Indonesia's commitment to phase out coal power generation within the next 15 years is now under intense scrutiny, as experts warn this ambitious objective will require immediate, transformative actions for it to be realized. The initiation of this plan came when the nation’s new President, Prabowo Subianto, surprised many during the recent G20 summit by committing to shut down hundreds of coal and fossil-fuel power plants by the year 2040. This pledge is significant considering Indonesia is among the leading coal producers and consumers globally.
Fahmy Radhi, who teaches energy economics at Gadjahmada University, emphasized the monumental challenge Indonesia faces, stating, "It will be difficult to achieve. We need a total change to do it." Currently, the Ministry of Energy and Mineral Resources reports 253 operational coal-fired power plants across the nation, including the Suralaya complex, which stands as Southeast Asia’s largest coal plant.
A troubling reality is the growing number of coal plants still under construction, which includes various so-called captive coal plants dedicated to supplying energy primarily to industry rather than to the broader electrical grid. To meet President Prabowo's target of achieving net-zero emissions by 2040, many experts anticipate closing down existing coal operations could cost the country upwards of tens of billions of dollars.
Indonesia's previous goal encompassed closing just 13 coal-fired power plants by the year 2030, indicating the substantial leap the new administration is proposing. Even though the nation had entered a $20 billion Just Energy Transition Partnership with developed countries back in 2022 intended to accelerate its shift to cleaner energy, the disbursement of these funds appears to have stalled, leaving many skeptical about the future.
While the government lays out plans for developing approximately 75 gigawatts of renewable energy capacity by 2040, specifics on achieving this transition remain sparse. Hashim Djojohadikusumo, the brother of President Prabowo, who now serves as the special envoy for energy and the environment, mentioned aspirations to construct two nuclear power plants, though no concrete proposals or locations for these facilities have been put forward yet.
The difficulties of breaking Indonesia's reliance on coal are apparent; even previous commitments have met substantial barriers. Former President Joko Widodo had previously announced a moratorium on new coal power plant constructions back in 2022. Nevertheless, this did not stop numerous projects agreed upon before the moratorium from advancing, and coal continues to satisfy two-thirds of the nation’s power generation, as confirmed by the International Energy Agency.
Coal remains attractive due to its affordability and reliability, especially for swiftly growing economies like Indonesia, where demand for energy is on the rise. Most of the coal power plants are relatively new, complicacies arise concerning early retirements which presents potential financial burdens. The Institute for Essential Services Reform (IESR), based out of Jakarta, estimates Indonesia would need about $27 billion by 2040 simply to shut down coal plants generating 45 gigawatts of capacity. Further complicate the matter, state-run electricity company PLN has indicated it will not bear the costs of shutting down the plants citing their financial burden, with estimates indicating the closure of one plant could near around $2 billion.
Adila Isfandiary, who works as a climate and energy campaigner for Greenpeace Indonesia, expressed concerns about the necessary policy adjustments, stating, "There are still many policies don’t aim for the real energy transition. Our investment climate is not favorable, and investors still don’t see renewable energy as bankable, especially with coal being so cheap."
Yet there are glimmers of hope. Experts contend there is potential to achieve the targets if the government pursues necessary changes. The government may need to retire around three gigawatts of coal capacity annually over the next 15 years and increase its investment and reliance on renewable energy, especially solar power, which is growing rapidly. Indonesia has made strides toward this goal; it recently unveiled the largest floating solar plant in the region, boasting 192 megawatts of capacity, and also has untapped resources connected to biomass and geothermal energy potential.
Nevertheless, for the government’s initiatives to work, they require great ambition paired with a clear roadmap. IESR's executive director, Fabby Tumiwa, urged the authorities to treat the transition as both serious and urgent. He stated, "This whole thing is a daunt task and very expensive." Immediate regulations against any new coal constructions following next year alongside coaxing investors through incentives for renewable energy projects stand as possible solutions.
“Now it might feel like mission to Mars,” Fabby says. “But if we approach it aggressively, it’s actually doable.””
