Coal mining companies in Indonesia face growing risks due to unreported methane emissions, which could hinder their decarbonization goals and elevate environmental and investment risks. Methane, a greenhouse gas with a warming effect 30 times greater than carbon dioxide, is a significant yet often overlooked emission from coal mining operations.
In Indonesia, many coal companies neglect to account for methane emissions from their mining activities. Only four out of ten major coal companies include these emissions in their inventories, with the remaining six potentially generating methane emissions comparable to or exceeding their reported fossil fuel combustion and purchased electricity emissions.
Despite efforts to reduce carbon dioxide through initiatives like solar photovoltaic expansions and investments in renewable energy and electric vehicles, coal mine methane remains unaddressed. This gap in emissions management underscores the need for coal mining companies to begin measuring and reporting methane emissions to better understand the problem and align with national and international standards.
Methane emissions are particularly critical given Indonesia’s substantial coal sector, which contributes significantly to the national economy. In 2023, coal accounted for 80% of Indonesia’s non-tax revenue from mining, amounting to $5.7 billion, and directly employed around 150,000 people. Despite this, Indonesia has committed to reducing emissions by 31.89% and aligning with the 1.5°C climate scenario, alongside signing the Global Methane Pledge for a 30% global reduction in methane by 2030.
The coal sector faces 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, recent approvals for new licenses could lead to oversupply and environmental impacts, including substantial methane emissions. The disparity between the Ministry’s production targets and new quotas—approving over 922 million tonnes for 2024—raises concerns about potential oversupply and its impact on coal prices.
The rise in coal production in 2023, driven by increased demand from China, may be temporary. China’s commitment to peak carbon emissions by 2030 and its significant expansion of wind and solar energy suggest a likely decline in coal demand. Similarly, India’s acceleration of domestic coal production and reduction in imports from Indonesia further indicate a potential decrease in demand.
In Indonesia, coal consumption is already declining, partly due to decarbonization measures in power plants and industries. However, despite this trend, many coal mining companies fail to report coal mine methane emissions, which can be substantial.
The lack of transparency in emissions reporting among Indonesian coal companies hampers efforts to address methane emissions effectively. Out of ten major companies, only four provide some information on methane emissions, using various methods and assumptions. Differences in reported emissions and the absence of clear emission factors highlight the need for improved reporting standards and transparency.
The IPCC provides guidelines for estimating fugitive methane emissions from coal mining, but many companies do not adhere to these standards, leading to variability and uncertainty in reported emissions. Enhanced transparency and standardized reporting practices are crucial for accurate assessment and mitigation of methane emissions in Indonesia’s coal sector.
Addressing unreported methane emissions is vital for the coal sector’s environmental and social governance, and aligning with global climate commitments. The coal industry’s future will depend on its ability to manage and report emissions comprehensively while adapting to the evolving energy landscape.
