Galvanizing Mining Business Actors for a Just Energy Transition

From left to right Wira Swadana, Green Economy Program Manager, Yulfaizon, General Manager, PT Bukit Asam Tbk Ombilin Mining Unit, Farah Vianda, Sustainable Financing Coordinator, and Y. Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal


Jakarta, January 25, 2024 – Mitigating the impact of the declining demand for coal in Indonesia is crucial, particularly in regions heavily dependent on coal production, amidst the global push for a robust energy transition. The Institute for Essential Services Reform (IESR) emphasizes that companies and business entities within the coal industry can play a pivotal role in revitalizing post-mining areas and facilitating economic development within communities once coal operations cease.

Wira Swadana, the Green Energy Program Manager at IESR, asserts that a just energy transition must actively involve various stakeholders, with a special focus on companies and business actors.

“While private entities and coal industry actors are often perceived as adversaries due to the negative impacts on mining areas, in the context of an inclusive and just transition, these mining companies assume a significant responsibility for post-mining endeavors and preparing communities for socio-economic activities, steering them away from a reliance on mining,” Wira explained during the Just Transition Dialogue: Identifying the Role of the Private Sector in Socio-Economic Empowerment of Communities (24/1/2024), an event organized by IESR.

Wira Swadana emphasized the need for business actors to fulfill their responsibilities in land reclamation and post-mining activities, as mandated by Law No.3/2020. He underscored that the government must actively oversee the implementation and take decisive action against mining companies neglecting their obligations in reclamation and post-mining endeavors.

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal, elucidated the distinction between mining reclamation and post-mining activities. Functionally, reclamation involves enhancing the quality of the environment and ecosystem to restore their intended functionality. On the other hand, post-mining activities focus on the comprehensive restoration of the natural environment and social functions, tailored to the specific conditions of the mining area.

“Reclamation becomes obligatory during the exploration stage, and as production operations commence, a post-mining plan is formulated after meeting the economic and technical feasibility criteria,” Sulistiyohadi explained. He noted that both reclamation and post-mining plans require guarantees for their respective activities.

Moreover, PT Bukit Asam Tbk Ombilin Mining Unit has carried out reclamation and post-mining processes. The post-mining activities are concentrated on establishing a sustainable economy by repurposing the former mining area for various purposes, including the creation of an animal protection zone, zones for crop and livestock cultivation, and utilization for tourism, sports, education, and cultural activities.

Yulfaizon, General Manager at PT Bukit Asam Tbk Ombilin Mining Unit, expressed optimism that the completed post-mining activities at the Ombilin mine will serve as a national exemplar. These efforts align with Sawahlunto’s vision and mission, aiming to transform the former mine into a center for study, job training, and a noteworthy destination in the Sawahlunto region.

The ‘Just’ Principle in Financing Just Transition in Indonesia

Johor Bahru, Malaysia, 16 November 2023 – Leading up to COP28 in the United Arab Emirates, there is a growing focus on climate financing efforts. Climate financing has become a critical focus to support a fair transition towards a sustainable, low-carbon economy.

The transformation towards a low-carbon economy and financing for a just transition requires government leadership. Governments can seize opportunities in funding energy transition by ensuring the fair execution and accountability of energy transition. For instance, the funding from the Just Energy Transition Partnership (JETP) supported by developed countries aims to expedite the energy transition. The ‘just’ aspect must take precedence in every energy transition funding agreement.

Wira Agung Swadana, the Green Economy Program Manager at the Institute for Essential Services Reform (IESR), stated that the energy transition is not solely about closing coal-fired power plants and shifting towards renewable energy plants. Instead, a broader perspective is needed to understand the impacts that will arise from the energy transition.

“The funding for the energy transition is not solely confined to infrastructure development; rather, every aspect of a just transition should also be taken into consideration. Just transition itself is not only about the affected workforce but also involves the broader community surrounding coal mining areas,” Wira expressed during the Asia-Pacific Climate Week 2023.

Furthermore, Wira also assesses that the funding for JETP is still very limited and insufficient to meet the set targets. This funding source is still predominantly dominated by loan-based financing.

