Report and Policy Brief Launching on The Indonesia Captive Power Decarbonization
Background
The growth of Indonesia’s manufacturing industry in recent years has been matched by a rapid increase in the use of captive power plants, which remain dominated by fossil-fuel-based energy sources. Dependence on these carbon-intensive plants poses a long-term risk of carbon lock-in, potentially hindering the achievement of Indonesia’s Net Zero Emission targets and increasing economic risks for industry players due to the potential for stranded assets in the future.
Amid economic transformation efforts to reach an 8% economic growth target, global economic dynamics increasingly demand the implementation of low-carbon production practices. The implementation of the Carbon Border Adjustment Mechanism (CBAM) by the European Union starting in 2026 presents a tangible challenge to Indonesia’s export competitiveness, particularly in energy-intensive sectors such as steel, aluminum, cement, and fertilizer. High emission intensity from a continued reliance on fossil-based captive power could weaken Indonesia’s position in global supply chains and obstruct the national agenda for industrial downstreaming and value-added growth.
However, efforts to decarbonize captive power plants in Indonesia still face various structural barriers. From an economic perspective, industrial players have yet to see a strong financial justification to transition away from fossil-based assets that still have remaining economic life. From a regulatory standpoint, challenges arise in the form of licensing complexities, limited interconnection with the PLN (national utility) grid, and additional cost burdens that reduce the feasibility of renewable energy projects. Furthermore, the absence of legal mandates and incentives for industries to replace coal-based captive plants, alongside limited land availability for renewable energy development, makes the transition process for captive power increasingly complex.
These conditions indicate that the decarbonization of captive power cannot be achieved through a single approach; rather, it requires a targeted strategy based on the characteristics of the systems and actors involved, supported by cross-ministerial and inter-agency policies. Addressing this need, the Institute for Essential Services Reform (IESR) has developed the report “Beyond Industrial Coal: Identifying Archetypes to Unlock Green Energy Solutions” as an analytical foundation mapping existing captive power conditions and feasible transition pathways. The findings are further articulated in a policy brief titled “Leveraging Indonesia’s Climate and Economic Growth Ambition through Captive Power Decarbonization,” which provides specific policy recommendations for key stakeholders, including the government, PLN, industry players, and financial institutions.
Objectives
The objectives of this activity are:
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To widely communicate the key findings and policy recommendations for the decarbonization of captive power plants.
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To serve as a strategic discussion forum for stakeholders to align the implementation of captive power decarbonization in Indonesia.
Speakers
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Fabby Tumiwa - Chief Executive Officer (CEO) - IESR
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Andriah Feby Misna S.T. M.T. M.Sc - Director of Various Renewable Energy - DJEBTKE-KESDM *
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Deon Arinaldo - Director of Energy System Transformation Program - IESR
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Komjen Pol (P) Drs. Nanan Soekarna - Chairman of the Indonesian Nickel Miners Association*
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Dr. Winardi M.Si - Director of Industrial Zoning - DJKPAII-Ministry of Industry*
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Soegito C. Kurniawan - General Manager Procurement & AFAM - PT Indocement Tunggal Prakarsa Tbk*
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Muhammad Ihsan - Renewable Energy Analyst - IESR
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Reananda Hidayat - Sustainable Mobility Clean and Building Environment Officer - IESR
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Speaker to be confirmed *
