Government and international donors say Indonesia has entered the conversation. The 270.6 million-person nation on 17,500 islands has pledged to abandon fossil fuels for a cleaner economy. Conservationists have criticised it for rainforest destruction and palm oil plantations.
President Joko Widodo said at a G20 summit in Bali in 2023 that Indonesia would use its energy transition to create a green economy and drive sustainable development. Widodo ambitiously promised to close coal power facilities, peak power sector emissions by 2030, and target net-zero emissions by 2060 or sooner.
The 2030 emissions-reduction objective is 29%, with a medium-term strategy to decrease climate change risks on agriculture, water, energy security, forestry, maritime and fisheries, health, public services, infrastructure, and urban systems.
Size Matters
Indonesia is Southeast Asia’s largest economy, predicted to become the world’s fourth largest by 2050, so its success counts. Due to its diverse geology, terrain, and climate, peat swamps, montane forests, 81,000 km of coastline, and large human densities in hazard-prone locations, Indonesia is vulnerable to climate change’s sea-level rises and increased temperatures.
Indonesia has some of the world’s richest terrestrial biodiversity. Indonesia’s mega-diverse tropical rainforests make it a biodiversity powerhouse. The forest estate stores a lot of carbon above and below ground, and in a monsoonal country; it maintains natural hydrology and prevents floods.
The land is crucial to Indigenous communities’ cultural identity and livelihoods in Indonesia. Indonesia’s 64% forest estate is important socially, economically, and environmentally. Of the 8.6 million people who live in or around forests, 35% use them as a supplement and 18.5% as their main source of income.
Problem With Palm Oil
NGOs consider Indonesia one of the world’s most greedy exploiters of natural resources, making change impossible. The world’s greatest palm oil producer is Indonesia, which produced 46 million tonnes of crude palm oil in 2021 and exported 59% of it.
The industry has burned and cleared rainforest for plantations, causing a third of old-growth forest loss in the previous 20 years and deadly fires. Six million hectares of primary forest cover died between 2000 and 2012, or 3% of the national land area. About 40% of this occurred in protected areas. 2022 saw over 200,000 hectares of rainforest removed. The previous 30 years have deteriorated or destroyed 40% of Indonesia’s mangroves.
Industrial mining, mostly of coal and nickel, causes more than half of tropical deforestation and pollutes rivers and coastal seas in Indonesia. Hydro, frequently touted as a ‘greener’ energy source, has displaced Indigenous people and an endangered orangutan subspecies in Sumatra with the £1.5 billion China-led Batang Toru forest dam.
The government’s stance on palm oil plantations predicts delayed progress. A 2020 law gave corporations three years to stop forest damage and replaced punitive punishments with administrative penalties. Indonesia’s purportedly protected forest estate has 3.12 million hectares of oil palm planted at the end of 2019, and oil palm concessions contain one million hectares of prime rainforest earmarked for exploitation.
“Illegal palm oil plants still happen all across the country,” Damanik said.
They could have stopped them or allowed them to finish the last plantation and return it to its natural state. Instead, they let corporations pay fines and continue. Real action is absent.
Coal Transition Funding
To help Indonesia turn Bali rhetoric into meaningful change, the World Bank announced a Just Energy Transition Partnership (JETP), in which rich nations like the United Kingdom, United States, Japan, and Germany pledged USD 10 billion over three years, with HSBC and Bank of America matching this amount.
The financing will help Indonesia move away from coal-fired power facilities, although Indonesian coal production is rising. In the decade to 2019, coal production doubled to 616 million tons, surpassing the United States and Australia.
Most domestic energy comes from fossil fuels, 60% from polluting coal-fired plants. The country emits 2.7% of fossil fuel emissions and ranks ninth in carbon dioxide emissions.
Indonesia has relied on resource exploitation to alter its economy in recent decades, therefore political pressure is high. The poverty rate declined from 60% in 1970 to 24% in 1999 to 9.78% in 2020.
Mining propels the economy and extracts important minerals for renewable energy building, lithium-ion batteries, and stainless steel. Palm oil accounts for 4.5% of GDP. Some argue that too soon removing fossil fuels could hinder these gains, as could climate change.
Examine The Details
The JETP’s devil is its details. The International Energy Agency recommends increasing renewable energy spending from USD 2 billion in 2020 to USD 38 billion in 2026 in Indonesia. This money would scale solar, wind, hydro, and geothermal energy. From 2024 to 2030, closing coal plants and paying and retraining laid-off people will cost USD 150–200 billion.
Climate Policy Initiative Indonesia head Tiza Mafira said, “The amount of financing announced is not important in itself – it’s a small percentage of what is needed.”
“I’ve seen no genuine, financially viable JTEP approach. Nobody has agreed to retire a coal plant. It will be a major challenge to scale this up. She feels the JETP symbolism is favourable. The relevance is that it moves political willingness, conversations, and action. Without JETP, early coal retirement would not accelerate,” the official added.
350.org Indonesia’s Jeri Asmoro welcomed cautiously. He hopes to maximise the JETP initiative to initiate a huge, sustainable, and just energy revolution in Indonesia.
He said, “Indonesia’s emission forecasts will increase in the future with increasing national energy needs, The energy transition will become an important aspect of reducing global emissions.”
Greenpeace Indonesia doubts the JETP will significantly impact the former coal plant. Its main concern is that coal plants will co-fire biomass from palm oil or wood pellets, waste pellets, sawdust, palm shells, and rice husks with coal. By year’s end, 52 coal power plants may run in this manner. The percentage of biomass will increase over time, but usually from 1–5%; the other 95% is coal.
Greenpeace Indonesia claims the biomass supply chain will add 26.48 million tonnes of CO2 equivalent year to Indonesia’s greenhouse gas emissions.
“This will really make land use even more problematic — where would the woodchip come from?” asks Greenpeace Indonesia’s Iqbal Damanik, while adding, “They want to dedicate one million hectares to the energy forest transition. The narrative about blending biomass with coal ignores the fact that coal demand is still high in this co-firing programme.”
After reviewing the JETP tiny print, Mongabay.com found that it gives assurance and protection for new coal power plant proposals until 2030. Before that, coal-fired power facilities can generate approximately 14 gigawatts.
“Our coal production is rising, and a shortage of ready-to-burn biomass raw materials prevents co-firing. Why aren’t these money utilised to create renewable power plants that match Indonesia’s geography, such solar, wind, and water? Our conditions require us to switch to greener energy,” says Forest Watch Indonesia campaign and advocacy director Agung Ady Setyawan.
Indonesia’s commitment to a cleaner, greener economy is commendable, but the challenges are substantial. President Joko Widodo’s ambitious targets to close coal power facilities, reduce emissions, and achieve net-zero emissions by 2060 are a significant step forward. However, widespread deforestation, particularly for palm oil plantations, and increasing coal production pose significant obstacles to achieving these goals.
The Just Energy Transition Partnership (JETP) is a promising initiative with significant financial backing from various countries and financial institutions. However, concerns have been raised regarding the details of the plan, particularly regarding the co-firing of biomass with coal and the protection for new coal power plant proposals until 2030. There is a need for a more comprehensive and sustainable approach that prioritises renewable energy sources such as solar, wind, and water.
While there are differing perspectives on the impact and effectiveness of the JETP, it is clear that Indonesia’s energy transition is a complex and multifaceted issue that requires careful consideration of environmental, social, and economic factors. Cooperation between the government, international donors, NGOs, and environmental advocates will be crucial in navigating the challenges and ensuring a just and sustainable energy revolution in Indonesia.