The scale of Indonesia’s nickel and aluminum processing has established the country as one of the key players in critical mineral downstreaming. However, this industrial expansion is increasingly powered by off-grid, coal-fired captive power — posing a significant challenge to Indonesia’s climate commitments and long-term competitiveness.

This report presents new analysis on the growing role of captive power in Indonesia’s mineral sector. An RMI-developed database, which compiles captive power capacity data from government and public sources, shows that Indonesia’s captive power capacity has more than doubled over the past five years, reaching 22.9 GW in 2024. Over 81 percent of this capacity is coal-fired, operating largely outside the oversight of the state-owned utility, PLN.

Much of this growth is concentrated in energy-intensive nickel smelters, with aluminum projects contributing a smaller but growing share. As of 2024, the nickel industry accounts for the largest share of captive power generation capacity, totaling approximately 13.94 GW. In comparison, the aluminum industry currently utilizes around 1 GW of captive capacity. However, with ongoing and planned industrial expansion, this figure is expected to increase in the coming years.

The climate implications are significant. In 2023, nickel-related activities alone emitted 170.2 million tons of CO2 (MtCO2 ) equivalent to 22% of Indonesia’s emissions from the energy sector and industrial processes and product use. A single aluminum smelter project powered by 1.1 GW of captive coal is expected to emit 5.2 MtCO₂ annually — nearly 2 percent of the national power sector’s total emissions.

While Presidential Regulation No. 112/2022 includes commitments to reduce emissions from captive coal, exemptions for industrial estates and national strategic projects have enabled continued coal development. Combined with limited grid access, weak market signals, and a lack of verified emissions data, these conditions are locking in long-lived, high-emission infrastructure.

At the same time, international trade frameworks — including the EU Carbon Border Adjustment Mechanism, battery passport standards, and Indonesia’s upcoming Emissions Trading System — are raising the bar for cleaner, verifiable supply chains. Aligning with these standards is critical to maintaining export competitiveness and attracting sustainable investment.

Designed for decision makers, industry stakeholders, and policy advisors, this report details the current landscape and projected trends and provides actionable recommendations. By highlighting pathways to transition from coal dependence to cleaner, more reliable power systems, the report offers a strategic framework for aligning industrial growth with national decarbonization and sustainability goals.

Download the full report to explore emissions trends, power sector dynamics, and decarbonization strategies for Indonesia’s nickel and aluminum industries.