“IESR is part of the technical working group with the JETP Secretariat. JETP funding still heavily relies on loans, and some of these are not new commitments from donor countries. Only about 1.62% of what we receive comes in the form of grants for a fair transition. There’s still a shortfall in funds, which I find quite ironic. Grants need to be increased rather than relying solely on loans,” he emphasized.

The funding for energy transition should encompass a comprehensive approach, including the early retirement of coal-fired power plants, addressing coal-producing regions, increasing the use of renewable energy, and managing transitions in mining locations. Wira believes that JETP still lacks a comprehensive and holistic approach.

“The funding for energy transition should ideally serve as the starting point. Currently, Indonesia is in the process of implementing the National Medium-Term Development Plan (RPJMN), utilizing domestic commitments and striving to align it with JETP and the Energy Transition Mechanism (ETM). The Indonesian government needs to address various challenges at the domestic, national, and international levels,” added Wira.

Tiza Mafira, Director of the Climate Policy Initiative (CPI), revealed that there are debates within some financial institutions regarding financing for a just transition.

“The issue lies in debates within financial institutions about whether financing for a just transition is part of financing for energy transition. When we discuss the ‘just’ aspect, we’re talking about several critical projects within the energy transition. It’s not just a few projects but an overall significant change in the economy. If not managed properly, this will have a significant impact on a large scale,” explained Tiza.

Mitigate the Impact of the Energy Transition in Coal-Producing Regions with Economic Transformation

press release

Jakarta, September 1, 2023 – The Institute for Essential Services Reform (IESR), a leading energy and environmental think tank based in Jakarta, Indonesia, released a report on the potential impact of the energy transition on coal-producing regions in Indonesia. This report, entitled Just Transition in Indonesia’s Coal Producing Regions, Case Study Paser and Muara Enim, finds that economic diversification and transformation must be immediately planned to anticipate the social and economic impacts of the decline in the coal industry along with plans to end coal-fired power plants (CFPP) operations and increased commitments to energy transition and emissions mitigation, from countries that have become coal export destinations so far.

IESR recommends that the central and regional governments realize the potential impact of the energy transition on the economy and development of coal-producing areas and start planning for economic transformation as soon as possible in these coal-producing areas.

A recent study conducted in Paser Regency, East Kalimantan Province, and Muara Enim Regency, South Sumatra Province, has recommended the utilization of coal’s revenue sharing (dana bagi hasil, DBH) CFPP and corporate social responsibility (CSR) programs to plan and support economic transformation. The study also highlighted the importance of expanding public access and participation to ensure a just transition. In 2023, Coals’ revenue sharing fund (DBH) is projected to account for 20% of the total revenue budget of the Muara Enim government. Similarly, between 2013-2020, it accounted for 27% of the total revenue of the Paser government.

“The importance of prioritizing economic activities that benefit local communities and have a greater multiplier effect towards post-coal mining economic transformation. It is equally important to factor in the potential impact of a decrease in coal production on the informal economy sector, which has not yet been included in macroeconomic analysis,” mentioned Executive Director of IESR, Fabby Tumiwa.

According to a recent study, the coal mining industry has contributed 50% to 70% of GRDP in Muara Enim and Paser over the last ten years. However, despite this significant economic contribution, coal industry workers earn little. Only around 20% of the added value is allocated to workers, while as much as 78% becomes company surplus. This means that the enormous economic value generated by the coal mining industry contributes little to the income of its workers.

“The coal mining industry has also caused significant social and environmental impacts on the surrounding communities. These impacts include degradation of air and water quality, changes in people’s livelihoods, economic inequality, and increased consumerism and rent-seeking,” stated Julius Christian, the leading author of this study and also the Research Manager of IESR.

According to him,  different parties in the region are responding to the trend of energy transition in various ways based on their interests, knowledge, and access to information. Coal companies are more aware of the energy transition risks posed to their businesses than governments and ordinary citizens.

“Both companies and local governments are starting to carry out various economic transformation initiatives. However, local people are more skeptical about the potential decline in coal because they have seen increased production recently,” said Martha Jesica, Social and Economic Analyst at IESR.

