Fighting for Just Energy Transition in Indonesia, Colombia, and South Africa

Jakarta, February 29, 2024 – The aspect of justice in energy transition is closely tied to community involvement in the process, particularly in preparing communities in coal-producing areas. Civil society organizations, as entities that closely engage with both the community and the government, play a significant role in urging the government to adopt participatory policies and integrate equitable principles. Additionally, they help in enhancing the community’s capacity by providing skills and knowledge, enabling them to effectively articulate their interests.

Ilham Surya, an Environmental Policy Analyst at the Institute for Essential Services Reform (IESR), highlighted that the income of coal-producing regions in Indonesia heavily relies on the coal industry. He pointed out that the lack of economic diversification in these regions could lead to economic disruptions if there’s a decrease in coal demand due to the global energy transition, especially if no measures are taken to mitigate this change.

“Indonesia is practicing distributive justice concerning fossil energy by providing access to electricity from coal and offering some subsidies to maintain affordability. The government should extend this distributive justice to the adoption of renewable energy during this global energy transition. Furthermore, Indonesia has ratified the Paris Agreement to contribute to emission reduction, including emissions from the energy sector,” Ilham explained during the webinar titled “Cross-country reflections on coal and just transitions in Colombia, South Africa, and Indonesia,” organized by the Stockholm Environment Institute (SEI) in collaboration with IESR.

Ilham emphasized the government’s promotion of the concept of energy transition, which he finds still confusing. On one hand, Indonesia receives various funding for energy transitions such as the Energy Transition Mechanism (ETM) and the Just Energy Transition Partnership (JETP). On the other hand, Indonesia appears to be permitting the construction of coal-fired power plants for industrial purposes.

According to Ilham, civil society organizations need to establish intensive discussion spaces and enhance the relevance of energy transition to the community to ensure that more people are exposed to energy transition issues.

Juliana Peña Niño, Senior Staff at the National Resource Governance Institute, revealed that the coal-producing regions of La Guajira and Cesar in Colombia are heavily reliant on royalties from the coal industry. She stated that nearly 50% of the region’s revenue comes from coal royalties, leading to a less diversified economy.

“The government must utilize these royalties to channel investments towards economic diversification. The challenge lies in the fact that local governments lack the capacity to access these resources and develop alternative economic projects,” she elaborated.

Furthermore, when discussing the energy transition in South Africa, Muhammed Patel, Senior Economist at Trade and Industrial Policy Strategies, considers the bottom-up approach as the ideal method to encourage community participation. However, implementing this approach tends to be challenging due to the prevailing top-down approach in South Africa.

“A lot of energy policy decisions can be made at a national level, but local governments sort of have to bear the costs,” added Patel. “Moreover, local governments often face capacity constraints. Even struggling to provide basic services, often private sector stakeholders take over the government.”

In South Africa, the civil society movement has also brought attention to the issue of energy transition through various means, such as pursuing legal cases concerning air pollution from factories in South Africa, lobbying the government, and engaging with the community.

“But those are some of the dynamics where there’s a strong voice for justice, strong backlash against injustice, especially when it concerns vulnerable communities and heavy industrial operations. But they don’t get a lot of support. So they often are flying the flag on the triangle,” remarked Patel.

Towards an Energy Transition in South Sumatra

Podcast Ruang Redaksi RMOL Sumsel

Palembang, December 6, 2023 – South Sumatra, also known as Sumsel, is a province in Indonesia that has immense economic potential. To promote sustainable economic growth, shifting towards renewable energy sources is crucial. This transition not only benefits the environment but also positively impacts the financial sector in South Sumatra.

Marlistya Citraningrum, Sustainable Energy Access Program Manager, Institute for Essential Services Reform (IESR), explained that Indonesia should prepare for the energy transition to ensure its people’s and economy’s well-being. Marlistya has observed that the perspectives on energy transition differ globally, nationally, and locally. For example, while some countries have already started adopting renewable energy and secured financing, Indonesia has only recently begun the energy transition process in the last ten years, which may take longer due to the presence of coal-producing areas that require long-term planning. To ensure a successful transformation, it is crucial to consider the opinions of various stakeholders, including entrepreneurs, workers, and communities living in the vicinity.

“The energy transition has the advantage of promoting an energy “democracy” in the economic system, where various parties can pursue renewable energy. For example, individuals can aim for renewable energy by installing solar panels in their homes. This creates opportunities for many parties to enter the renewable energy industry.,” said Marlistya Citraningrum in the RMOL South Sumatra Editorial Room Podcast on Wednesday (6/12).

