Indonesia’s Energy Transition Concerns: Revising Renewable Energy Regulations
Indonesia is at a crossroads in its energy journey, especially following the latest draft revision of its renewable energy regulation. Critics argue that this revision signals a retreat from the country’s commitments to shift towards cleaner energy sources. Instead of promoting a swift transition, the revised Presidential Regulation (Perpres) No. 112/2022 threatens to expand the footprint of coal-fired power plants (CFPPs), a move that could jeopardize Indonesia’s intentions to reach net-zero emissions by 2060.
Background of the Regulation
Perpres No. 112/2022 was initially designed to accelerate renewable energy development for electricity procurement. It is embedded in a framework of existing laws, including Law No. 30/2007 on Energy and various government regulations that have aimed to facilitate a comprehensive national energy policy. However, the recent proposals have revived concerns about loopholes that permit the integration of new CFPPs with national strategic projects, counteracting the goal of phasing out coal power.
The Public Outcry
The Energy and Mineral Resources Ministry unveiled the draft revision during a public consultation on November 6, 2023, leading to significant backlash from environmentalists and energy experts. The absence of measures to close the loophole that allows new CFPP construction has alarmed many, particularly given Indonesia’s declared objectives to reduce its reliance on coal. The introduction of exemptions allowing new CFPPs for energy self-sufficiency raises questions about the sincerity of efforts to retire coal plants, further complicating Indonesia’s energy landscape.
Criticism from Energy Experts
Experts are voicing strong concerns over the inconsistency of these provisions with Indonesia’s ambitious targets under the Just Energy Transition Partnership (JETP). The nation aims to boost new and renewable energy (NRE) to 34% of its energy mix by 2030 and achieve a fully renewable energy system by 2035. Critics argue that the revision could derail these targets while exacerbating greenhouse gas emissions. The addition of hybrid power plant provisions is similarly contentious, with fears it may foster further reliance on fossil fuels rather than facilitating a shift towards renewable sources.
Government’s Stance
In response to the criticism, the National Energy Council (DEN) insists that the draft does not signify a relaxation of coal regulations. They argue that any new CFPPs permitted under the revised Article 3 will have to meet strict criteria, demonstrating significant economic benefits. Furthermore, DEN advocates that hybrid power plants could enhance NRE deployment, potentially providing electricity access to remote areas. This perspective has stirred debate among stakeholders about the balance between energy security and environmental responsibility.
Budget Allocations and Fossil Fuel Investments
Examining the financial aspects reveals a concerning trend. The 2026 state budget draft outlines an allocation of Rp 402.4 trillion (approximately US$24.15 billion) for energy security, yet a mere Rp 37.5 trillion is designated for NRE development. In stark contrast, Rp 210.1 trillion is earmarked for subsidies supporting fossil fuel, including oil and gas. This discrepancy raises doubts about the government’s genuine commitment to transitioning toward a greener energy portfolio, especially as electricity utility PT PLN’s 2025–2034 Electricity Procurement Business Plan (RUPTL) allows 16.6 gigawatts of new fossil fuel plants.
Health and Economic Implications
Research from the Institute for Essential Services Reform (IESR) highlights that optimal management of energy demand could eliminate the need for additional CFPPs while reducing production costs by 3-17%. Furthermore, a joint study by the Centre for Research on Energy and Clean Air (CREA) and other organizations examined the potential impact of existing CFPPs, predicting that they could contribute to 156,000 premature deaths and incur economic losses of Rp 1.81 quadrillion by 2050. Alarmingly, this situation could lead to 1.45 million job losses, directly conflicting with the Prabowo administration’s ambition to create 19 million new jobs.
As Indonesia navigates this complex energy landscape, the tension between economic growth, energy security, and environmental sustainability becomes increasingly apparent. The implications of the latest regulatory revisions will undoubtedly shape the future of Indonesia’s energy sector and have broader consequences for climate commitments.