Jakarta, January 22, 2025 – The administration of President Prabowo Subianto and Vice President Gibran Rakabuming Raka will complete 100 days on January 28, 2025. The Institute for Essential Services Reform (IESR) believes that while the government has expressed enthusiasm for achieving energy independence and aiming for zero emissions before 2060, this commitment has not yet been fully reflected in concrete plans and actions. IESR emphasizes the need for the government to translate its commitment to energy transition into actionable steps promptly. This includes issuing a plan to increase the utilization of renewable energy and phase out fossil fuel technologies. Specifically, IESR advocates for tactical measures to achieve a 23 percent renewable energy mix by the end of 2025 to maintain momentum in this vital transition.
A month after his inauguration, President Prabowo emphasized Indonesia’s contribution and leadership in addressing global climate change and renewable energy transition through his speeches at the APEC CEO Summit and G20 Summit in Brazil. He delivered a net zero target before 2050 with a strategy to stop coal power plants in 15 years, achieve 100 percent renewable energy in 10 years, and achieve electricity self-sufficiency.
However, until now, the president has not provided specific direction to achieve the promise to reach a 23 percent renewable energy mix by 2025 and attain 100 percent renewable energy within the next ten years. Currently, the government focuses on long-term targets, as outlined in the RUPTL 2025-2034 plan, which is expected to prioritize renewable energy. For this reason, IESR believes the government needs to implement tactical steps, such as accelerating the development of 9 GW of renewable energy capacity this year.
To facilitate a smooth implementation and ensure the long-term success of energy initiatives, verbal commitments made in international forums need to be clearly defined in written rules and integrated into various energy policies. However, the National Electricity General Plan (RUKN), published in November 2024, maintains the net zero emissions target 2060 instead of advancing it to 2050. Additionally, it sets peak emissions in 2035 rather than 2030, aligning with the president’s statements. Furthermore, the RUKN still includes plans to construct coal-fired power plants (CFPP) until 2035.
IESR Executive Director Fabby Tumiwa mentioned the energy transition is lengthy. However, decisions must be made now to allow for comprehensive energy planning and measurable implementation. The president and vice president need to demonstrate courage in challenging the status quo and the interests that protect fossil fuels and address the various reasons that downplay energy transition efforts. These actions are crucial for achieving energy security and self-sufficiency in alignment with Asta Cita.
In line with the president’s ambition to phase out coal-fired power plants by 2040, IESR’s study found that early retirement of coal-fired power plants could be implemented in 105 units (25 GW). This action contributes to nearly half the cumulative emission reduction of on-grid power plants.
“The president’s commitment to early retirement of coal power plants in 2040-2045 should also be accompanied by a halt to the construction of captive power plants. Not only that, efforts to maintain the use of dirty coal by using untested CCS / CCUS technology that can significantly reduce emissions must be compared to the effectiveness of results and costs, with the option of utilizing renewable energy, which is cleaner, cheaper, and cuts emissions,” Fabby said.
Fabby also added that the government needs to seriously examine global market trends that demand low-emission goods and services, such as clean and low-carbon electricity. A country’s ability to provide low-carbon electricity will determine its investment attractiveness.
Furthermore, Fabby emphasized the importance of a level playing field for renewable energy utilization by gradually reducing fossil energy subsidies. Based on data from the Ministry of Finance, 2024, the government spent Rp386.9 trillion on fossil energy subsidies and compensation, including fuel, LPG, and electricity, of which 87 percent of electricity comes from fossil energy. Notably, 87 percent of the electricity produced comes from fossil energy. Additionally, the reliance on fossil fuels, including low-quality fuel, has resulted in a health cost burden of IDR 1.2 trillion in 2023 for the Jakarta area alone due to high pollution levels. In the first 100 days of the Prabowo-Gibran government, no strategy has been put in place to reduce gross energy subsidies or mitigate the impact of energy prices if these subsidies are gradually and selectively cut.
During the past 100 days, the reform of the policy of providing coal DMO prices to PLN has also not been on the radar of policymakers. IESR urges the government to evaluate this policy’s impact on advancing renewable energy development. IESR recommends that instead of continuing coal subsidies in the form of a USD 70 per ton DMO to PLN, which undermines the economics of renewable energy, the government should establish a new funding scheme to support Indonesia’s energy transition. This could involve levying a 2.5-5 percent tax on the value of exported coal. IESR estimates that this levy could generate more than USD 1.25 to USD 2.5 billion annually for the government. These funds could then be used to finance investments in renewable energy generation and transmission by PLN and other utilities.
IESR believes that the development of biodiesel under President Prabowo Subianto, as part of an effort to achieve energy independence, must be approached with caution and wisdom, taking into account various trade-offs. The increasing demand for crude palm oil (CPO) as a raw material for biofuel poses a risk of further oil palm land clearing, which could lead to increased deforestation, destruction of ecosystems, and a significant rise in greenhouse gas emissions. To mitigate these risks, IESR advocates diversifying biodiesel feedstocks by exploring alternative sources, thereby reducing reliance on palm oil.
“Indonesia’s commitment to achieve a net FOLU sink by 2030 with a GHG emission level of -140 million tons CO2e by 2030 should be a major consideration in developing biodiesel and bioenergy. To support sustainability, all CPO production to make biodiesel must obtain sustainability certification, such as Indonesian Sustainable Palm Oil (ISPO). This is important to ensure that biodiesel development contributes to energy independence, reduces carbon emissions, and protects community rights,” Fabby said.
In addition, biodiesel production must meet strict sustainability criteria. These criteria include maintaining a low carbon footprint, avoiding damage to ecosystems, involving local communities fairly by respecting their rights and being produced economically to prevent burdening the state budget or causing market distortions. The IESR urges that within the next 100 days, the president should clearly state the necessity of adhering to sustainability rules throughout the entire biodiesel production chain. This is essential for reducing environmental and social risks and lowering emissions from this program.
