Interview

H.E. SIDHARTO REZA SURYODIPURO AMBASSADOR OF INDONESIA TO INDIA Talks on pertinent coal issues

According to recent reports, Coal reference price in Indonesia has fallen, making local market more attractive. Also, the domestic demand in the Indonesian power sector has been boosted. Can this change your country’s focus in coal export?

While Indonesia continues to be a significant player in the global mining industry, with substantial production and export of thermal coal, it is also a rising coal consumer and became the world’s 6th largest thermal coal consumer in 2018, with consumption of approximately 107.6 million tons (IEA, 2019).

In October 2014, when President Joko Widodo took office for the first time, a new target to electrify the nation was set. First and foremost to support the projected growth for power demand of 7.8% per year until 2022, the Government of Indonesia announced a target to develop 35GW of new capacity. Consequently, the rise in domestic coal demand will absorb a much higher share of national production than in the past and may limit the availability of Indonesia’s coal for the export market. The government therefore has to finely balance between domestic consumption and exports.

In 2019, Indonesia’s coal export to Japan and S. Korea have edged lower. Export to China has also showed lowered growth rate as compared to previous years due to China’s restriction on coal import. If the current scenario prevails, will Indonesia increase its focus on India as its most prominent coal export market?

Indonesian thermal coal export growth has slowed in 2019 but continued to account for most of the overall rise in global supply. The slow export growth is in part also due to the increase of domestic coal consumption for electricity production. In the Mid-Term Development

Plan (RPJMN) 2015-2019, annual coal production is set to be 400 million tons in 2019, 60% of which is consumed domestically. Coal companies are obliged to supply a certain percentage of their production to domestic buyers, known as Domestic Market Obligation (DMO). As the mining industry continues to be an important contributor to the economy, Indonesia is committed to expanding its coal industry, not only through trade but also by increasing its coal downstream processing capabilities. Indonesia opens its door to all friendly nations to support coal downstreaming process in Indonesia. This opportunity is wide open for India with its vast experience and expertise in coal downstreaming.

Indonesia provided more than 61 percent of India’s thermal coal imports. What new initiative is the Indonesian government planning to take to further bolster the bilateral coal trade?

Coal holds a large but shrinking share as an energy source, accounting for 27% of global primary energy consumption. Due to the non-renewable nature of coal resources, Indonesia needs a new strategy of using coal, including working on gasification technology to raise the efficiency of coal-fired power plants, even as it develops solar, geothermal and other renewable resources. The government’s focus is also on strengthening Indonesia’s coal downstream processing capabilities. One example is the making of Dimethyl Ether (DME) or coal-processed compounds into gas. DME has the potential to be a substitute for LPG. Besides being beneficial for coal entrepreneurs to maximize the potential of lowcalorie coal which is not sold in the market, DME can also help to reduce LPG imports dependence. The government welcomes the participation of foreign investors, including India to support this development of coal downstream processing. As the process will require business transformation, the government is introducing various incentives, including tax and royalty payment reduction up to 0%.

Resources of Indonesia with Indian Institutes like IIT(ISM) Dhanbad, IIT Kharagpur and IIT (BHU);

India is introducing commercial mining and allowing 100 percent Foreign Direct Investment in the mining sector, would this move invoke investment interests from the Indonesian coal miners?

India’s move to allow 100 per cent foreign direct investment in coal mining is a positive step and the Indonesian government supports not only inbound investment from foreign countries, but also outbound investment abroad, including in the coal mining sector. The government encourages Indonesian coal mining companies to invest in India. Although the characteristics of the mining site and terrain are very different from of Indonesia, there are numerous potentials in India, including long term energy resources and needs.

In your opinion, what are the steps to be taken by the Indian government to further strengthen coal trade and movement between the two countries?

The 4th Meeting of the Joint Working Group on Coal between India and Indonesia, was held on 20th April 2017 in Jakarta, whereas both sides agreed that technology and science are crucial in mining industry in order to have sustainable, scientific, safe and environmental friendly mining. Pursuant to the JWG, the areas agreed for future cooperation, include:

a) Geological exploration between CMPDI, India and Geological Agency of Indonesia;

b) Capacity Building between the Ministry of Energy and Mining c) Ex change of best practices in the following areas of Coal Mining:

• Mine Plannin g and design,

• Satellite monitoring of mined out areas for reclamation,

• I T enabled solutions for vehicle movement monitoring,

• Envir onmental management of Coal Mines;

d) Lab to lab cooperation between Central Institute of Mining and Fuel Research (CIMFR) of India and R&D agency of MEMR of Indonesia to conduct research on coal gassification, mine water treatment technology and clinker formation as a result of blending.

We look forward to future cooperation, not only in trade but also in technological and innovation aspects of the coal sector.

Indonesia’s energy consumption growth is among the fastest in the world, and the government is relying mostly on coal-fired plants to feed the demand. It is also the second largest coal exporter in the world. What steps is the country mulling to take to meet the target of Paris climate agreement?

Indonesia is a party to the United Nations Framework on Climate Change (UNFCCC) and supporter of the global climate agreement. In the 2015 Paris Climate Conference, President Joko Widodo was committed to reducing Indonesia’s Greenhouse Gas (GHG) emission. The government of Indonesia ratified Paris Agreement and submitted its Nationally Determined Contribution (NDC) in 2016. Under the NDC, the government pledged to reduce GHG emission by 29% of the BAU scenario in 2030 unconditionally, and additionally, 12% more with international supports. GHG emission from energy sector is to be reduced by 11% unconditionally (or 14% conditionally).

Indonesia’s energy policy evolves over time, but it emphasizes on diversification, intensification and conservation of energy sources. Since Indonesia possesses abundant of coal and renewable resources, energy diversification strategy is aimed at maximizing these resources, including the use of vegetable oil, mainly crude palm oil (CPO) as biofuel feedstock to reduce oil import.

Coal share is expected to be reduced in the national energy mix and replaced by renewable energy sources. As specified in the General Planning on National Energy (RUEN) issued in 2017, the target is to have renewable energy share of 23% by 2025 and 31% by 2050. Under RUEN, the government is set to limit domestic coal production at 400 million tons per year starting 2019, unless domestic demands exceeds this amount