Hans Nicholas Jong, Jakarta – As much of the world shutters coal power plants and shelves new proposals, Indonesia is bucking the trend – adding the third-highest volume of coal capacity globally in 2024, driven largely by the need to power a growing fleet of metal smelters.

This places Indonesia among a shrinking group of nations still expanding their coal use, according to a new report by U.S.-based nonprofit Global Energy Monitor (GEM).

The annual "Boom and Bust Coal" report found that global coal-fired power plant capacity growth reached its lowest point in 20 years last year, increasing by just 44 gigawatts, compared to an annual average of 72 GW between 2004 and 2024.

Yet Indonesia added 1.9 GW of coal capacity in 2024, the third most in the world, behind China and India. Some 80% of this new capacity came from so-called captive coal plants, built specifically to serve industrial estates processing nickel, cobalt and aluminum for the booming electric vehicle market.

Indonesia is the only country in Southeast Asia that proposed new coal plants in 2024, according to the report.

This unchecked coal expansion pushes Indonesia to "the brink of failing its energy transition," said Zakki Amali, a research manager at Indonesian NGO Trend Asia.

Indonesia's metals-processing focus, which the government calls "downstreaming," has turbocharged the expansion of captive coal plants. Since 2019, captive coal capacity has tripled from 5.5 GW to 16.6 GW, and the fleet now comprises 130 plants of at least 30 megawatts each, with 21 more in development, according to the GEM report.

Most are concentrated in Sulawesi and North Maluku, the country's main nickel-mining islands and home to sprawling smelters that are part of Indonesia's bid to become a global EV battery hub.

Total disconnect

This unbridled expansion has come even as Indonesia continues to tout its commitment to transitioning from fossil fuels to renewable energy in a bid to tackle climate change. The country is among the 195 parties that signed the Paris Agreement in 2015, where it pledged to reduce its greenhouse gas emissions by 31.89% by 2030.

As part of that climate agenda, Indonesia in 2022 pledged to stop building new coal-fired power plants after 2022. However, that moratorium comes with a massive loophole: It exempts plants already listed in the national electricity plan and those serving strategic industries like mineral processing – i.e., captive coal plants

This loophole allows the latter to continue to be built without restriction, undermining Indonesia's pledge to phase out coal entirely by 2050.

That phaseout plan is part of Indonesia's Just Energy Transition Partnership (JETP), signed in 2022 with a group of industrialized countries that pledged to help with the energy transition. But three years into the JETP implementation, there's been little progress on retiring coal plants early, Zakki said.

Instead, coal use in Indonesia has expanded rapidly. Since the country signed the Paris Agreement in 2015, its coal capacity has increased by 29 GW, making it the country with the fifth-largest coal fleet worldwide, at 54.7 GW total capacity.

"There's a clear disconnect between Indonesia's coal plans and its climate commitments," said Lucy Hummer, a senior researcher at GEM. "It's like the left hand doesn't know what the right hand is doing."

Indonesia still plans to add another 26.7 GW of coal plant capacity over the next seven years, three-quarters of it captive, according to its national electricity road map for 2024-2060.

If realized, that would push the country's coal generation up by 62.7%, peaking in 2037, according to an analysis by U.K.-based think tank Ember.

Sticking with coal could backfire economically, with captive plants potentially more expensive than renewables, according to Ember."Expanding captive coal while global markets shift to clean energy makes little economic sense. Indonesia has a clear opportunity to scale up renewables instead of committing to more coal," said Dody Setiawan, a senior climate and energy analyst for Indonesia at Ember.

Meanwhile, the environmental fallout is already visible. In Sulawesi and North Maluku, industrial pollution from captive coal plants has reportedly tainted water, sickened communities, and damaged crops.

"With planned growth [of captive coal] largely concentrated in Sulawesi and North Maluku islands, those residing near the industrial sites where the coal power plants will operate will have to bear the highest health and economic burden from pollution exposure, not to mention the irreversible environmental impacts from the spread of toxic particles," Katherine Hasan, an analyst at the Finland-based Centre for Research on Energy and Clean Air (CREA), said in a press release.

A call for real transition

To justify continued coal use, the government plans to retrofit existing plants with what it calls cofiring technology, in which some of the coal is replaces with wood pellets and other biomass, and with carbon capture and storage (CCS), which would in theory trap CO2 emissions on site.

But experts remain skeptical about these measures, which are widely seen as costly and unlikely to deliver significant emission reductions.

"The proposed alternatives are likely to do more harm than good. Biomass cofiring could drive deforestation, while CCS remains an unproven solution," Hummer said.

As an increasing number of countries give up coal in favor of renewables, experts warn Indonesia risks isolating itself as markets and investors pivot to clean energy.

"Committing to a clear path for coal phase-out while prioritising renewables would help Indonesia address the multi-faceted challenges that all coal-dependent economies must face in these crucial decades," Hasan said. "Now is the time for Indonesia to walk the talk and realise true energy affordability and security" as described in its electricity road map.

Source: https://news.mongabay.com/2025/04/indonesia-defies-global-coal-retreat-with-captive-plant-boom