New Study Finds Cancelling Coal Plants as Cost-Effective Way to Cut Global CO2 Emissions

Preventing nine planned Indonesian coal plants would avoid nearly 300 million tons of emissions for less than 80 cents per ton of CO2, per IESR analysis supported by The Rockefeller Foundation

JAKARTA, INDONESIA | May 30, 2023 ― The Institute for Essential Services Reform (IESR), a leading energy and environment think tank based in Jakarta, Indonesia, released a first-of-its-kind analysis, commissioned by The Rockefeller Foundation, which examines what it would take to prevent planned coal plants from being built. Delivering Indonesia’s Power Sector Transition found that nine coal plants in Indonesia could be cancelled with minimal repercussions for supply or grid stability and affordability, while avoiding an estimated 295 million tons of CO2 emissions. The study recommends cancelling planned, permitted, or pre-permitted plants as one of the most cost-effective and environmentally impactful approaches to accelerating just energy transitions in Indonesia.  

 “We developed an entirely new approach to undertake this analysis. We looked individually at each planned coal plant in Indonesia. Based on a multi-criteria scoring system, we identified plants that could be cancelled, and then assessed the legal, financial, system resilience, energy security, and carbon emission implications of this intervention. Our team used satellite images to track plants’ development progress over time, “said Fabby Tumiwa, Executive Director of IESR.  

“There are some 950 coal plants planned or under construction around the world, which if built, would emit an estimated 78 billion tons of CO2 into the atmosphere over their lifetime,” said Dr. Joseph Curtin, Managing Director for Power and Climate at The Rockefeller Foundation. “This first-of-its-kind analysis illustrates that, in many cases, there are better options available to policy makers, utilities, regulators, and systems planners that can accelerate the shift from fossil fuels. This analysis could also be replicated in other countries with a large coal pipeline.”

If constructed, the nine coal plants, which are predominantly at the financing state, would account for nearly 3,000 megawatts (MW) of coal capacity, or about 20% of total planned additions in Indonesia. A power system analysis was undertaken using seven separate models, representing each part of the country’s existing grid, to examine the power system reliability and affordability associated with cancelling. IESR’s analysis found that cancelling the nine plants: 

  • Would avert 295 million tons of CO2 emissions. With USD 238 million already invested to date into the nine, the calculated carbon abatement is less than 80 cents per ton of CO2 emissions avoided.
  • Could be achieved without compromising system stability, and that the power would mostly be replaced by existing power plants operating at greater capacity. This route, however, would likely imply additional costs from power system operation of $2.5 billion per annum in the period to 2050. It also should be noted that IESR’s analysis did not include adding more renewables to the energy mix, which would help reduce the average generation costs even further. 
  • Requires incorporating the legal risks associated with the unilateral cancellation of any project for the Republic of Indonesia and PLN, Indonesia’s government-owned electricity company, which were identified in the study. Independent power producers (IPPs) enjoy long-term power purchase contracts with PLN on favorable terms, and negotiations will be necessary in each case to ensure that cancellations do not amount to a breach of existing agreements. In some cases, offering the project developer the option to replace the power with renewables could be considered.
  • Will not be sufficient to meet Indonesia’s Just Energy Transition Partnership (JETP) target.

More than two-thirds of Indonesia’s electricity currently comes from burning coal, and with the PLN predicting an additional 13,822 MW of capacity via new coal plants by 2030, Indonesia has the third largest coal pipeline in the world, following China and India. At the same time, through JETP, Indonesia also aims to achieve peak emissions from the power sector at 295 million metric tons of CO2 per annum by 2030 and net-zero emissions in the power sector by 2050. In order to do so, the Republic of Indonesia and International Partnership Group (IPG) signed a JETP agreement in 2022, and in March 2023, the Indonesian Ministry of Energy and Mineral Resources signed a Memorandum of Understanding with the Global Energy Alliance for People and Planet (GEAPP), which is funded by The Rockefeller Foundation, IKEA Foundation, and Bezos Earth Fund. 

