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

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Methodology

Coal demand projection

Domestic coal demand primarily consists of power generation and metal processing industries. These estimates are derived from the latest power plant capacity projections. Other industrial uses, including pulp and paper, cement, textile and fertiliser, are estimated based on the average consumption over the past three years, given that these industries have shown limited growth in recent periods.

Export demand projections draw from multiple data sources. China’s import demand is based on the IEA projection, adjusted for Indonesia’s historical export share. Exports to India are estimated using India’s national coal demand outlook. For other destination countries, export projections are calculated using the five-year average annual growth rate (AAGR) of Indonesian coal exports to each market.

Coal mine methane emissions

Coal mine methane emissions for 2024 were estimated using a composite approach that combines reported emissions from five major coal companies and calculated emissions from underground coal mines as well as remaining open cut mines emissions using IPCC emissions factors. The five companies that reported emissions are Golden Energy Mines, Kideco Jaya Agung, Indo Tambangraya Megah, Bukit Asam, and TBS Energi Utama. Emissions from underground coal mines are calculated based on Sumber Daya Energy (SDE) production of 2.57 million tonnes in 2024. Emissions from other underground coal mines were excluded due to limited data availability.

Projection of future emissions assumes that the five reporting companies will maintain current production and emission levels, while underground coal mines gradually expand production, reaching production capacity of 20 million tonnes per year by 2030. Other coal producers are expected to progressively reduce output in response to weakening demand.

Acknowledgements

Contributors

Shiyao Zhang, Jivan Zhen Thiru, Rajasekhar Modadugu, Ardhi Arsala Rahmani, Nishant Bhardwaj.

We thank our external reviewers, Mutya Yustika (IEEFA) and Timon Wehnert (Wuppertal Institute), for providing valuable inputs for this report.

Cover image

Aerial view of multiple barges loaded with coal anchored at sea near a coal-fired power station in Paiton, Indonesia.

Supporting materials