Report Launching and Discussion : 1.5°C-aligned coal power transition pathways in Indonesia: additional strategies beyond the Comprehensive Investment and Policy Plan (CIPP)

Background

Indonesia has ratified the Paris Agreement through Law no 16/2016. As a result, Indonesia is legally bound to contribute to the global struggle to mitigate the climate crisis through ambitious efforts and action in reducing Greenhouse Gas (GHG) emissions and limiting the increase of the average global temperature below 1.5 0C. In one of the IPCC climate model results of a 1.5 0C compatible pathway, the global Greenhouse Gas (GHG) emission must decrease by 45% in 2030 compared to 2010 and reach net zero emission by 2050. As of now, Indonesia is among the top 10 greenhouse gas (GHG) emitters and is still projected to increase its emissions, with the energy sector as the highest GHG contributor by 2030.

In November 2023, the Government of Indonesia published the first version of the Comprehensive Investment and Policy Plan (CIPP), outlining the country’s power sector emissions reduction roadmap and strategies. While the plan was expected to detail how the emissions reduction and renewable targets envisioned by the JETP will be delivered with investment and policies, we find that critical elements of a successful coal power transition are absent from the current version. 

According to the CIPP report, the investment required to achieve the 2030 targets proposed in the plan is estimated at 97 US$ billion.8 These resources will cover over 400 priority projects22, including grid development, phase-out of coal power plants, and the deployment of renewable energy. Overall, 50% of the resources are allocated for investment in dispatchable clean technologies such as geothermal and hydropower, while 26% is designated for variable renewable plants, and 20% for transmission infrastructure. The early retirement of coal plants represents just 2% of the entire plan8.

Join the Institute for Essential Services Reform (IESR) and the Center for Global Sustainability (CGS) at the University of Maryland on (insert date) to learn about new research into achieving a successful coal power transition in Indonesia. This event will launch two new reports, followed by a discussion session to disseminate key findings and recommendations to Indonesian stakeholders.

  1. To address the gaps in investment and subsequent resources, IESR and CGS assessed existing and pipeline coal power plants to determine retirement priority using a muti-criteria framework under a 1.5 0C compatible emission pathway for Indonesia. The research develops a comprehensive, high-ambition pathway for Indonesia’s coal power transition by combining a global integrated assessment model (GCAM), a power system dispatch model (PLEXOS), and bottom-up analyses. It expands the existing version of the CIPP in several dimensions, including (1) assessing the pathway that is 1.5°C aligned through 2050, (2) covering both on-grid plants and off-grid captive plants, (3) exploring a larger set of transition options for different coal plants, and (4) conducting plant-by-plant assessments to better understand the technical and economic suitability for individual plants, using the best available data. Further analysis is done to determine the costs and benefits of the early coal retirement scenario from economic, social, and environmental aspects, for a wider set of stakeholders. 
  2. The Center for Global Sustainability’s new report and database, the first of its kind on industrial parks, which is a pivotal element of the broader CIPP initiative aimed at bolstering regional economies. This launch highlights the importance of enhanced data availability, essential for understanding demand and making informed decisions about captive coal development. It also emphasizes the need to balance environmental objectives with economic growth and explores the potential for developing renewable energy sources within industrial estates.

Objective

The objectives of these seminars and workshops are:

  1. Disseminate the IESR-UMD study on transition strategies and 1.5°C -aligned pathway for on grid and captive power plants
  2. Discuss and identify aspects to consider for Indonesia to implement its coal-to-renewables strategy.
  3. Identify and propose a holistic framework for Indonesia beyond JETP CIPP to assess its transition strategies and 1.5°C -aligned pathway

Kompas | “Off-grid” CFPP Not Yet Included in JETP Targets

The Just Energy Transition Partnership Secretariat or JETP officially opened the draft investment plan to receive input from the public. Observers believe that there is homework to do to reduce greenhouse gas emissions optimally, considering that the emission reduction target in the draft has not yet reached generators outside the electricity grid of the State Electric Company (Persero) or off-grid.

Read more on Kompas.

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.