According to state-owned coal company Bukit Asam, which is building the plant in partnership with US firm Air Products and Chemicals, the plant is designed to process 6 million tonnes of low-grade coal to produce 1.4 tonnes of dimethyl ether (DME) per year, which could reduce Indonesia's LNG imports by 1 million tonnes per year.
Indonesia is counting on its own resources to increase its energy supply, but there are concerns that its heavy reliance on polluting coal, already the main source of fuel for electricity generation, will further increase the country's greenhouse gas emissions.
Indonesia has pledged to reach net zero emissions by 2060 and is seeking help from rich countries to achieve this goal in the fight against climate change.
According to government data, in 2021, Indonesia consumed 7.95 million tons of LNG, of which 6.4 million tons were imported.
“We can reduce subsidies from the state budget by about 7 trillion rupiah, while improving our trade balance and current account deficit,” said President Jokowi, as he is commonly known.
Indonesia has allocated 66.3 trillion rupiah in the 2022 budget to subsidize part of its domestic LNG consumption.
Indonesia's LNG imports are expected to fall sixfold by 2025 from current levels as the country seeks to ramp up coal gasification, which is on the government's list of “priority” investments, offering incentives such as tax breaks.
The plant is located in Muara Enim, South Sumatra, the mining hub of state-owned coal company Bukit Asam. Construction is expected to take 30 months, and state-owned energy company Pertamina is expected to use gas produced at the plant.
Source: Reuters
