Webinar: Sunset of Coal-Fired Power Plants and the Coal Industry – Reviewing Direction and Multisectoral Impacts in a Just Energy Transition

Background

Indonesia has ratified its commitment to keeping global temperatures below 1.5 degrees Celsius, in line with the Paris Agreement, through Law No. 16 of 2016. The Indonesian government has set climate commitment targets through its enhanced Nationally Determined Contributions (NDCs): a 31.89% reduction in greenhouse gas emissions compared to business-as-usual scenarios and a 43.20% reduction with international assistance by 2030. However, these targets are still insufficient to meet the goals of the Paris Agreement. Based on business-as-usual scenarios, the energy sector is projected to dominate Indonesia’s emissions in the future. The electricity sector can be the first sector to be decarbonized considering the availability of low-emission technologies, such as renewable energy, which are becoming increasingly competitive. However, the Indonesian electricity system is currently dominated by coal-fired power plants.

On November 15, 2022, at the peak of the G20 High-Level Conference, President Joko Widodo and the International Partner Groups (IPG) led by the USA and Japan, including Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom, agreed to the Just Energy Transition Partnership (JETP) agreement. As a follow-up to this agreement, the Indonesian government needs to prepare a Comprehensive Investment and Policy Plan (CIPP) to achieve the target of peak emissions in 2030 and a 34% renewable energy mix in the electricity sector by 2030, as well as support for affected communities. The targets to be achieved are a peak emission of 290 million tons of CO2 in the electricity sector by 2030, net zero by 2050, and a 34% renewable energy mix in the electricity system. As a concrete step, the Indonesian government is currently preparing the CIPP investment plan document, which was originally scheduled to be launched on August 16, 2023, but has been postponed to the end of 2023. This delay is due to the unclear funding framework of the JETP from the IPG countries and the need for further refinement of some analyses in the document. In addition, the government also expects a more inclusive document and opens the opportunity for public consultation in the coming months.

Energy transition in various funding schemes, both JETP and Energy Transition Mechanism (ETM), is expected to prioritize justice aspects, especially for vulnerable and affected groups. The energy transition process should be seen as a comprehensive process that includes the creation of environmentally friendly jobs, social protection for vulnerable groups, as well as skills enhancement and retraining driven by employer programs to address these issues.One of the focuses of JETP is the effort to early retire coal-fired power plants (CFPP) which still contribute about 60% of the overall electricity generation. JETP also recognizes the importance of a fair transition principle for workers and communities affected by the early retirement of PLTU, including the domestic coal industry which will weaken and have an impact on the economy, especially in coal-rich areas. The JETP program in Indonesia must develop a fair transition roadmap that includes the creation of environmentally friendly jobs, social protection for vulnerable groups, as well as skills enhancement and retraining driven by employer programs to address these issues.

The impacts of this coal transition are identified and analyzed in several scenarios to study the relevant outcomes under various future conditions. These outcomes are presented so that stakeholders can make policies that anticipate the impacts that will occur. Therefore, the Institute for Essential Services Reform (IESR) will hold a public discussion to discuss the financing and investment scheme strategies, particularly in relation to the plans and anticipation of the multi-sectoral impacts of the early retirement of coal-fired power plants (PLTU) in efforts to achieve a just energy transition.

Objective:

To present and discuss the impacts resulting from the coal transition process in Indonesia.

To discuss how CIPP JETP supports a just energy transition.

To discuss the role of stakeholders in anticipating these impacts.