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First-ever just transition plan for coal retirement in Indonesia finds a feasible pathway for a 2045 phase-out

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An accelerated plant-by-plant retirement strategy makes solidifying a 2045 coal phase-out target possible. 

Internationally assisted phase-out and a coordinated national approach will support Indonesia’s 2050 net-zero goal and a 1.5ºC global pathway.

Jakarta, Indonesia; Maryland, United States, August 2, 2022—A new first-ever analysis released today by the Center for Global Sustainability (CGS) at the University of Maryland and the Institute for Essential Services Reform (IESR) shows Indonesia can accomplish an accelerated coal phase-out by 2045 with international financial support. The analysis finds that Indonesia must decrease coal power generation by 11% over the next eight years and then ramp up retirement by over 90% before 2040 to retire the country’s 72 coal-fired plants. 

“Our analysis finds that through a just coal transition, Indonesia can take critical actions now that will set the country up for both an accelerated retirement and stronger international climate commitments before COP27,” says Ryna Cui from the Center for Global Sustainability, University of Maryland. “Meanwhile, the financing needed to implement a just coal power phase-out is estimated at 27.5 billion US dollars, which requires strong domestic effort and international support.”

Though Indonesia has committed to ambitious goals of reaching net-zero by 2060 or earlier, and phasing out coal in the 2040s with international assistance, their continued reliance on coal for both domestic energy and foreign exports presents challenges. But with the structured plant-by-plant retirement schedule showcased in this report, Indonesia can head to COP27 this November and signal to the world its commitment by setting a strong and feasible target to phase out coal power by 2045. 

The framework developed in this paper starts with developing pathways for national 2050 net-zero emissions and then structuring clear plant-by-plant retirement pathways through an integrated modeling approach. The retirement schedule is constructed based on an individual plant’s technical, economic, and environmental performance. 

“This analysis offers a detailed plant-by-plant retirement timeline that is financially feasible based on our systematic assessment of the benefits and costs of implementing a just, rapid coal-to-clean energy transition,” says Fabby Tumiwa, Executive Director of IESR. “First, we find that Indonesia can rapidly phase out coal and meet domestic and international goals, but importantly we find that they can do so in a way that benefits the public health and economy.”  

An accelerated retirement will cost over $32 billion through 2050, but the positive benefits from avoided coal power subsidies and health impacts amount to $34.8 and $61.3 billion—2-4 times larger—than the costs of stranded assets, decommissioning of plants, employment transitions, and state coal revenue losses. 

“Indonesia has adopted climate targets in line with international commitments. Today’s paper presents a pathway to help reduce over 2,600 MtCO2 emissions through a coal phase-out,” says Nathan Hultman, Director, Center for Global Sustainability at the University of Maryland. “This contribution will reap significant benefits for not only the Indonesian people but the world; new approaches to international financial support will likely be a critical component to achieve the most rapid transition possible.”

“To realize a 2045 coal phase-out and its economic and societal benefits, the Indonesian government must adopt strong policies that build on political and social momentum towards a clean energy transition,” says Raditya Wiranegara, Senior Researcher, Institute for Essential Services Reform (IESR). “But it is not on Indonesia alone to implement such an accelerated plan. As we head into COP27 in Egypt, where all eyes will be on finance, adaptation, and loss and damages, the international finance community must step up to help deliver on these goals.” 

Responding to this study, Andriah Feby Misna, Director of Various of New and Renewable Energy, said that early retirement of coal phaseout has become the government’s concern towards net zero emissions 2060.

“According to government modeling, the coal phase out will still last until 2056, while encouraging early retirement of coal phaseout outside PLN could be in 2050. If we want to speed it up in 2045, more in-depth calculations are needed,” she says.

Feby said that the government is currently designing a roadmap for early retirement for coal-fired power plants. According to her, the IESR and CGS studies at the University of Maryland can be harmonized with studies currently being carried out by the government. She continues, if there is international assistance, it is hoped that the early retirement of the coal-fired power plants can be accelerated.

To hear from authors, global experts, and policymakers about this new analysis, tune into CGS and IESR’s webinars on Wednesday, August 10, 2022: Financing a Just Coal Phase-Out in Indonesia.

Download the report to learn more about a financing strategy for Indonesia’s coal phase-out.

The research behind this report was funded by Bloomberg Philanthropies. ***

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