Out-Law / Your Daily Need-To-Know

Indonesia to lift coal export ban ahead of schedule

Out-Law News | 11 Jan 2022 | 11:53 am | 1 min. read

Indonesia will begin to lift its coal export ban imminently, and ships carrying coal have already been cleared to depart, according to press reports.

Chinese news agency Xinhua said that the Indonesian government is finalising official regulations to lift the ban, which was due to run until 31 January 2022. Exports will resume in stages beginning on 12 January, with the first ships carrying coal due to leave on 11 January, according to the report.

Renewables expert John Yeap at Pinsent Masons said: “With the imminent lifting of the ban, a potential power supply crisis in countries dependent on Indonesian coal such as the Philippines may be avoided. However, the risk of a repeat of such bans in the future will undoubtedly cause purchasers to be concerned on supply security. A solution that meets the needs of Indonesia and its supply markets will need to be found so as to restore full confidence in the market.”

Yeap John

John Yeap

Consultant

The risk of a repeat of such bans in the future will undoubtedly cause purchasers to be concerned on supply security

On Monday, Japan, South Korea and the Philippines urged Indonesia to lift the ban, which took effect on 1 January. The policy, announced at the end of December 2021, was issued after coal miners failed to meet their domestic market obligation (DMO), and was aimed at preventing outages at domestic generators.

Filipino energy secretary Alfonso Cusi appealed to his counterpart in Indonesia, energy and mineral resources minister Arifin Tasrif, to lift the ban, specifically to the Philippines. Cusi said that the policy was “detrimental to economies that rely on coal-fired power generation systems like the Philippines”, and asked the foreign affairs department to intervene and appeal on behalf of the Philippines via the ASEAN cooperation mechanism.

The Philippines sourced 2.3 million metric tons monthly from Indonesia to fuel its coal-fired power plants in 2021. Power generated from coal comprises about 60% of the country’s power demand.

On the same day Indonesia and Japan signed a memorandum of cooperation on energy transition aiming to materialise Indonesia's energy transition programme, according to a report. The report said the two countries planned to work together to develop carbon capture, utilisation, and storage (CCUS) technology by using Indonesia’s natural resources.