Furthermore, Marlistya stated that exploring alternative economic sectors in coal-producing areas is essential during the energy transition process. Marlistya emphasized that South Sumatra is not just an energy granary but also a food granary. This means that certain agricultural commodities and plantations can contribute to the economy and improve the quality of life, access to financing, and capital.

“Diversifying the economy in the energy transition requires preparation, not only in terms of regulations but also the readiness of the business world and how the community will deal with it. Business diversification is one of the strategies for the business world, especially those engaged in fossil energy. However, we need to emphasize social justice for those affected should be a priority. For instance, providing certification or training for working in the green economy may be necessary,” Marlistya explained. 

Brilliant Faisal, Functional Planner Associate Expert, Regional Development Planning Agency (Bappeda) of South Sumatra (Sumsel), mentioned that his party plans to create new training programs for the community to prepare for the energy transition process. Faisal also said that they will prepare regional regulations related to economic transformation to ensure an equitable energy transition.

“We have planned eight main strategies to be implemented from 2024 to 2026. These strategies aim to achieve economic transformation, enhance the regional economy’s conduciveness, promote equitable development, and improve the workforce’s quality and competitiveness. This is necessary because South Sumatra heavily relies on its primary sectors, such as coal,” said Faisal.

Hermansyah Mastari, Chairman of the Regional Executive Board (BPD) of the Indonesian Young Entrepreneurs Association (HIPMI) of South Sumatra Province, explained that his party always synergizes with companies that will invest in South Sumatra. However, it is crucial to have the support of the local government, particularly in guiding major companies operating in the fossil fuel industry to prepare themselves and the local community for the shift towards renewable energy.

“In the past, there was a phenomenon where job seekers invaded one factory since dawn, and they were willing to queue since dawn. Such occurrences should not happen. Therefore, it is essential for big corporations to not only fulfill their corporate social responsibility but also take initiatives to train residents in skills that can help them earn a livelihood and contribute to the economy’s growth,” said Hermansyah.

Promoting Central and Local Government Institutional Capacity for Just Transition

press release

Jakarta, October 26, 2023 – The Institute for Essential Services Reform (IESR), in collaboration with the Stockholm Environment Institute (SEI), conducted a collaborative study on the analysis of central and local government institutional capacity for sustainable coal transition in Indonesia. 

The preliminary findings of this study show that of the eight ideal capacities that governments must possess to facilitate the energy transition, national and local governments have different strengths in their ability. The national government understands the energy transition well, while local governments have sufficient capacity to implement it. However, national and local governments still require capacity building in seven other abilities to support the energy transition successfully.

Wira Swadana, Program Manager of Green Economy, IESR, mentioned that a just energy transition requires careful planning and implementation. For this reason, qualified and complementary capacities and close collaboration between the national and local governments are crucial. 

“The national government can play its role in establishing regulations that support the implementation of an equitable energy transition, attracting investment and financing the energy transition through various international cooperation. Meanwhile, local governments can act as coordinators and stimulators in the energy transition process because they are better positioned to understand the field conditions and directly interact with citizens,” said Wira Swadana at the National Workshop on Equitable Transition: Building Capacity for Sustainable Coal Transition in Indonesia.

IESR assessed eight government capacities: awareness, technical knowledge, stakeholder engagement, communication, multilevel networking, finance, instrumental mastery in organizational structuring and strengthening, and implementing the energy transition. Based on IESR’s initial analysis, the national government needs capacity building in technical knowledge, communication, and networking. Meanwhile, local governments must also improve technical knowledge about the energy transition, finance, and authority, including instrumental capacity.

Martha Jesica, Social and Economic Analyst at IESR, explained three major gaps in the capacity building of the government at the national and regional levels. First, the rapid transfer of labor that limits the exchange of information. Second, there needs to be more awareness about the impact of coal and its implications on economic development. Third, multilevel communication between governments is hindered by complex bureaucratic processes.

“To address the capacity gap in technical knowledge among national and local government, shifting from a coal-centered economy to a more sustainable and equitable green economy is imperative because future economic growth and development are moving towards sustainability and equitable development. Furthermore, it is important to involve actors outside the government in planning, such as civil society groups at both the national and local levels, to facilitate knowledge exchange about this energy transition,” Martha said. 

Stefan Bößner, Researcher at Stockholm Environment Institute, said that the government can enhance its capacity to create policies and regulations supporting low-carbon initiatives and technologies. He also mentioned that economic diversification is a key solution to making an equitable energy transition. 

“These economic diversification options are available in Indonesia. For example, coal-producing regions can develop environmental tourism and use mining sites for solar energy installations or as energy storage,” Stefan said.