PWYC Urges Government to Cut Coal Production

JAKARTA - The Publish What You Pay (PWYP) Indonesia Coalition urges the Government to immediately implement the government's discourse to cut Indonesia's coal production. However, PWYP Indonesia emphasized that this policy should not stop at pragmatic efforts to save commodity prices in the global market, but must be placed in the framework of a long-term strategic policy to end dependence on fossil energy.

The National Coordinator of PWYP Indonesia, Aryanto Nugroho, said the government's discourse to reduce coal production was based on the price of coal and nickel commodities that fell or declined.

"The price reduction is due to excess supply in the global market," he said in a statement to the media, Thursday, January 8.

This is because, based on the statement of the Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia, the supply of coal supplies in the global market from Indonesia reaches almost 50 percent, namely 500-600 million tons out of the total world trade volume, which reaches Rp. 1.3 trillion.

Aryanto also emphasized that this production cut was a crucial momentum that should have been carried out a long time ago if referring to the National Energy Master Plan (RUEN).

"The government should not only be reactive when prices fall because of oversupply. If the motive is only to raise prices so that state revenues are maintained, then it is not a strategic policy, but merely market stock management," he continued.

For this reason, he emphasized that Indonesia needs a transformative vision, namely cutting production to save the environment and accelerating the energy transition, not just saving corporate profit margins.

Aryanto explained that the flood of coal production to reach 800 million tons in 2024 is a clear proof of the obstacles to the energy transition in Indonesia.

"Production that is sluggish," he said, "makes incentives to switch to renewable energy weak.

"Production cuts are a must to achieve the Net Zero Emission target. We cannot talk about energy transition if the upstream coal supply continues to be boosted without control. The gradual reduction of production to 400 million tons in accordance with the RUEN mandate must be a binding commitment in the roadmap for Indonesia's decarbonization. This is a concrete step to align energy policy with global climate commitments," he added.

He added that PWYP Indonesia noted that during this time the increase in coal production has always been accompanied by various governance issues that have not been completed, ranging from corruption gaps in quota determination, land conflicts with indigenous peoples, to the many abandoned mine holes without reclamation.

"This production cut must be parallel to a massive audit of the management of the mining sector. There are still many problems with law enforcement and weak environmental supervision that are ignored in pursuit of production targets. This momentum must be used to clean up illegal mining practices and ensure that companies that continue to operate actually meet strict compliance standards, without compromise," said Aryanto.

PWYP Indonesia also warned of the risk of corruption behind the policy of setting production quotas.

"When production is cut, quotas become 'expensive' goods. This creates the potential for rent-seeking in the process of lobbying production quotas. Don't let this cut be just a tool for a handful of elites to continue to get production privileges. The cutting process must be transparent, accountable, and based on strict environmental compliance criteria," he said.