However, according to her, changes in perspective are occurring in both society and coal industry companies. The local community has called for economic diversification, and coal companies have started branching into other fields. She hopes that various stakeholders and the government can work towards raising awareness and implementing structural changes to drive economic transformation efforts.

The report “Just Transition in Indonesia’s Coal Producing Regions: Case Studies Paser and Muara Enim” by IESR suggests that to achieve sustainable development in coal-producing regions, firstly, there needs to be a comprehensive plan for economic diversification and transformation that involves stakeholders and community participation. Secondly, utilizing DBH funds and CSR programs to finance the financial transformation process, which can attract more investment into sustainable economic sectors. Thirdly expanding access to education and training to prepare a competitive workforce in the sustainable industry and increasing financial literacy for the community. Fourthly, expanding the participation of all elements of society, especially vulnerable groups, in regional planning and development.

“All matters related to the transition in coal-producing areas should be included in the respective central and provincial governments’ Medium Term Development Plan (RPJM). This will provide clear support and direction for local governments,” said Ilham Surya, Environmental Policy Analyst IESR.

Study Launch: Just Transition in Coal-Producing Regions in Indonesia Case Study of Muara Enim Regency and Paser Regency


Coal holds significant importance for Indonesia, both as a consumer and as one of the world’s largest producers. As of 2022, Indonesia stands as the world’s third-largest coal producer, trailing only behind India and China. It also ranks among the globe’s leading coal exporters, having exported a total of 360.28 million tons, marking a 4.29% increase from the previous year. Looking ahead to 2023, the Indonesian government maintains ambitions for even higher coal production. The coal industry plays a pivotal role in the national economy. In 2022 alone, it contributed approximately 3.6% to the national GDP, accounted for 11.4% of the total export value, generated 1.8% of the national state revenue, and provided employment to 0.2% of the population.

On the other hand, coal demand is expected to decline due to the ongoing trend of transitioning towards renewable energy and the commitments outlined in the Paris Agreement, aimed at limiting temperature rise to below 1.5°C. According to IESR (2022) estimates, Indonesia’s total coal demand—both domestic and for export—is projected to decrease by approximately 10% after 2030, considering the country’s existing commitments. Furthermore, the Government of Indonesia has enacted Presidential Regulation No. 112 of 2022, which focuses on expediting the development of renewable energy sources for electricity generation. This regulation explicitly imposes a ban on the construction of coal-fired power plants, effective from 2030 onward. This national commitment is reinforced by the endorsement of the Just Energy Transition Partnership (JETP) agreement between Indonesia and the International Partners Group (IPG), as well as the Glasgow Financial Alliance for Net-Zero (GFANZ). This alliance aims to mobilize a substantial USD 20 billion in funding to facilitate an just transition to clean energy, which includes provisions for the early retirement of coal power plants.

Indonesia possesses coal reserves totaling 33.37 billion tons, distributed across several provinces including East Kalimantan, South Sumatra, South Kalimantan, Central Kalimantan, and various other areas. While these regions reap benefits from the coal industry sector, they also endure significant drawbacks.

IESR’s study, “Redefining Future Jobs,” conducted in 2022, illustrates that the advantages accruing to coal-producing regions are disproportionate to the hardships faced by their inhabitants. Furthermore, many communities in the surrounding areas bear the brunt of injustices, encompassing unequal economic impacts, land degradation, and health risks. Addressing these inequities must be a central focus for the government as it formulates plans for future energy transition.

IESR conducted a study on the coal industry’s impact within coal-producing regions in Indonesia, focusing on two major coal-producing districts: Muara Enim and Paser. The study unveiled various forms of injustice experienced by communities residing near coal mining sites, encompassing economic, social, and environmental dimensions

Among the observed injustices in coal-producing areas are income disparities between residents, workers, and capital owners, local community asset loss, and a decline in quality of life around coal mines. Addressing these issues necessitates comprehensive solutions aimed at mitigating these injustices and fostering opportunities for positive change within communities, ensuring an just energy transition.

By proactively tackling these injustices, the government can ensure that the transition process remains just for all stakeholders. With the Indonesian government’s commitment to a greener energy transition, the need arises for comprehensive development planning that promotes inclusivity and participation, particularly in each of Indonesia’s coal-producing regions.

