[Look at China on January 7, 2022]Indonesia, the world’s largest coal exporter, banned coal exports in January in order to ensure domestic supply. This has triggered concerns from all walks of life that global coal prices may soar, and its largest customer, China, may also be affected. Reappear the power shortage crisis. However, observers believe that with the current overcapacity of coal in China, most factories have entered the off-season, and electricity consumption has slowed. Therefore, the amount of coal needed for China‘s power generation should be limited by the impact of Indonesia’s export ban. In particular, Beijing may also reduce carbon emissions. The goal is to implement power rationing again, but overall, the soaring coal price is still not conducive to China‘s economic recovery.
There was a shortage of coal stocks in Indonesia at the end of last year. Therefore, in order to ensure the supply of coal to domestic power plants, the Indonesian Coal Mine Bureau issued an emergency ban and suspended coal exports for one month from New Year’s Day in 2022. 40 million tons of coal exports.
Indonesian President Joko Widodo (Joko Widodo) said that coal mines and liquefied natural gas companies must prioritize domestic demand and ensure energy security before exporting to other countries.
According to Indonesia’s “Domestic Market Obligation” (DMO) policy announced in 2018, local coal mining companies must supply 25% of their annual output to Perusahaan Listrik Negara (Perusahaan Listrik Negara), and the purchase price limit cannot exceed US$70 per ton. Half of the market price, at present, the supply of coal mining enterprises is not up to the government standard.
Although Indonesia’s national power company received an additional 7.5 million tons of coal on January 4, the ban assessment review originally scheduled for January 5 has been postponed, which means that the export ban cannot be relaxed or lifted in the short term. This makes Indonesia’s main fuel Coal-importing countries are caught in fear of tight energy supplies. The Japanese Embassy in Jakarta recently urged the Indonesian Ministry of Energy to revoke this ban because the ban will have a serious impact on the Japanese economy and people’s lives.
According to data from the international energy research company Kpler, in 2021, China, India, Japan, and South Korea will obtain 73% of Indonesia’s coal exports. Indonesia is also China’s largest coal supplier. According to statistics from the General Administration of Customs of China, China imported nearly 300 million tons of coal in the first 11 months of last year, of which about 170 million tons came from Indonesia, accounting for 61%.
As some provinces in China have experienced the crisis of “switching the gate and lack of electricity” since the middle of last year, and after the Sino-Australian relationship has gone bad, Beijing has suspended coal imports from Australia and increased its dependence on coal from Indonesia and Russia. Therefore, as soon as Indonesia announced the coal ban, some market participants worried that China‘s energy crisis may intensify.
Indonesia’s coal ban has limited impact on China
However, Tao Yifen, an associate professor in the Department of Political Science at National Taiwan University in Taipei, believes that Indonesia’s coal ban will not have much impact on China‘s coal-fired power supply.
Tao Yifen told VOA: “Most of China’s coal is produced on its own, and less than 10% is imported. About 6% of the coal that China uses for power generation is produced in Indonesia. Now it has entered the off-season of production. Coupled with the New Year at the end of January, (factories) usually shut down, so China‘s own electricity demand is declining, which will not have much impact.”
Wang Weiluo, a technology and water conservancy expert living in Germany, also said that after China’s electricity rationing and production restrictions last fall, China has asked coal companies to increase production capacity. Therefore, even if the amount of coal imported to Indonesia decreases, China will no longer cause electricity shortages.
Wang Weiluo told VOA: “China’s coal production capacity has reached 5 billion tons at a time. Due to the production restriction order of the National Development and Reform Commission, many coal mines (businesses) cannot use their production capacity and are in a state of surplus. Utilizing domestic coal production capacity, China’s coal production will soon increase. From September this year until now, because coal prices have gone up and electricity prices have gone up, you have not seen power shortages.”
However, Wang Weiluo said that if Indonesia extends the coal ban, coal prices will remain high due to reduced supply, which will make life difficult for low-income households in remote areas of China.
Wang Weiluo said: “If Indonesia (long-term) restrictions on exports, even if China’s coal prices go down, the price of coal supplied to remote areas will remain high. The impact on the livelihoods of these people with relatively low incomes will be affected. It’s huge.”
Use the injunction to counter Beijing’s hegemony in the South China Sea?Scholar: Low probability
Jakarta’s export ban was due to concerns about the insufficient supply of coal for power generation. However, according to official statistics, Indonesia plans to produce 644 million tons of coal this year. After deducting the estimated domestic consumption of 190 million tons, in fact, There are still more than 450 million tons of coal available for export. Therefore, some people believe that Indonesia is not short of coal, but instead uses the ban to counter Beijing’s recent hegemony in the South China Sea.
Indonesia conducted oil and gas drilling operations in the Natuna Islands in its exclusive economic zone in July last year (2021), but the islands’ waters overlapped with the “nine-dash line” boundary claimed by China in the South China Sea. Beijing Not only did they protest, they also dispatched coastal defense ships to the waters, and even sent a letter asking Indonesia to stop drilling operations, which led to Indonesia’s decision to strengthen national defense and security on the island.
In this regard, Tao Yifen of National Taiwan University believes that Indonesia’s coal ban is mainly due to the low purchase price, which should have nothing to do with Beijing’s territorial water dispute.
Tao Yifen said: “The coal supplied by Indonesia (coal mining companies) for domestic power generation is purchased by the state, so the price is much lower than the international price. Indonesian coal mining companies would rather sell the coal to the international market than they want. The supply of domestic power generation has caused domestic shortages and the government threatened to ban exports. So I think it is mainly because of the state of negotiations between the Indonesian government and these coal mining companies. It should not be because of the relationship with China.”
Chen Zhijie, an associate professor at the Institute of Political Science of Sun Yat-sen University in Kaohsiung, Southern Taiwan, also said in an interview with Voice of America that Indonesia is unlikely to retaliate against Beijing through a coal export ban. After all, the ban is not only for China, but for all exports. All countries are treated equally.
Editor in charge: Xin He Source: Voice of America
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