Just energy transitions and coal in Indonesia

The document examines the economic, political, and governance challenges hindering Indonesia's transition away from coal, emphasizing the need for multi-level governance and social protections. It highlights the role of artificial price caps and political 'lock-in' as primary barriers, while noting a significant gap in planning capacity between national and subnational governments. The brief recommends establishing a Just Energy Transition Support Facility under Bappenas, implementing economic diversification for coal-dependent workers, and reforming electricity markets to eliminate coal subsidies and facilitate renewable energy integration.

• Coal remains artificially cheap in Indonesia due to government-mandated price caps, currently around USD 70 per metric ton for the power sector, and market controls such as export bans tied to domestic market obligations.
• Coal is deeply embedded in the Indonesian economy and politics, contributing almost 2% of national GDP and 67% of electricity in 2022. Some regional governments rely on mining royalties for up to 40% of their budgets, and in East Kalimantan, coal employs approximately 11% of the labour force.
• A 'revolving door' between the coal industry and the political establishment entrenches coal interests, making a phase-out difficult as former industry leaders enter politics or finance political parties.
• There is a significant gap in governance and planning capacity; decision-making is concentrated at the national level, while subnational governments have limited authority, lack budget or technical assistance, and suffer from weak communication with national agencies.
• Stakeholder visions for the transition diverge: industry players and some government agencies advocate for technological fixes like carbon capture and storage or coal derivatives, while NGOs and international organizations push for an accelerated phase-out focused on environmental and social impacts.
• The document recommends that the Ministry of National Development Planning (Bappenas) manage a Just Energy Transition Support Facility focused on three pillars: knowledge and information, a talent pool for workers, and finance mobilization.
• To enable renewable energy growth, the brief suggests eliminating coal subsidies, revising inflexible power purchasing contracts for PLN, and allowing the Central Agency of Statistics (BPS) to include environmental degradation in national economic balance sheets.

APA

Bner, S., Surya, L. R. F., Mendrofa, M. J. S., & Arond, E. (2024). Just energy transitions and coal in Indonesia. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2024/09/just-transitions-coal-indonesia-policy-recommendations-sei2024-037.pdf

Chicago

Bner, Stefan, lham R. F. Surya, Martha Jesica Solomasi Mendrofa, and Elisa Arond. Just energy transitions and coal in Indonesia. Stockholm Environment Institute, 2024. https://www.sei.org/wp-content/uploads/2024/09/just-transitions-coal-indonesia-policy-recommendations-sei2024-037.pdf.

Wikipedia

{{cite report |last1=Bner |first1=Stefan |last2=Surya |first2=lham R. F. |last3=Mendrofa |first3=Martha Jesica Solomasi |last4=Arond |first4=Elisa |title=Just energy transitions and coal in Indonesia |publisher=Stockholm Environment Institute |date=October 2024 |url=https://www.sei.org/wp-content/uploads/2024/09/just-transitions-coal-indonesia-policy-recommendations-sei2024-037.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bner2024just, author = {Bner, Stefan and Surya, lham R. F. and Mendrofa, Martha Jesica Solomasi and Arond, Elisa}, title = {{Just energy transitions and coal in Indonesia}}, institution = {Stockholm Environment Institute}, year = {2024}, month = oct, url = {https://www.sei.org/wp-content/uploads/2024/09/just-transitions-coal-indonesia-policy-recommendations-sei2024-037.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }