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A US company is quietly building a massive coal-to-gas plant – in Indonesia

Air Products and Indonesia have partnered to build a coal gasification plant that will challenge the country's net-zero ambitions.

In January 2022, Indonesia broke ground on a $2.3bn coal gasification plant on the island of Sumatra, Indonesia, expected to be finished in 2025 or 2026. The plant is part of a $15bn planned investment by Air Products and Chemicals, a Pennsylvania-based company in the US, that is one of the largest ever overseas coal investments by a US company.

Air Products is also a partner in a second coal gasification facility already planned for East Kalimantan, on the Indonesian side of the island of Borneo. Together, the two plants would produce 3.2 million tonnes of coal-derived dimethyl ether (DME) every year, making them among the largest such facilities in the world. DME is a synthetic gas that can be used as an alternative fuel in industrial, chemical or transportation applications.

“It is undoubtedly a massive investment [that] will be helpful [to Indonesia economically],” says Surya Dharma, an energy expert with the Indonesian Renewable Energy Society, a domestic think tank. “But, in terms of reducing [greenhouse gas] emissions, this is a significant challenge.” Indonesia is party to the Paris Agreement and the government has pledged net-zero emissions by 2060.

The problem is that, if built, these plants could entrench the long-term use of coal in a country with vast coal reserves that is already the world’s fourth-largest greenhouse gas emitter.

For Indonesia, coal gasification aims to support domestic coal interests.

“The government wishes to supply [an alternative to] liquefied petroleum gas [LPG] for domestic use [in industry and heating], as a substitute for LPG imports,” says Surya. “[But] coal itself will produce emissions, and I am unsure how Air Products will deal with this.”