Profiles: Prospects For Coal and Clean Coal Technologies in Indonesia

July 2009
PF 09-05 Profiles
Prospects for coal and clean coal
technologies in Indonesia
Estimates for 2008 could 7000 Mt will be mined Clean coal technologies
see exports reaching between 2005 and 2025, are not yet mainstream
211 Mt equivalent to current
reserves
This report is the first in a series of geographical location all form steam coal trade, mainly with Asian
country reports on the Far East that important facets of the countrys coal importers, now surpasses every other
looks at the domestic coal markets and industry, making it one of the most steam coal exporter in the world.
the possibilities for clean coal power successful exporters of steam coal. Exports grew fivefold in the ten years
technologies. A series of chapters provides an between 1995 and 2005 rising from
The report introduces the country, its overview of the structure of the coal 30 Mt/y to more than 150 Mt/y. By
unique geography and briefly looks at industry and the major players. 2007, steam coal exports were
the turbulent socio-political history of Indonesias policy of encouraging estimated to have reached around
the economy. The report then discusses private sector investment has meant that 194 Mt while annualised estimates for
the importance of biomass in the energy large energy companies such as Adaro, 2008 could see exports reaching
economy, and why its displacement as a Bumi resources, Kideco, and many 211 Mt.
fuel is not as straightforward as some others, have emerged. While many of Indonesia consumes around 20% of
might think. these companies are geared towards the the countrys coal output for power
The countrys energy resources are export market, the domestic market generation and industry the remaining
examined, looking at the demise of oil, particularly the power generating 80% is exported. The growing demand
the prominence of natural gas and, in sector is increasing in importance. for electricity means that the prospects
greater detail, the countrys coal Indonesian coal production has for domestic steam coal are good. One
reserves. Coal qualities, geology and grown at an astonishing rate and its of the central tenets of the countrys
500
exports
450 others
UBC
400 metallurgical, pulp, textiles, briquettes
cement
350 electricity generation
300
Coal, Mt
250
200
150
100
50
0
2005 2006 2007 2008 2009 2010 2012 2015 2020 2025
Projected coal demand and exports 20065-35, Mt

energy policy has been the move away Without expansion there may be a
from oil-fired power towards failure to meet domestic demand or
renewables, gas and coal. In addition to exports, depending on whether the rise
the replacement programme of oil in demand materialises.
plants, the rapid growth in power If new resources are not brought
demand is also driving the need for forward, there is a risk that the
reliable and cost-effective power coal domestic and/or export markets will
is seen as being able to deliver this need to compromise. Export operations
power. may need to provide some of the coal
Clean coal technology prospects are for domestic usage, but how much is
in their infancy, and a move towards not yet certain. At the same time,
supercritical power stations is a first Indonesian producers are also
step to enhanced efficiencies and considering upgrading lower rank coals
minimising CO2 emissions. However, and the government may even promote
Indonesia is not yet committed to firm, liquefaction in order to supplement the
let alone stringent, carbon emission dwindling reserves of oil and increasing
cuts although discussions on the oil imports. IEA Clean Coal Centre is a
prospects for CCS are under way and It is possible domestic market collaborative project of member
CO2 reduction policies will become obligations will be required for fuelling countries of the International
more import in the future. However, domestic power stations and growing Energy Agency (IEA) to provide
clean coal is not yet a priority. industry needs, but this requires some information about and analysis of
Meeting the power shortages and degree of certainty amongst the policy coal technology, supply and use.
serving the countrys 220 million makers. A plausible, albeit unlikely, IEA Clean Coal Centre has
people is no easy task. While solution is that Indonesia continues to contracting parties and sponsors
economic activity is concentrated in export low sulphur, low ash coals to the from: Australia, Austria, Brazil,
Java, energy demand is growing across rest of Asia at a price premium, while Canada, China, Denmark, the
the archipelago, and blackouts could importing cheaper higher sulphur and European Commission, Germany
become more common. higher ash products to blend in with its India, Italy, Japan, Republic of
The international market has been domestic products. South Korea, the Netherlands,
the primary driver for the production The report concludes that the coal New Zealand, Poland, Russia,
of coal in Indonesia for many years, prospects for Indonesia are incredibly South Africa, Sweden, Spain,
and interest remains strong because of strong, and the prospects for future coal Thailand, the UK and the USA.
the coal properties. Very low sulphur production and domestic demand
and low ash are typical traits of remain good. However, clean coal
Indonesias current production and, technologies are not yet mainstream as
with modest heating values, the coals the country struggles to meet the most
are perfect for blending. Indonesian basic demands for power across the
coal producers still operate with a low entire economy.
cost base compared to many other
exporters around the world, and are
well situated to access the massive and
ever-growing Asian coal-consuming
markets. However, the future could be
different.
Indonesias economy has been
growing at a pace that has driven
demand for coal internally in the
power and industrial sectors. The Each issue of Profiles is based on a
economy produced around 630 Mtce detailed study undertaken by IEA Gemini House
of energy in 2006, but consumed just Clean Coal Centre, the full report of 10-18 Putney Hill
260 Mtce, clearly showing the export which is available separately. This London SW15 6AA
nature of the energy business that particular issue of Profiles is based on United Kingdom
exists today. However, some energy the report:
reserves are reaching, or will reach, Tel: +44 (0)20 8780 2111
critical depletion within the next Prospects for coal and clean coal Fax: +44 (0)20 8780 1746
twenty years. About 7000 Mt of coal technologies in Indonesia e-mail: [email protected]
will be mined between 2005 and 2025. Paul Baruya > Internet: www.iea-coal.org
This is the same as the current CCC/148, ISBN 978-92-9029-468-9,
mineable reserves which therefore 70 pp, June 2009,
could be depleted by 2025. This 255*/85/42.50
clearly brings about a need for further * non-member countries
exploration of the countrys reserves member countries
base, and to bring forward resources educational establishments within member
countries
into the mineable reserves category.

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July 2009

Projected coal demand and exports 20065-35, Mt

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