Coal mining companies in Indonesia face growing risks linked to unreported methane emissions, which can affect decarbonization targets and increase environmental and investment concerns. Methane is described as a greenhouse gas with a warming effect 30 times greater than carbon dioxide, and it is characterized as a significant emission from coal mining operations.
In Indonesia, many coal firms do not account for methane released from their mining activities. Only four out of ten major coal companies include these emissions in their inventories, while the remaining six are reported to potentially generate methane emissions comparable to or higher than their stated emissions from fossil fuel combustion and purchased electricity.
Efforts aimed at reducing carbon dioxide, including solar photovoltaic expansion and investments in renewable energy and electric vehicles, are noted as not addressing coal mine methane. The gap in emissions management is presented as a reason for companies to begin measuring and reporting methane emissions to support alignment with national and international standards.
Methane reporting gaps amid Indonesia’s coal-driven economy
Methane emissions are highlighted as particularly important due to the scale of Indonesia’s coal sector within the national economy. In 2023, coal accounted for 80% of Indonesia’s non-tax revenue from mining, totaling $5.7 billion, and it directly employed around 150,000 people.
Indonesia’s climate commitments include a target to reduce emissions by 31.89% and align with a 1.5°C climate scenario. The country is also reported to have signed the Global Methane Pledge, which calls for a 30% global reduction in methane by 2030.
Licensing, production quotas, and demand outlook
The coal sector is described as facing a mismatch between production targets and demand forecasts. While the Ministry of Energy and Mineral Resources (MEMR) anticipates a long-term decline in coal demand, approvals for new licenses are reported to raise the possibility of oversupply and related environmental impacts, including substantial methane emissions.
The source links concerns about oversupply to differences between MEMR production targets and new quotas, including approval of more than 922 million tonnes for 2024. Separately, it notes that coal production rose in 2023, driven by increased demand from China.
The increase in output is characterized as potentially temporary based on China’s commitment to peak carbon emissions by 2030. The expansion of wind and solar energy in China is cited alongside this commitment as factors that could reduce future coal demand.
A similar potential shift is described for India, where domestic coal production is accelerating and imports from Indonesia are being reduced. The combination is presented as indicating possible decreases in demand for Indonesian coal.
Declining consumption but persistent unreported methane
Coal consumption in Indonesia is reported to already be declining, partly due to decarbonization measures in power plants and industries. Despite this trend, many coal mining companies are said not to report coal mine methane emissions, which are described as potentially substantial.
The lack of transparency in emissions reporting is presented as limiting efforts to address methane effectively across the sector. Among ten major companies referenced in the source, only four provide some information on methane emissions using different methods and assumptions.
The source further notes that differences in reported emissions and the absence of clear emission factors contribute to variability and uncertainty. It says improved reporting standards and transparency are needed for more accurate assessment and mitigation of methane emissions in Indonesia’s coal sector.
IPCC guidance versus company practice
The IPCC provides guidelines for estimating fugitive methane emissions from coal mining. However, many companies are reported not to adhere to these standards, contributing to variability in what is reported.
The source describes enhanced transparency and standardized reporting practices as important for improving assessment of methane emissions. It also frames addressing unreported methane as relevant to environmental and social governance while aligning with global climate commitments.