Indonesia economic output and employment impact of low rank coal utilization: An input output analysis

Abstract

Indonesia is the largest exporter of steam coal. Domestic coal utilization still limited, and even for low rank coal (LRC) has not been used. On the other hand, the need for energy is increasing and now, Indonesia is an oil importer. Through Presidential Decree No. 5/2006 on National Energy Policy, Indonesia will take advantage of 33% coal and coal liquefaction by 2% of the total energy required in 2025. This policy will also reduce the use of oil to only 20%. In government policies, the LRC utilization is used as a source of energy for domestic purposes. Based on economic calculations, the LRC can be used as briquettes, electricity, coal water mixture or even LRC liquefaction. Nevertheless, the calculation of the economic benefits of widespread the utilization of the LRC has not been done. This paper aims to evaluate the economic impact of output and employment from the LRC utilization using input-output analysis by the latest data of The Indonesian Input Output Table 2008. The calculations show, all types of LRC utilization give high output effect among 9 other economic sectors. While the use of briquettes will provide the output, income and employment effects for the highest compared with the utilization of the power plant, brown coal liquefaction and coal water mixture.