The report also includes a series of further recommendations that outline a systematic approach to reaching net-zero emissions by 2050 or earlier. 

Report Launching and Discussion Delivering Power Sector Transition in Indonesia: Options and Implications of Intervening the 13.8 GW Coal-fired Power Plants Project Pipeline of Indonesia’s State-owned Utility


Indonesia has ratified the Paris Agreement through the Law no 16/2016. As a result, Indonesia is legally bound to contribute to the global struggle of climate change through ambitious efforts and action in mitigating Greenhouse Gas (GHG) emission and limiting the increase of the average global temperature below 1.5 0C. In one of the IPCC climate model results of the 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 still projected to increase its emissions, with the energy sector as the highest GHG contributor by 2030.

With 66% share of power generation in 2021, the coal power plant has been the major contributor of the energy sector emission (around 40%), and even 90% of power sector emission. The latest PLN’s RUPTL (green RUPTL) still considers the addition of 13.8 GW of Coal power plants in the next decade. The share of renewable energy will only increase to around 24% by 2030 according to the same plan, resulting in overall increase of the power sector (and energy sector) emission. Thus, it clearly goes against the mandate of the Paris Agreement.

Institute for Essential Services Reform (IESR) and the University of Maryland (2022) study found that 9.2 GW of coal must be phased out from the state-owned utility (PLN) grid before 2030 and all unabated coal plants must be phased out by 2045 at the latest, to put Indonesia on track to meeting the 1.5°C Paris Agreement global temperature goal. The study also concluded that the coal emission has to start declining event before the end if this decade. There have been several initiatives and measures to support and realize the early retirement of Indonesia’s CFPP. In addition to the Energy Transition Mechanism (ETM) launched at COP-26, during the G20 summit, Indonesia and the International Partnership Group (IPG) have also signed the Just Energy Transition Partnership (JETP), aimed at meeting the power sector’s peak emission target of 290 million metric tons of CO2 (MtCO2) by 2030, reaching a 34% renewable energy mix by 2030, and having the power sector become net-zero by 2050. 

Even though the JETP target is not yet aligned with the Paris Agreement’s goal, it is an important opportunity for Indonesia to accelerate energy transition and open the possibility for early coal plant decommissioning.  According to the IESR assessment, under current power system circumstances, meeting the JETP goals would require slashing 8.6 GW of coal power capacity in the PLN grid by 2030, lower than the capacity required to meet the 1.5°C pathway.   

This study hence explores the potential of intervening in some of Indonesia’s coal plant pipelines and assesses the legal, financial, system resilience, energy security, and carbon emission reduction of this intervention. The thinking behind this assessment is that, given the average age of coal plants in Indonesia, including those that are currently in the pipeline, their operation will surpass the 2045 or 2050 target year. Meanwhile, the early retirement of existing plants in operation could be very costly given their long-term contract and nature of their PPA’s terms. Therefore, intervention for individual plants in the pipeline, even cancellation of existing projects whenever it is possible could produce a lower-cost carbon emission abatement and might contribute to meeting the target to reach peak emission by 2030 and net-zero emission by 2050. Types of interventions considered in the study include cancellation of planned CFPP, repurposing, and early retirement.

IESR will hold a hybrid seminar to launch the research report titled “Delivering Power Sector Transition in Indonesia: Cost and Benefits and Implication of Intervening in the 13.8 GW Coal-fired Power Plants Project Pipeline of Indonesia’s State-owned Utility”, and invited the related stakeholders to discuss and build out recommendation for decarbonization of the power system.


  1. To disseminate research-based analysis of intervention strategy on carbon emission reduction in power sector to meet the JETP target and even the 1.5°C Paris Agreement global temperature goal in the long-term especially for the pipeline CFPP
  2. To identify the cost, benefit and implication on intervening Coal-Fired Power Plants Pipeline
  3. To discuss the opportunity and potential obstacle to overcome the challenges on cancellation, repurposing and/or early retirement of CFPP