IESR UMD (2022) - Financing Indonesia coal phase-out_Page_01

Financing Indonesia’s coal phase-out

A just and accelerated retirement pathway to net-zero

Indonesia, one of the world’s largest coal producers and consumers, has signaled its openness to adopt a more ambitious net-zero target and a 2040s coal phaseout with international support. Such additional support could address the broader socio-economic implications of achieving the 1.5°C-compatible coal-to-clean power transition and ensuring the accelerated transition is carried out in a just and equitable way.

Although various financing mechanisms are under discussion, identifying the most beneficial strategies will require refinement of how to evaluate the just transition financing needs, what elements should be considered, and how to effectively allocate the limited resources to achieve the best outcome in the near term that can also set a robust pathway towards the long-term goals.

This research uses a structured methodology to develop a feasible plan and associated financing needs for retiring Indonesia’s coal-fired power plant fleet in support of national 2050 net-zero emissions and the global 1.5ºC target. Using the best data available, we conduct a comprehensive and systematic assessment to understand the magnitude and distribution of the benefits and costs of the accelerated, just coal transition in Indonesia.