Indonesia’s coal boom hits wall as methane soars, profits sink: Ember
Global oversupply has pushed coal prices down and eroded fiscal returns, while domestic demand remains stagnant
[JAKARTA] Indonesia’s record-breaking coal output of 836 million tonnes in 2024 has come at a steep cost: surging methane emissions, shrinking company profits and weakening state revenues. This is based on a new report by global energy think tank Ember released on Thursday (Nov 6).
The report, Chasing Volume, Losing Value: The Cost of Coal Over-Expansion in Indonesia, warns that the country’s coal boom is now showing signs of strain. What was once a lucrative engine for export earnings has turned into a drag on fiscal performance and a growing climate liability.
“Indonesia’s coal sector now stands at the intersection of two realities – shrinking global demand and rising methane emissions,” said Nishant Bhardwaj, Ember’s coal mine methane programme director. “The path forward is not to extract more, but to measure, manage and mitigate better.”
Ember estimates that Indonesia’s coal mine methane emissions reached 722 kilotonnes of methane in 2024.
This was more than four times higher than official government figures – equivalent to around 20 million tonnes of carbon dioxide, or nearly the entire annual emissions of Sweden.
The group projects that methane pollution could rise another 25 per cent by 2030 as new underground mines come online.
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Oversupply drags down the market
Indonesia’s coal production jumped about 36 per cent in three years, from 614 million tonnes in 2021 to 836 million tonnes in 2024, far exceeding the government’s 710-million-tonne target. Yet, this output surge coincided with a global oversupply that sent prices tumbling.
Major buyers such as China and India, which together account for about 60 per cent of Indonesia’s exports, are cutting imports as they ramp up domestic coal production and renewable energy use. China’s solar and wind installations doubled in the first half of 2025 from the previous year, displacing coal generation, while India’s renewable output surged more than 26 per cent in the same period.
As a result, Indonesia’s exports are expected to fall by 46 million tonnes in 2025, with overall coal demand projected to shrink by 32 million tonnes to 756 million tonnes when compared with last year.
Profits down, revenues shrinking
Coal companies’ profits have plunged in line with the price drop. After peaking in 2022, when global coal prices exceeded US$400 per tonne, net profits fell 67 per cent by 2024.
To offset lower prices, miners have chased higher volumes, further fuelling oversupply. But production costs have continued to climb, driven by inflation, fuel costs and stricter royalty payments under new government regulations.
The implementation of the B40 biodiesel mandate this year – which requires diesel sold in Indonesia to contain 40 per cent biodiesel – has significantly increased operational expenses for companies.
Non-tax state revenues from the mineral and coal sector, which surged to 183 trillion rupiah (S$14.4 billion) in 2022, since declined nearly 19 per cent in 2024.
Fiscal transfers to coal-producing provinces such as East Kalimantan and South Sumatra have fallen sharply, exposing local economies to rising budget risks.
“Coal regions will need to prepare for declining revenues very quickly,” said Timon Wehnert, co-head of international energy transitions at Germany’s Wuppertal Institute. “Once public budgets shrink, diversification becomes much harder.”
A turning point for policy
Ember urges the government to impose a moratorium on new coal-mining permits, set a long-term production cap, and strengthen methane monitoring and reporting standards.
It recommends investing in methane-capture technologies and designing a “just transition” strategy for coal-dependent regions.
“Indonesia’s coal expansion has delivered short-term gains but created long-term vulnerabilities,” said Dody Setiawan, the report’s lead author. “Controlling production and managing methane emissions are key to aligning the sector with national climate and economic priorities.”
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