Indonesia’s captive coal: Could it lead the transition away?
With the country dominating nickel exports, its moves towards green industry could make the greatest impacts The post Indonesia’s captive coal: Could it lead the transition away? appeared first on Dialogue Earth .
Indonesia's commitment to transitioning away from fossil fuels is being hindered by captive coal capacity, which consists of private, off-grid plants that power industrial facilities. This type of coal poses challenges to the country's environmental targets and market competitiveness. Captive coal is driven by the country's status as the world's top nickel exporter, with almost half of the world's reserves located in Indonesia.
Energy finance specialist Randi Bachtiar believes that transparent supply-chain monitoring, reporting, and verification (MRV) could help Indonesian nickel, aluminum, and steel products command a premium in green markets. However, Indonesia's captive coal capacity has grown rapidly, with over 19.3 gigawatts (GW) operational and nearly 8 GW in pipeline as of July 2025, totaling nearly 31 GW.
This surpasses Australia's current coal fleet and nearly equals Germany's 2024 coal capacity. The continued reliance on captive coal presents a contradiction for Indonesia's goal of achieving net-zero emissions by 2060. While nickel is seen as a key component of the energy transition due to its use in EV batteries, only 17% of Indonesia's nickel production is currently used for this purpose, with the majority going towards stainless steel.
Experts highlight that Indonesia can capitalize on green premiums and transition credits to shape the industrial coal transition, but significant progress is needed to fully transition away from captive coal.
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