Researcher: Coal export governance reform supports energy transition
This is based on research highlighting coal export governance as well as indications of underpricing practices that could reduce economic benefits for the state.
Makassar (ANTARA) - Clean Transition Researcher Muhammad Irfan said that reform of natural resource governance, particularly in the coal sector, is considered a strategic step to increase state revenue while supporting the financing of Indonesia’s energy transition.
“This is based on research highlighting coal export governance as well as indications of underpricing practices that could reduce economic benefits for the state,” said Irfan, a researcher at the Financial Research Center for Clean Energy (FRCCE), in an online press statement from Makassar on Wednesday.
The researcher revealed that Indonesia needs enormous financing to achieve its Net Zero Emission (NZE) target, estimated at around US$1 trillion, or roughly Rp16,000–Rp17,000 trillion, by 2060.
With financing needs of that scale, funding through the state budget (APBN) or debt is considered insufficient and risks burdening both the public and national finances.
Therefore, Irfan continued, reform of natural resource management is viewed as a more sustainable alternative. The government is being urged to increase its role in regulating strategic sectors such as coal, nickel and crude palm oil (CPO) through stronger regulation, without resorting to nationalisation.
He said this model allows the private sector to continue managing resources, while the state obtains a larger share of the economic benefits.
The research found that Indonesia controlled around 47.3 per cent of the global export market share for low-calorie coal in 2024. However, this dominance in volume has not been matched by the ability to set prices on the international market.
The research indicates that Indonesian coal export prices are consistently below their fair value after adjusting for quality, energy content, logistics costs and other trade factors.
The analysis also shows indications of structural underpricing. Based on comparison with other exporting countries, Indonesian coal prices are on average about US$5.6 per tonne lower than those of competing nations.
According to him, this occurred consistently during the 2021–2024 period.
Beyond market structure factors, the research also identified the risk of value leakage through transfer pricing practices. Statistical mirror analysis showed the gap between Indonesian export prices and Indian import data reached around US$204 per tonne, far larger than the gap with China, which was only about US$3 per tonne.
These findings provide initial indications of the need for stricter oversight of cross-border coal trading transactions.
The research also highlighted the Domestic Market Obligation (DMO) policy, which is seen as encouraging producers to pursue larger export volumes, thereby triggering oversupply and depressing coal prices in the global market.
Therefore, the researcher recommends gradual governance reform of production, the application of fiscal instruments such as an export tax based on benchmark prices, diversification of export markets, and the integration of trade data through the Indonesia Strategic Data (DSI) system to make transaction oversight more effective and transparent.
A number of economists and energy transition observers consider the research findings to be important input for the government in formulating mining sector policy.
Coal governance reform is seen not only as having the potential to increase state revenue, but also as providing a source of financing to accelerate renewable energy development, so that the benefits of natural resource management can once again be felt by the people, in line with the mandate of Article 33 of the 1945 Constitution.