grant Coal Mining Permits to Clean Energy Investors
Main Takeaways
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JAKARTA, Investortrust.id — Coal mining permits in Indonesia should be granted to investors equipped with significant capital and cutting-edge technology to help produce cleaner energy and support national energy sovereignty, stakeholders said at a recent forum in Jakarta.
Speaking at the Focus Group Discussion titled “Coal and National Energy Sovereignty: Bridging Economic Realities and Climate Commitments,” experts agreed that coal remains vital to Indonesia’s energy mix, especially when paired with downstream technologies to reduce emissions.
The event, organized by Investortrust on Wednesday, May 28, 2025, featured Surya Herjuna, Director of Coal Business Development at the Ministry of Energy and Mineral Resources, as keynote speaker. Panelists included senior representatives from the Ministry of Investment (BKPM), Emmsons Group, the Indonesian Coal Mining Association (APBI), Indonesian Mining & Energy Forum (IMEF), Indonesian Association of Mining Experts (Perhapi), and Universitas Islam Internasional Indonesia (UIII).
Massive Coal Reserves, but Cleaner Use Required
Indonesia holds an estimated 31.71 billion tons in proven coal reserves and 97.3 billion tons in total resources, mainly in East Kalimantan, South Sumatra, and South Kalimantan. At the current production rate of 600 million tons per year, reserves could last another 60 years.
Yet, coal prices have fallen below production costs, pressured by rising domestic output in China and India. China, the world’s top coal producer and consumer, extracted 4.6 billion tons in 2023 and aims for 4.8 billion tons in 2025. Its coal prices are now lower than import rates.
In contrast, Indonesia’s output is just 13% of China’s, placing added importance on ensuring its coal sector adds value through clean technology investments.
Coal’s Role in Energy Sovereignty
Panelists emphasized that coal underpins Indonesia’s energy sovereignty. About 57.1% of state electricity provider PLN’s 69 GW installed capacity comes from coal-fired power plants.
“Coal is a God-given commodity that enables us to reach energy sovereignty,” said Gita Mahyarani, Executive Director of APBI. But to align with climate goals, Indonesia must push for low-emission technologies like dimethyl ether (DME)—a synthetic fuel derived from coal gasification and seen as a cleaner substitute for LPG.
Other innovations discussed include co-firing (combining coal with biomass such as rice husks and wood pellets), and carbon capture, utilization, and storage (CCUS), along with ultra-supercritical boilers that operate more efficiently with fewer emissions.
Balancing Economic Hardship and Climate Goals
Indonesia’s energy strategy must also contend with socioeconomic realities. Over 92 million people—or 32.5% of the population—are classified as poor or vulnerable. About 41% receive health insurance subsidies, unable to afford the Rp 42,000 ($2.60) monthly premium.
To protect this segment, the government has increased energy subsidies in the 2025 state budget to Rp 203.41 trillion ($12.5 billion), including Rp 90.2 trillion for electricity alone. As such, fossil fuels like coal remain essential for delivering affordable energy.
The Indonesian government has acknowledged that shifting from coal to cleaner energy sources is no longer a choice, but an imperative for achieving sustainable development and maintaining competitiveness in the global market.
Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM), Nurul Ichwan, emphasized during the event that this transition is driven by a universal demand for environmentally friendly products—spanning academia, industry, finance, and consumers across generations.
“If we don’t align with what the market wants, it’s like digging our own grave,” he said.
Panelists warned that rushing a full transition to renewables could deepen poverty and trap Indonesia in a middle-income status. Investments in clean coal technologies, they said, provide a more realistic path forward.
Anil Kumar Monga, Chairman of Emmsons Group—a global commodity trading firm headquartered in India—emphasized that responsible investment, especially in the context of coal’s role in the green energy transition, demands careful and long-term strategic thinking.
Drawing from the group’s global investment experience, Monga highlighted Indonesia as one of the few countries with abundant coal reserves and access to major export markets. However, he urged Indonesia to prioritize adding value to its coal resources rather than relying solely on raw exports.
“Whether it’s costly or not, certain steps are essential to the work. Several countries are moving to shut down coal-fired power plants—you must have viable alternatives,” he said.
Coal gasification, he argued, presents the best path forward. “Gasification is the right project. While it may be expensive upfront, the cost will ultimately be offset by the value of the end product,” Monga said.
To produce clean energy—ideally with low and continuously reducible carbon emissions—advanced technology is required to develop environmentally friendly coal-based energy or alternative fuels such as Dimethyl Ether (DME).
DME is a synthetic fuel derived from coal through a gasification process. It serves as a potential substitute for liquefied petroleum gas (LPG) due to its similar properties—easily liquefied, highly flammable, and clean-burning.
The coal-to-DME production process involves converting coal into synthetic gas (syngas), which consists of a mixture of carbon monoxide (CO) and hydrogen (H₂).
Committing to Climate Targets with Pragmatism
Coal gasification is among the few available technologies with one of the lowest costs for capturing carbon dioxide, according to analysis by the International Energy Agency (IEA) and data from the Global CCS Institute’s 2017 update on the global costs of carbon capture and storage.
Implementing this technology could help Indonesia strengthen its energy security while advancing toward its net-zero emissions target—at a relatively low cost.
Indonesia ratified the Paris Agreement in 2016 through Law No. 16/2016 and submitted its Nationally Determined Contribution (NDC) to reduce emissions. The country aims to reach net zero emissions (NZE) by 2060.
Reaching that target requires annual investments of around $30 billion, particularly in cleaner coal technologies and post-mining land rehabilitation. “Clean energy isn’t optional anymore—it’s a must,” said Hanafi S Guciano, Director at UIII’s Center for Sustainability.
A Call for Integrated, Technology-Driven Investors
Looking ahead, government officials and experts stressed that Indonesia must attract investors capable of building integrated coal-to-clean-energy industries, rather than merely exporting raw materials. Incentives such as special economic zones (KEKs) were proposed to support full value chains from mining to DME and CCUS production.
A national blueprint and roadmap for coal investment and downstreaming is also needed to guide stakeholders, according to panelists.
“The government must ease entry for both domestic and foreign investors who have the capital and technology to convert coal into cleaner energy,” said Surya Herjuna.