Indonesia to adjust coal and nickel production quotas based on market demand, affecting carbon markets and emissions

Indonesia's Energy and Mineral Resources Minister announced a flexible approach to coal and nickel production quotas, allowing output adjustments based on commodity prices and domestic processing needs. For coal, the government plans to increase production when prices are high and tighten supply when markets weaken, following a reduction to around 600 million tonnes in the 2026 Work Plan and Budget. This policy aims to support coal prices while maximizing state revenue and foreign exchange earnings. In the nickel sector, the government may revise quotas to ensure sufficient ore supply for domestic smelters, after industry groups warned demand could reach around 350 million wet metric tonnes in 2026. Mining executives argue excessive restrictions could disrupt supply chains, reduce smelter utilization rates, and affect employment. The policy directly impacts carbon markets and emissions, as coal production increases could raise Indonesia's carbon footprint, while nickel demand is tied to battery supply chains for electric vehicles.