Indonesia’s new government energy policies may impact global climate change


Indonesian Defence Minister Prabowo Subianto (Left) declared victory in presidential election on Feb. 14. (Photo: Prabowo Subianto)

From coal, nickel, palm oil to rainforests, Indonesia’s riches matter to the rest of the world, as does its presidential election.

Prabowo Subianto, a former army general, has claimed victory as the country’s next president. The new government’s approach on the management of its natural resources could have a significant effect on the world’s ability to keep global warming to relatively safe levels.

Prabowo’s two initiatives clash

Indonesia is the largest exporter of coal, the fossil fuel that must quickly stop burning to avoid the consequences of global warming. But Indonesia also has huge reserves of nickel, which is vital to battery-making and the transition to greener energy.

Prabowo has said that he supports transitioning away from coal power, though gradually. He also favors a ban on exports of raw nickel, designed to encourage local battery-making industry.

However, those two initiatives clash. Processing nickel needs a lot of energy. So, Indonesia has been building new coal power plants. That has driven up its emissions of greenhouse gases. Prabowo has said he would largely continue the policies of Joko Widodo, whose administration announced the nickel export ban in 2019.

Indonesia’s climate role is significant for another reason. It possesses vast forest that are vital to mitigate global warming, but it is also the largest exporter of palm oil, which is used in a range of products, and the production has led to severe deforestation. While deforestation rates have slowed recently, Prabowo’s promises to produce more biofuels could swiftly reverse those gains.

Intensifying its focus on coal

Indonesia is a big exporter of coal, with China its main buyer. Coal is also vital to domestic energy, supplying the single-largest share of Indonesia’s electricity.

Indonesia has signed a US$20 billion global agreement, the Just Energy Transition Partnership, led by the U.S., to retire some of its coal-burning power plants earlier than planned. But the agreement has not yet resulted in any specific plans to close coal plants.

In fact, despite the coal transition deal, Indonesia’s coal fleet is expanding. According to Climate Action Tracker, Indonesia’s emissions of CO2 increased by more than 20% in 2022. It assessed the country’s climate targets to be “critically insufficient”.

Rembang Coal Fired Power Plant in Central Java, Indonesia. (Photo: Wikimedia Commons)

Nickel processing consumes lots energy

Widodo’s administration positions Indonesia as central to the global transition to electric vehicles. By banning the export of nickel ore, critical for EV batteries, he pushed foregion companies to invest in processing nickel in Indonesia.

The Chinese firm Tsingshan set up factories to process nickel ore for use in EV batteries, as well as other products like stainless steel. But that is driving up coal power consumption.

With Chinese support, Indonesia is building new coal-burning power plants to meet the demands of its booming nickel processing facilities. While processed nickel is more profitable than nickel ore, it also presents a range of social and environmental risks. 

Non-profit group Climate Rights International ‘s latest report points out that nickel mining and processing units had violated the rights of indigenous communities and caused water and air pollution.

Prabowo said he would continue the mineral export ban. S&P Global, a firm that analyses trends in commodities, said the ban would “likely remain largely unchanged”.

A big yellow dump truck transports mining material in the nickel mining of PT Vale Indonesia in Sorowako. (Photo: Wikimedia Commons)

Biofuels raise deforestation concerns

Prabowo has proposed setting up a palm oil ministry. He campaigned to expand production of biofuels from crops including palm oil, cassava and sugar cane. Environmentalists worry that it could lead to deforestation, reversing the gains that the nation had made in protecting forests.

The president-elect was removed from the army after being associated with the abduction of political dissidents. His human rights record has raised concerns among climate activists.

Related Topics
Indonesia’s new law could make rooftop solar less attractive
Indonesia’s new CCS rule allowing 30% carbon storage from overseas

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