The rapid expansion of alumina and aluminium capacity in Indonesia raises the risk of another captive coal power construction boom and the depletion of its bauxite ore reserves, researchers with the Centre for Research on Energy and Clean Air (CREA) warned on Thursday.
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Indonesia's alumina production capacity is expected to rise from 9 million metric tons in 2025 to 32.5 million tons by 2030, while aluminium smelting capacity could increase to 14 million tons from 1 million tons.
Many proposed projects continue to rely on off-grid coal-fired power plants, even though Indonesia's bauxite reserves are geographically clustered in locations with good potential to integrate with regional power grids as well as untapped renewable energy resources, CREA said in a report released on Thursday.
Indonesia's captive power plants are built by industries to generate electricity for their own use, and the country's nickel boom had boosted the number of plants, which are mostly coal-fired, in recent years.
Indonesia has pledged to stop commissioning new coal-fired power plants, but captive plants are exempt from the pledge as long as they commit to reduce emissions by 35% within 10 years of operation.
"If all planned capacity proceeds, aluminium downstreaming could lead to another industrial captive coal boom. This would undermine national decarbonisation targets, lock industrial growth to a carbon-intensive pathway, and further impose environmental and public health costs on communities," CREA analyst Katherine Hasan said.
The capacity expansions could also lead to the rapid depletion of Indonesia's reserves of bauxite, the raw material for alumina. CREA said with feedstock demand projected to reach 65 million tons, Indonesia's proven reserve is expected to be fully depleted in around 12 years.
"Unrestrained expansion may in fact create new vulnerabilities related to resource security and energy supply," said Syahdiva Moezbar, a CREA analyst.
"To both safeguard the industry and mitigate its environmental impact, the government should ensure project pipelines are transparent, based on realistic assessments of ore reserves and supply, and include built-in energy plans that avoid reliance on fossil-based power," Syahdiva said.