A coal-fired power plant at night in the nickel industrial area in Halmahera. Image by Rabul Sawal/Mongabay Indonesia.
Indonesia’s first road map for its energy transition, focusing on phasing out coal, is riddled with loopholes that will make it difficult for the country to retire its massive fleet of coal-fired power plants, critics say.
The road map uses a weighted scoring system to determine which power plants should be prioritized for closure or early retirement. But the system gives too much weight to criteria like how much funding has been secured to shutter a plant (27% of the total score) and not enough to factors like emissions (just 9.3% of the score), even though cutting emissions is the primary goal.
This approach means that only the lowest-risk plants — those with available donor funding and minimal grid impact — are likely to be retired first, regardless of their carbon emissions, said Bhima Yudhistira Adhinegara, director of the Centre for Economic and Law Studies (CELIOS), a Jakarta-based think tank.
“This scoring system would fail most [coal plants from being retired early],” Bhima told reporters in Jakarta. “This road map actually blocks early retirement of coal plants.”
The system also overlooks the potential cost savings from retiring old, inefficient, and heavily polluting plants, Bhima added. “If closing a coal plant saves money … shouldn’t that reduce the financial burden?” he asked, questioning the government’s reliance on external funding to shut down aging plants.
“If we rely on external funds, given today’s global finance conditions, it’ll be tough,” he said.
Even if the funds are available, other criteria, like whether renewables are ready to replace the coal plant, or whether the plant supports key industries, could still prevent early retirement, Bhima said. For instance, both economic added value (9.8%) and grid reliability (13%) carry more weight than emissions in the scoring system.
“That assumption means not many plants will qualify for retirement, since they assume many industries would be affected,” Bhima said, adding that emissions should be the top consideration for retiring a coal plant.
Lack of timeline and plant list
The roadmap also lacks a binding retirement schedule. At the G20 Summit in November 2024, President Prabowo Subianto pledged to phase out coal-fired power plants entirely within 15 years, or by 2040. However, the road map doesn’t set a firm deadline or clear timeline for this phaseout, according to energy nonprofit CERAH.
Moreover, the road map doesn’t specify which coal-fired power plants should be targeted for early retirement, despite studies identifying which plants are most eligible.
“This regulation should have included a list of coal-fired power plants targeted for early retirement,” said Sartika Nur Shalati, a policy strategist at CERAH.
The road map also sets a target for peak emissions in the power sector by 2037, with reductions only beginning in 2038 — seven years later than the 2030 peak recommended by the International Energy Agency (IEA) to keep global warming below 1.5° Celsius (2.7° Fahrenheit) above preindustrial levels.
‘False solutions’
The road map also promotes so-called cofiring, in which coal plants burn less coal and make up the difference by adding alternative fuels like biomass, hydrogen and ammonia. The plan also calls for retrofitting plants with carbon capture and storage (CCS) facilities.
But experts say both of these constitute “false solutions” that could prolong the lifespan of coal-fired power plants and divert investment away from true renewables.
The road map projects that coal-fired power plants with CCS and ammonia will still be operating in 2060.
CCS, in particular, is costly and doesn’t have a record of reliability in capturing carbon effectively and at scale. “This path [of false solutions] risks failing to curb emissions and could trap Indonesia in a worsening climate crisis,” said Wicaksono Gitawan, a policy strategist at CERAH.
If all 54.7 gigawatts of Indonesia’s current coal-fired capacity were equipped with CCS, it could add an estimated $17 billion annually to electricity production costs, Sartika said.
“One of the indicators for retiring coal-fired power plants is the potential impact on the basic cost of electricity provision. But integrating new energy technologies into the power sector actually entails very high costs and risks raising that basic cost,” she said.
The road map also lacks clarity on what a “just transition” means in practice. It doesn’t spell out support mechanisms like retraining programs for coal workers, compensation for communities affected by coal plant operations, or diversification of local economies dependent on coal — all of which are critical for a fair and inclusive energy transition.
“The government must clarify what framework of just transition is being used,” Wicaksono said.
What works
Despite these shortcomings, the road map provides some positive steps, according to the Indonesian Center for Environmental Law (ICEL). It legally mandates the early retirement of coal plants by state utility PLN, which must be based on a formal assignment from the energy minister. This mandate also includes the development of replacement power plants and grid infrastructure.
The roadmap also introduces the business judgment rule, a legal principle that protects company directors and executives from personal liability if their business, made in good faith and with due care, lead to financial losses but are in the long-term public interest, such as early coal plant retirements.
This provision is significant because PLN directors have expressed concerns about being held personally liable for state losses tied to early plant closures.
“With PLN being officially mandated to retire coal-fired power plants early and the business judgment rule applied in assessing retirement plans, this should serve as a strong legal foundation to push forward the retirement process,” said Bella Nathania, deputy program director of ICEL. “ICEL’s analysis also shows that legal risks surrounding coal plant retirement, particularly regarding potential state losses, are only relevant if there is an element of unlawful conduct.”
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A coal barge transporting coal from from the mines to the sea in Central Kalimantan, 2013. Image by Andrew Taylor/WDM via Flickr (CC BY 2.0).
Call for action
With the road map now in place, the Ministry of Energy and Mineral Resources should issue decisions to retire at least the two coal-fired power plants committed under Indonesia’s Just Energy Transition Partnership (JETP) scheme, Bella said. The JETP, funded largely by the G7 group of most industrialized nations, has highlighted the Cirebon-1 and the Pelabuhan Ratu plants, both in West Java province, as potential early retirement candidates to meet Indonesia’s climate targets.
Advancing the early retirement process would allow these plants to start preparing for the transition, including workforce and community adjustments, Bella said.
The government must address these gaps to prevent the road map from becoming a barrier to coal retirement — the very goal it was designed to achieve in the first place, Bhima said.
This article was originally published on Mongabay under the Creative Commons BY NC ND licence. Read the original article.
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