‘The government must have the courage to halt the construction of new captive coal-fired power plants and prepare a roadmap for phasing them out. The transition to clean energy must be the backbone of nickel industry decarbonisation,’ said Riski Saputra, AEER researcher, during the discussion in Jakarta (21/8).

Data from Bappenas shows that total emissions from the nickel industry in 2023 will be equivalent to 22% of national emissions from the energy and IPPU (Industrial Processes and Product Use) sectors. As much as 98% of these emissions came from pyrometallurgical smelter activities, and 63% of these came from captive coal-fired power plants. If these practices are allowed to continue, greenhouse gas emissions from the nickel industry are projected to surge by 86% by 2045. This situation will make it even more difficult for Indonesia to achieve its net zero emissions target by 2060.

Based on the National Electricity General Plan (RUKN), the potential for new and renewable energy (EBT) in Sulawesi reaches more than 250 GW, mainly from solar and hydro power. However, in the 2025–2034 RUPTL operational document, less than 10 GW will be developed in the next 10 years. The amount of electricity from renewable energy is far from sufficient to offset the current surge in electricity demand from smelters.

AEER warns that large-scale nickel mining in Sulawesi will quickly deplete available reserves. At the current rate of mining, nickel in Central and Southeast Sulawesi is predicted to be exhausted before 2045. This makes the development of clean energy sources unprofitable for industry because, without connection to the electricity grid, the electricity generated is of no use to other regions.

‘Excessive extraction increases the risk of stranded assets for clean energy. If the mine’s lifespan is only a dozen years, while solar energy, for example, operates for 25–35 years, investments in clean energy will be wasted. Synchronisation of mining and energy planning is absolutely necessary,’ said Riski.

Private initiatives, such as the construction of a 1.27 MWp solar power plant in the Indonesia Morowali Industrial Park (IMIP) area, are still considered symbolic. ‘In order for the nickel industry to truly align with the net zero emission target and be willing to develop clean energy, PLN needs to accelerate the construction of the 150-275 kV Sulawesi electricity interconnection network,’ said Riski.

In addition to limited reserves, the potential for nickel mining in Sulawesi also overlaps with more than 1.2 million hectares of natural forest. If this area is opened up, the loss of carbon stocks could reach hundreds of millions of tonnes. Therefore, forest protection must be an integral part of the nickel industry’s governance strategy.

Annisa Putri Widiani, Senior Planner at Bappenas, emphasised that the government is targeting 8% economic growth, which will be supported in part by the nickel industry. However, Indonesia is also committed to reducing carbon emissions by 45.73% by 2030.

“Decarbonisation of the nickel industry is a must. By 2045, this industry must reduce emissions by 81%, partly through energy transition,” she said.

However, Annisa acknowledged that major challenges remain, particularly due to the involvement of the private sector. The Just Energy Transition Partnership (JETP) scheme, which is supposed to accelerate decarbonisation, has yet to be widely adopted. ‘Many investors consider this project to be unbankable,’ she said.

Yeni Gusrini, Associate Policy Analyst at the Directorate General of Electricity at the Ministry of Energy and Mineral Resources, explained that the electricity systems in northern and southern Sulawesi are still separate. For this reason, PLN is planning to build a 275 kV backbone spanning 3,996 km that will connect the whole of Sulawesi. By 2034, the addition of renewable energy is targeted to reach 7.7 GW.

Meanwhile, Kevin Marojahan, a lecturer in Electrical Engineering at the Bandung Institute of Technology (ITB), highlighted the cost factor. According to him, energy prices greatly affect nickel production costs, especially with RKEF technology, which is electricity-intensive. Therefore, the continued existence of permits to build captive coal-fired power plants makes coal the cheapest option in terms of techno-economics. ‘Without firm policies, it is difficult to expect the industry to switch to clean energy,’ he said.

AEER emphasises that the energy transition in the nickel sector requires more than just replacing electricity sources. Efficiency and restrictions on nickel production, energy consumption limits, and environmental protection must also be part of the strategy. Without integrated governance between mining, energy, and ecosystems, the nickel industry risks becoming a time bomb for the economy and climate.***

Publication Report: From Captive to Green Grid, the Role of the Nickel Industry in Decarbonising Sulawesi’s Electricity System (Indonesian only, English version in progress), available at:

https://www.aeer.or.id/dari-captive-ke-grid-hijau-peran-industri-nikel-dalam-dekarbonisasi-sistem-kelistrikan-sulawesi/

Media contact:

Pradnya Paramarini | +62822-4976-1486 | pradnya@aeer.or.id