Indonesia – which operates the world’s fifth-largest coal fleet – was the only Southeast Asian nation to propose new coal plants in 2024.
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According to a new report by non-profit Global Energy Monitor (GEM), all of Indonesia’s 160 megawatts (MW) proposed plants last year were for captive use, which refers to private coal plants exclusively used to power industrial facilities, such as nickel or aluminium smelters.
The country’s captive coal capacity has tripled since 2019 to 16.6 gigawatts (GW) last year, mostly tied to the processing of nickel, which is used in the production of electric vehicle batteries.
Its latest national electricity master plan for 2024 to 2060 also includes plans to increase coal capacity by 26.7 GW over the next seven years – 75 per cent of which would consist of captive plants.
The industrial sector now accounts for nearly half of Indonesia’s total energy consumption, due to the continued prioritisation of industrial parks, nickel and aluminium smelters, as well as other national strategic projects through Indonesia’s green finance taxonomy, which controversially allows for coal plants powering industrial plants to qualify for “transition” finance.
Critics have also pointed out how captive coal carve-outs in coal exclusion policies have allowed for Asia’s top banks to continue financing the dirtiest fossil fuel.
Last month, responsible finance campaigner Market Forces published a report highlighting Singapore’s largest three banks and their financing of Indonesian conglomerate Harita Group’s coal-powered nickel smelters, despite publicly announced coal restriction policies. Harita – a major player in Indonesia’s nickel value chain – has argued that nickel processing requires a stable and high-volume energy source that is not yet fully achievable through renewables alone.
Most of Indonesia’s captive capacity is largely driven by the metals processing sector. Image: Global Energy Monitor
Meanwhile, Indonesia produced a record 831 million tonnes of coal in 2024 – 17 per cent above the government’s target. Over half of the coal produced was exported last year, primarily to China, India, South Korea and the Philippines.
The rest of Southeast Asia – which maintains over 60 GW of operating coal plant capacity – has seen stalled coal projects far outpacing new proposals since 2016. But GEM pointed out that alternative power capacity has not caught up with the fuel’s deprioritisation in countries like Vietnam.
While Vietnam plans to cease building new coal plants after 2030 and has aimed for renewables to make up a third of its power mix by then, its thermal coal imports rose by 31 per cent in 2024. The country also plans to maximise generation at its coal plants this year due to anticipated energy demand boom, primarily driven by its manufacturing sector.
Of the nearly 12 GW of coal capacity shelved or cancelled in Southeast Asia last year, 10.3 GW was outside of Indonesia. Image: Global Energy Monitor
Coal phase-out setbacks
In Indonesia, progress for its early coal retirement projects – central to the country’s Just Energy Transition Partnership programme which launched in 2022 – has been limited.
The country has missed its initial target to reach a financial close on its pilot Cirebon-1 project by December 2024 due to bureaucratic, regulatory and business challenges. The Asian Development Bank had previously estimated that up to US$300 million would be needed to shut down the coal plant seven years ahead of its operational lifespan.
Last month, the United States’ exit as a co-leader from Indonesia’s JETP threw a spanner in the works for the previously allocated funds of up to US$2 billion – nearly a tenth of the total US$21.6 billion pledged by rich nations – for the programme.
Indonesia’s national plan also explicitly mentions a preference for retrofitting coal plants to run on ammonia, biomass and possibly nuclear, rather than decommissioning them, in order to lower costs and prioritise energy security. However, critics have highlighted that the expansion of biomass could further accelerate deforestation in Indonesia, while the effectiveness of ammonia co-firing technologies have been unproven on a commercial scale.
GEM flagged that transparency around coal-related information in Indonesia also remains a challenge for advocacy efforts for public health. Indonesia’s unchecked captive coal expansion has been estimated to cost an additional 27,000 deaths and US$20 billion in public health burden, due to air pollution emitted from coal-based smelting processes.
Last year, Indonesian state-owned utility PLN was ordered to disclose the emissions data for the country’s largest coal-fired power plants in response to a complaint filed by activists who argued that such data should be publicly available.
