The demand for electric vehicle batteries, as part of the energy transition, continues to rise and is projected to reach over 3 terawatt-hours (TWh) by 2030, up from around 1 TWh in 2024. Although electric cars remain the primary driver of battery demand, other modes of transport are expected to gain market share. In particular, the contribution of electric trucks to electric vehicle battery demand is set to triple by 2030 to over 8%, up from nearly 3% in 2024.[i]
Nickel is one of the critical minerals essential for electric vehicle batteries. Lithium-nickel-cobalt-manganese (NMC) batteries are still widely used in the United States and Europe. Although lithium-iron-phosphate (LFP) batteries are now more widely used in China, currently the world’s largest electric vehicle market. China accounted for 64.70 per cent of the 17 million electric vehicles sold in 2024.[ii]
Indonesia is a major global producer of nickel and therefore plays a crucial role in the global electric vehicle battery supply chain. With nickel reserves of 55 million tonnes, or 42.30 per cent of the world’s total reserves, Indonesia mined 2.2 million tonnes of nickel, or 59.45 per cent of the world’s total production in 2024, a sharp increase from 130,000 tonnes, or around 5.70 per cent of the world’s total production, in 2015.[iii]
The rapid expansion of nickel mining has been driven primarily by nickel downstream processing programmes over the past 10 years in Central Sulawesi, North Maluku, Southeast Sulawesi and South Sulawesi. These provinces have rapidly grown into processing hubs producing NPI, a raw material for the stainless steel industry, which has also developed significantly in these regions. Furthermore, particularly in Central Sulawesi and North Maluku, these regions have become producers of nickel matte and mixed hydroxide precipitate (MHP), raw materials for electric vehicle batteries.
Nickel processing is an energy-intensive industry. The nickel-based industrial zones developing in Central Sulawesi, North Maluku, and Southeast Sulawesi are entirely reliant on coal-fired power plants. By 2025, captive coal-fired power plants with an installed capacity of 15,405 MW will have been built, making these nickel-based industrial zones highly carbon-intensive. The paradox of decarbonisation is that the nickel processing industry for electric vehicle battery raw materials relies on electricity supplied by coal-fired power plants.
The International Energy Agency (IEA) estimates that global CO2 emissions will reach 37.5 Gton CO2 in 2024. Carbon emissions from coal-fired power stations and industrial processes account for 15.6 Gton CO2, or around 41.58 per cent of total emissions for that year. Southeast Asia, as the world’s third-largest consumer of coal, saw coal consumption rise in 2024, increasing by nearly 8 per cent. This increase was primarily driven by Indonesia, where use by the metallurgical industry – particularly nickel processing – was the main driving factor.[iv]
Indonesia has set a target to achieve Net Zero Emissions (NZE) by 2060. Various policies have been implemented, the most significant being Presidential Regulation No. 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Supply, which serves as the foundation for decarbonisation. Unfortunately, there is no indication that decarbonisation in the nickel industry is currently underway. One of the reasons for this is that Presidential Regulation No. 112/2022 permits the construction of coal-fired power plants in industries that generate added value and are designated as National Strategic Projects (PSN).