Therefore, IESR intends to host a launch event for the study results of the Just Energy Transition in Coal Producing Areas in Indonesia. This event will bring together the national government, various experts from academia, civil society organizations, and international organizations to engage in a dialogue about the impact of the coal industry and the necessary preparations for an just energy transition in Indonesia.


The launch of the study results has several objectives:

  1. Delivering the findings of IESR’s Just Energy Transition in Coal Producing Regions’ study to the public.
  2. Gathering input on the outcomes of the study ‘Just Energy Transition in Coal Producing Areas’ to create practical recommendations for relevant parties.
  3. Collecting inputs and recommendations from various stakeholders concerning just energy transition and the mapping of potential economic sectors in coal-producing areas.

Enhancing understanding by providing practical recommendations to key policymakers to support the achievement of an just energy transition in coal-producing regions in Indonesia.

Waiting for JETP Implementation in Indonesia

Raden Raditya Yudha Wiranegara

Pakistan, May 31, 2023 –  The energy transition is being discussed in many countries, including Pakistan. Some of the challenges faced by Pakistan in adopting renewable energy include inadequate electricity infrastructure and network integration. Similar to Pakistan, Indonesia also faces similar challenges. Still, the government’s fast action is needed to reduce the use of fossil energy as a concrete step to reduce greenhouse gas emissions.

Raden Raditya Yudha Wiranegara, Senior Researcher at the Institute for Essential Services Reform (IESR), explained the electricity sector contributes around 40% of greenhouse gas emissions in Indonesia based on the 2023 Indonesia Energy Transition Outlook (IETO) report and achieves net zero emission by 2060 or faster, Raditya said, it is necessary to transition all energy supplies. One is changing the electricity sector by gradually reducing fossil fuels in PLTU. According to Raditya, coal-fired power plants must be reduced or retired in stages until 2045 to align with the 1.5°C ambition.

“The first phase is carried out by closing 18 coal power plants with a total capacity of 9.2 GW until 2030, then 39 coal power plants with a total capacity of 21.7 GW, and 15 coal power plants with a total capacity of 12.5 GW,” explained Raditya in the Symposium on “Accelerating the Just Energy Transition in Pakistan” organized by the Sustainable Development Policy Institute (SDPI) on Wednesday (31/5/2023).

In fulfilling the 1.5°C ambition, Indonesia’s Just Energy Transition Partnership (JETP) is one of the driving forces. Raditya explained that the partnership includes a peak emission target 2030 for the Indonesian electricity sector, including on-grid, off-grid, and captive power generation systems, shifting the projected peak emissions by about seven years earlier. Apart from focusing on significant emission reductions, JETP is also promoting sustainable development and economic growth and protecting the livelihoods of people and workers in the affected sectors.

To implement this target, Raditya said, currently the JETP Indonesia Secretariat, is developing a comprehensive investment plan (CIP) for the Just Energy Transition Partnership (JETP) funding program. However, Raditya stressed the JETP Indonesia Secretariat only had a limited time to complete it, bearing in mind that the document needed to be published in August 2023. Regarding the work on the comprehensive investment plan document, Raditya emphasized that it was hoped that the analysis results in the working group could be included in it in July 2023. The working groups in JETP Indonesia consist of 4 working groups representing various parties, including the Indonesian government, national and international institutions, and elements of civil society who have expertise in their respective fields. The working group oversees Technical, Policy, Funding, and Equitable Transition.

“Reflecting on these conditions, transparency and availability of data is a problem in the working group. This needs to be a concern considering that these conditions can hinder each group member from carrying out the assigned tasks,” said Raditya.

The CIP document will contain technical, funding, policy, and socio-economic information regarding energy transition investments in the electricity sector up to 2030 which will form the basis for implementing the USD 20 billion partnership under JETP Indonesia. Based on the JETP Indonesia Joint Statement, funding mobilization is targeted to occur in years 3 to 5 after the JETP Indonesia funding partnership is agreed upon. In addition, the investment areas that have been agreed upon in the CIPP consist of developing transmission and distribution networks, early retirement of coal-fired power plants, accelerating the use of baseload type renewable energy, accelerating the use of variable type renewable energy, and building a renewable energy supply chain.