The Investment Management Agency Daya Anagata Nusantara (Danantara) is poised to become administrator of levies taken from extractive industries, particularly coal, nickel and palm oil, which are expected to generate funds for Indonesia’s transition from fossil fuels to clean and renewable energy.

The funds originate from potential maximum production levies on coal, estimated at US$22.5 billion annually, nickel export tariffs of up to $6.8 billion, and crude palm oil (CPO) export tariffs generating up to $5.9 billion per year.

Indonesia faces a significant financing gap in its renewable energy development and transition efforts. Investments in renewable energy have stagnated for the past seven years, with only $1.5 billion invested in 2023, lagging behind its Southeast Asian neighbors. 

According to the Institute for Energy Economics and Financial Analysis (IEEFA), Indonesia requires $146 billion to meet its 2030 climate targets. Moreover, to achieve 75 GW of renewable energy by 2040, as outlined by President Prabowo Subianto’s administration at COP29 and the G20 Summit, the country needs to add 8 GW of renewable energy annually while reducing 3 GW of coal power each year. To reach these goals, substantial funding is necessary.

Economists argue that Indonesia has untapped potential revenue sources from its key export commodities, including coal, nickel and palm oil. Depending on different scenarios, the government could secure between $11.7 billion and $35.2 billion annually, amounting to between $58.3 billion and $176 billion over five years.

The coal sector alone has the potential to generate significant fiscal revenue, as the industry continues to yield supernormal profits despite market fluctuations. 

“The coal industry could contribute up to $22.5 billion annually in additional state revenue,” Tata Mustasya, Executive Director of the Indonesian Sustainable Welfare Foundation (SUSTAIN), said as quoted in a statement on Wednesday, March 5, 2025.

Beyond increasing state revenue, coal production levies are essential for economic distribution and incorporating externalities into pricing.

Danantara currently holds a capital fund of $19.1 billion from government budget savings, allocated for national projects. 

Similarly, the nickel downstream industry has substantial fiscal revenue potential. Indonesia’s nickel production costs and prices are relatively low, driving down global market prices. The government could impose an export tariff to restore balance to the international nickel market. 

“A 10-20 percent export tariff could generate between $3.4 billion and $6.8 billion annually for the government,” Abdurrahman Arum, Executive Director of Clean Transition, said.

Meanwhile, in the palm oil sector, as the world’s largest producer, Indonesia could introduce export tariffs on CPO. 

“A 10-20 percent export tariff could bring in between $2.9 billion and $5.9 billion annually,” Harryadin Mahardika, Program Director of Clean Transition, said.

These revenues from extractive industries and palm oil need structured management. Danantara is positioned to take on this role, not just in collecting levies, but also in directing them through state-owned enterprises (SOEs) like State power utility company PT PLN.

“Danantara’s funds should be prioritized for developing clean and renewable energy, rather than being allocated to fossil fuel projects like coal gasification into DME,” Tata said.