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Just Transition Network - Scenarios and Implications of Coal Production in Indonesia for East Kalimantan and South Sumatra

Analysis of Indonesia's coal demand, supply, and reserves with a focus on East Kalimantan and South Sumatra, highlighting future production scenarios and just transition strategies for economic diversification and environmental management.

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Related topics:
Just Transition• Just Energy Transition•
Scenarios of coal production in Indonesia: Implications for East Kalimantan and South Sumatra Just Transition Network
Presentation outline 1. Status quo 2. Future coal demand 3. Coal reserve and production 4. Future coal supply 5. Just transition perspective 6. Key takeaways
Status quo and historical development Export and domestic demand drive Indonesia’s coal output 1
Provincial-level coal demand by end use E. Kalimantan & S. Sumatra increasingly serve export and domestic demand 1
Future coal demand National coal demand declines under both scenarios 2
Future coal demand MEMR also projected declining export under BAU and NZE scenarios Delivered by MEMR during Petromindo’s Indonesia Coal Outlook Conference (2023) 2
Future coal demand National coal demand declines under both scenarios Low-demand scenario ● Peak year 2024 ● Peak demand 790 Mt ● Zero coal export by 2052 ● 2060 demand 30 Mt ● Remaining reserve by 2060 15.9 Bt 2
Future coal demand National coal demand declines under both scenarios High-demand scenario ● Peak year: 2031 ● Peak demand: 851 Mt ● 2060 demand: 414 Mt ● Remaining reserve by 2060: 3.2 Bt ● *Reserve life by 2060: 6.4 years *Assuming fixed 2060 demand Reducing coal use in power generation and industry through renewable energy, energy efficiency and electrification can strengthen energy security, improve reserve depletion rate. 2
Coal reserve and production Indonesia’s coal reserves last 35 years at current output Reserve (2024) in million tonnes Production (2024) in million tonnes *Reserve life years Indonesia 29,245 836.1 35 East Kalimantan 11,178 378.6 30 South Sumatra 8,556 113.3 76 South Kalimantan 3,644 236.9 15 Central Kalimantan 2,473 43.8 56 Jambi 1,574 13.6 116 North Kalimantan 941 28.8 33 Aceh 409 12.9 32 Riau 359 2.6 136 Source: Indonesia Geological Agency (2025), MEMR (2025a) *Reserve life is calculated by dividing remaining reserves by annual production, assuming production remains constant at the current level. 3
Hubbert production model Each province follows a different production trajectory A Hubbert peak model is used to represent long-term production decline, linking annual output to the depletion of coal reserves. The result will be used as ceiling or maximum production level from each province to meet future demand. 3
National coal supply East Kalimantan and South Sumatra become the two largest suppliers 4
National coal supply East Kalimantan and South Sumatra become the two largest suppliers 4 ● South Sumatra to overtake East Kalimantan due to reserve decline. ● Increasing unmet export demand, from 1.5 Mt in 2025 to around 27 Mt by 2060. ● The remaining reserve is estimated to be 5.4 Bt, equivalent to approximately 14 years reserve life.
High production and exports contributed to oil reserve depletion Lessons learned from oil sector In the 1980s, Indonesia was one of the world's major oil exporters, with around 75% of production exported. However, declining oil production combined with rising domestic demand gradually reduced export capacity, and Indonesia became a net oil importer in 2003. 4
Province-level coal supply East Kalimantan to reach production peak by 2030 4
Province-level coal supply East Kalimantan to reach production peak by 2030 4 Low scenario ● Production peaks in 2025, then declines sharply. ● Exports fall rapidly, especially between 2025 and 2030, amid weaker demand and rising South Sumatra supply. ● By 2055, East Kalimantan supplies the domestic market only, with domestic industry accounts for almost all demand.
Province-level coal supply East Kalimantan to reach production peak by 2030 4 High scenario ● Production peaks in 2030 at 378 Mt, then declines, primarily driven by consistent decline of export demand. ● Domestic demand remains stable until 2055, partially offsetting declining exports. ● By 2060, production falls to 115 Mt, with remaining reserve of 1.97 Bt.
Province-level coal supply South Sumatra’s longer production horizon provides transition window 4
Province-level coal supply South Sumatra’s longer production horizon provides transition window 4 Low scenario ● South Sumatra is projected to increase production until 2035 at 159 Mt, then declines steadily. ● Exports grow only until 2030. South Sumatra gains bigger market share but faces weakening global demand. ● Longer production horizon provides a transition window to use coal revenues for economic diversification.
Province-level coal supply South Sumatra’s longer production horizon provides transition window 4 High scenario ● Production continues growing until 2050 at 243 Mt, more than double 2024 levels. ● Export also continue to increase until 2050, potentially generating higher revenues and creating more resources for economic diversification. ● By 2060, production falls to 186 Mt, with remaining reserve of 1.48 Bt (8 years reserve life).
Just transition perspective Implications for East Kalimantan and South Sumatra 5 Dimension Analysis East Kalimantan South Sumatra Political Coal governance is shifting from maximisation toward better production management. Political readiness to prepare earlier decline of coal Shared understanding between central and local govt enable early panning for future shifts Economic Coal regions need to reduce dependence on coal revenues and build alternative economic bases. Leverage national projects and existing industries Use coal revenues to build alternative economy Social Workforce and communities will experience different transition timelines. Reskill workers for earlier labour shifts from coal Strengthen social protection and upskilling Technological Renewable energy can replace coal while creating new economic opportunities. Hydropower Solar and biomass Environmental Coal decline creates opportunities for rehabilitation, but mine closure must be managed effectively. Identify opportunities for alternative land uses Post land-mining rehabilitation Legal Stronger and consistent regulation to align production with long-term demand and transition pathways. Need effective mine closure, reclamation and production planning Avoid stranded assets by aligning infrastructure plans with coal production trends
Key takeaways Indonesia need to prioritise early diversification and transition planning 1. Coal demand declines under both scenarios, but at different rates. Low demand falls after 2024, while high demand peaks at 851 Mt in 2031 before declining to 414 Mt by 2060. 2. East Kalimantan reaches peak production by 2030. Declining exports and reserves will shift production towards domestic industry, increasing the need for early economic diversification. 3. South Sumatra’s longer production horizon provides a transition window. Production continues rising until 2035 - 2050, providing more time and revenue to prepare for transition, but greater socioeconomic vulnerabilities increase the challenge. 4. Strategic production and demand management can support a just transition. Aligning production with long-term demand and accelerating clean energy can preserve reserves, reduce stranded infrastructure risks and support regional diversification. 6
Acknowledgements The project "Innovation Regions for a Just Energy Transition" is co-financed by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety (BMUKN) and by the Directorate-General for International Partnerships (DG INTPA) of the European Commission (DG INTPA) for the Interregional Platform for Just Energy Transition in Coal Regions (JET-CR).
Any person who believes they may be harmed by an IKI project or who wishes to report corruption or the misuse of funds can lodge a complaint to the IKI Independent Complaint Mechanism at IKI-complaints@z-u-g.org. The IKI Complaint Mechanism has a panel of independent experts who will investigate the complaint. In the course of the investigation, we will consult with the complainant so as to avoid unnecessary risks for the complainant. More information can be found at: https://www.international-climate-initiative.com/en/about-iki/values-responsibility/independent-compla int-mechanism/