Contemporary coal dynamics in Indonesia

The document analyzes the rapid expansion of Indonesia's coal sector, driven by political decentralization and intertwined interests between politicians and mining companies. It examines the resulting environmental and social legacies, recent government attempts to regulate the sector through licensing reforms and production caps, and the impact of global shifts toward renewable energy and divestment from coal.

• Indonesia has become the world's largest exporter of steam coal, with production tripling from 154 Mt in 2005 to 474 Mt in 2013. As of 2016, the country exported approximately 79% of its annual production, primarily to India (33%) and China (27%).
• The rapid expansion of coal mining was significantly driven by the decentralization of permitting. Between 2001 and 2014, the number of mining permits grew from 750 to nearly 11,000, as district heads were granted authority to issue licenses, creating incentives to maximize permitted land area for fiscal gain.
• Coal mining is deeply intertwined with Indonesian politics through ownership and campaign funding. It is common for political elites, including former Cabinet ministers, to own mining operations, and district heads may issue licenses in exchange for illegal 'under the table' payments to fund election campaigns.
• The coal boom has left severe environmental and social legacies, including the issuance of illegal permits in protected forest areas covering roughly 6.3 million hectares in 2014. Other impacts include the displacement of local communities, physical violence against opponents of mining, and widespread failure to comply with mine rehabilitation requirements.
• The Indonesian government has introduced several regulatory measures to rein in the sector, including the 2014 shift of licensing authority from districts to provincial governors, the 'One Map' policy, and the 'Clean and Clear' program to audit licenses. However, the implementation of these measures is often inconsistent or not formally codified into regulation.
• National energy policy continues to signal strong future domestic demand for coal. The Mid-term National Development Plan 2015-2019 aimed to add 19.8 GW of coal-fired capacity, and the National General Energy Plan (RUEN) 2017 forecasts that coal will provide 25% of the primary energy supply by 2050.
• International dynamics, including declining renewable energy costs and the divestment of international banks and pension funds from coal assets, pose a risk to the long-term viability of the sector. While Asian demand (particularly in India) may remain, the global trend toward decarbonization creates a risk of carbon-intensive infrastructure lock-in.
• There is a notable lack of domestic dialogue regarding a structural decline in coal demand. The government has not developed alternative socio-economic visions for mining regions, which the authors describe as risky given the global shift away from coal.

APA

Atteridge, A., Aung, M. T., & Nugroho, A. (2018). Contemporary coal dynamics in Indonesia. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2018/06/contemporary-coal-dynamics-in-indonesia.pdf

Chicago

Atteridge, Aaron, May Thazin Aung, and Agus Nugroho. Contemporary coal dynamics in Indonesia. Stockholm Environment Institute, 2018. https://www.sei.org/wp-content/uploads/2018/06/contemporary-coal-dynamics-in-indonesia.pdf.

Wikipedia

{{cite report |last1=Atteridge |first1=Aaron |last2=Aung |first2=May Thazin |last3=Nugroho |first3=Agus |title=Contemporary coal dynamics in Indonesia |publisher=Stockholm Environment Institute |date=May 2018 |url=https://www.sei.org/wp-content/uploads/2018/06/contemporary-coal-dynamics-in-indonesia.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{atteridge2018contemporary, author = {Atteridge, Aaron and Aung, May Thazin and Nugroho, Agus}, title = {{Contemporary coal dynamics in Indonesia}}, institution = {Stockholm Environment Institute}, year = {2018}, month = may, url = {https://www.sei.org/wp-content/uploads/2018/06/contemporary-coal-dynamics-in-indonesia.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }