Chasing volume, losing value: the cost of coal over expansion in Indonesia

This report by Ember analyzes the economic and environmental consequences of Indonesia's coal over-expansion. It finds that while production hit record highs in 2024, shrinking demand from major importers like China and India, coupled with rising production costs, is eroding company profits and state revenues. Additionally, the report highlights a significant underreporting of coal mine methane (CMM) emissions, which are projected to increase by 25% by 2030 due to the expansion of underground mining.

• Indonesia's coal production reached a record high of 836 million tonnes in 2024, exceeding the government's target of 710 million tonnes. However, total coal demand is projected to fall by approximately 10% to 756 million tonnes in 2025, driven by a projected export decline of 46 million tonnes that is not fully offset by a projected domestic demand increase of 14 million tonnes.
• Major export markets are contracting as China and India reduce reliance on Indonesian coal. In the first half of 2025, exports to China fell by 20% (20.9 million tonnes) and to India by 9.55% (5.7 million tonnes). This shift is attributed to increased domestic production in those countries and the growth of solar and wind energy displacing coal in their power mixes.
• The strategy of increasing output to maintain revenues amid falling prices has backfired, contributing to global oversupply and reducing profitability. Average net profits for coal companies have dropped by 67% from their 2022 peak, while non-tax revenues from the mineral and coal subsector declined by 4.4% in 2023 and 18.6% in 2024.
• Fiscal transfers to coal-producing regions have seen significant declines between 2023 and 2025: East Kalimantan fell by 41%, South Kalimantan by 30%, and South Sumatra by 23%.
• Coal mine methane (CMM) emissions are severely underreported in Indonesia. Ember estimates 2024 emissions at 722 kt CH4, which is more than four times the official government figure of 168 kt CH4. This discrepancy is attributed to the use of incorrect emission factors and the exclusion of underground coal mines from official estimations.
• CMM emissions are projected to increase by 25% by 2030, primarily driven by the expansion of underground mining in South Kalimantan. One specific underground mine is expected to see emissions rise from 35 kt CH4 in 2024 to 332 kt CH4 by 2030 as it reaches a full production capacity of 20 million tonnes per year.

APA

Setiawan, D., Zhang, S., Thiru, J. Z., Modadugu, R., Rahmani, A. A., & Bhardwaj, N. (2025). Chasing volume, losing value: the cost of coal over expansion in Indonesia. Ember. https://ember-energy.org/app/uploads/2025/11/EN-Chasing-volume-losing-value-the-cost-of-coal-over-expansion-in-Indonesia-PDF.pdf

Chicago

Setiawan, Dody, Shiyao Zhang, Jivan Zhen Thiru, Rajasekhar Modadugu, Ardhi Arsala Rahmani, and Nishant Bhardwaj. Chasing volume, losing value: the cost of coal over expansion in Indonesia. Ember, 2025. https://ember-energy.org/app/uploads/2025/11/EN-Chasing-volume-losing-value-the-cost-of-coal-over-expansion-in-Indonesia-PDF.pdf.

Wikipedia

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BibTeX

@techreport{setiawan2025chasing, author = {Setiawan, Dody and Zhang, Shiyao and Thiru, Jivan Zhen and Modadugu, Rajasekhar and Rahmani, Ardhi Arsala and Bhardwaj, Nishant}, title = {{Chasing volume, losing value: the cost of coal over expansion in Indonesia}}, institution = {Ember}, year = {2025}, month = nov, url = {https://ember-energy.org/app/uploads/2025/11/EN-Chasing-volume-losing-value-the-cost-of-coal-over-expansion-in-Indonesia-PDF.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }