Indonesia on Wednesday launched the first phase of mandatory carbon trading for coal power plants, part of efforts by Southeast Asia’s biggest economy to boost renewable energy and achieve net zero emissions by 2060.

Coal makes up more than half of Indonesia’s power generation. The first stage of a carbon trading mechanism will cover 99 power plants with total installed capacity of 33.6 gigawatt directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN).

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“There are 500,000 tonnes CO2 equivalent ready to be traded,” said energy ministry official Mohamad Priharto Dwinugroho.

The figure refers to an estimate of the excess emissions over a total 20 million tonnes CO2 equivalent emission quota given to the power plants.

Under the mechanism, power plants that emitted more carbon than their quota can buy carbon credits from plants with below-quota emissions or from renewable power plants.

Dwinugroho said a market mechanism would set the price, but, according to an energy ministry study, the price may range between $2 and $18 per tonne.

Indonesia’s carbon trade applies to power plants with a capacity of at least 100 MW. Energy minister Arifin Tasrif said, however, it would later be rolled out to smaller coal plants and other fossil-fueled power plants, as well as power plants not connected to PLN’s grid.

“Carbon pricing is one of the policies that could increase energy efficiency, reduce dependence on carbon energy, imported energy and can be a source of income for the company and government,” Arifin said at the launch, adding that carbon trading in power generation could reduce carbon emissions by 36 million tonnes by 2030.

Arthur Simatupang, chairman of the Indonesian private power producers association, said power plants could now monetise their efforts to reduce carbon emissions.

One of the world’s biggest greenhouse gas emitters, Indonesia last year set a more ambitious target for reducing carbon emission by 31.89% on its own, or 43.2% with international support, by 2030.

That compared to its 2015 Paris Agreement pledge to cut emissions by 29% or 41% with international help.

Authorities are studying the implementation of a carbon exchange and plan to set up agencies to monitor and verify emission volumes.

Indonesia initially planned to tax the remaining carbon emissions that had not been offset by carbon credits, but the implementation has been delayed.



Russia continues a re-direction of its hydrocarbons and minerals’ exports from Western states to the Asian region, as sanctions’ pressure from West tightens.

As part of these plans, particular hopes are put on coal exports to the region, where the demand for it remains high, especially due to big discounts, provided by Russian suppliers. Russia has already been able to increase its coal deliveries to South Korea, overtaking Australia – the main player in this market in the past.

At present South Korea imports about 2 million tonnes of thermal coal monthly from Russia and there is a possibility that the country’s dependence on Russian coal will only continue to grow.

That will be also due to attractive prices, which are offered by Russian coal producers to their Asian and particular South Korean customers. At the end of December, 6,000 kcal Australian coal cost US$409.5 per tonne, compared to US$244 per tonne for Russian coal.

Russia still remains one of the world’s largest coal producers and exporters with about 442 million tonnes of overall production and 223 million tonnes of annual exports, according to recent data, provided by the Russian Minister of Energy Alexander Novak.

Among the major suppliers of Russian coal to South Korea and other countries of the region are SUEK, Kuzbassrazrezugol, SDS-Ugol and Stroyservis. Still, in contrast to 2022, this year the situation for Russian coal suppliers is more complex. As coal prices in the Asian market fell to their lowest level since April last year, the European market is also seeing negative dynamics, caused by the decline of imports and consumption due to warm weather in Europe.

In the meantime, many Russian mining and metals’ companies are also considering China as one of the potentially biggest sale market for them in the Asian region, although, according to recent report, published by the Russian Aton investment company, there could be serious difficulties for Russian business during their expansion in China, despite the fact that the Chinese market is huge, (accounting for more than 50% of the global consumption of many metals including nickel and copper).  China has a powerful domestic production, so imports account for only 25% of its consumption. According to analysts, this, as well as traditionally lower prices offered by Chinese customers for Russian hydrocarbons and metals seriously limits Russian export potential in this region.  Instead of supplies to the Chinese market, Russia’s metals and mining companies will most likely have to compete with Chinese manufacturers in other countries and territories of the region among which are Malaysia, Vietnam, Taiwan, the Philippines and Indonesia.

At the same time, another problem which seriously complicates the current switch of the Russian metals’ business to the East is logistics, given that the distance of delivery of goods from Russia to East is three times longer those to West (2,300 km versus 7,900 km). This leads to huge additional costs for Russian business during its exports to the Asia Pacific region.

Anyway, despite the existing problems, the Russian metals and mining business will continue its re-orientation on the Asian region, while, according to some preliminary calculations, Russian ferrous metallurgy enterprises will have to reorient about 4 million tonnes of steel products per year to the eastern direction from traditional for them Western markets.

Therefore, as most leading Russian analysts believe, domestic metals and mining exports to the Asian region will increase annually by 10-20% in the coming years. However, it is unlikely that it will be possible to completely redirect export supplies that previously supplied to Europe to the East, since each Asian country has its own maximum level of consumption and reserves.

Still, despite sanctions the supplies of Russian metals to some Western countries are still ongoing, being mainly accounting for some rare and strategic metals and minerals. For example, JSC MMC Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel, has retained its positions in Western markets in the first seven months of 2022, with 50% of its exports still accounting for Europe and 20% for the US.


By Eugene Gerden

First Australian Coal Cargoes Since End of Ban to Enter China in February

China is set to receive at least two cargoes of Australian coal in early February, according to traders and shiptracking data, the first since an unofficial ban on imports in place since 2020 was lifted earlier this month.

Coal traders will be paying attention to how easily the shipments pass customs for signs that the informal ban is truly over and in the hopes of sending more Australian coal to China.

Australian thermal coal for power generation and metallurgical coal for steelmaking are favoured by Chinese consumers for their high-quality. China’s coal demand is forecast to rise in the upcoming months amid an expected economic rebound after Beijing rolled back its draconian zero-COVID strategy.

About 72,000 tonnes of metallurgical coal was loaded on to bulk vessel Magic Eclipse at Hay Point, Australia, on Jan. 23 and is expected to arrive at the southern Chinese city of Zhanjiang in Guangdong province next week, Refinitiv and Kpler shiptracking data showed.

China’s top steelmaker Baowu Group bought the cargo, according to a trader familiar with the deal and the shiptracking data.

Baowu is one of the four government-backed firms given permission from China’s state planner in early January to purchase Australian coal. The company has 12.25 million tonnes of annual steelmaking capacity at its Zhanjiang base.

Baowu did not immediately respond to Reuters’ inquiry seeking for comment.

Another bulk vessel, the BBC Maryland, is carrying about 12,000 tonnes of thermal coal from the Australian port of Newcastle and heading to the eastern Chinese city of Changshu, Kpler data showed. The cargo is scheduled to arrive on Feb. 10 but it is not immediately clear who the buyer was.

China Energy Investment Corp purchased at least two cargoes of Australian coal, Reuters reported in early January. China’s local media reported that the other two firms given approval to buy Australian coal have also placed orders.

Other Chinese utilities and steelmakers that are not on Beijing’s list of approved importers are still waiting to resume imports.

Customs officials in five major eastern and southern Chinese cities have said that there is no specific requirement for companies importing Australian coal during the customs declaration process.

However, it was unclear if the customs authorities would clear cargoes purchased by companies other than the four approved ones.

Australian thermal coal with a heating content of 5,500 kilocalories was assessed at about $132 a tonne on a free-on-board basis last week, down from about $137 a tonne in early January, according to traders.

Premium low volatile coking coal for delivery on a cost and freight basis to China was assessed at about $320 a tonne last week, up from $315 in early January, the traders said.

Source: Reuters