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Indonesia’s energy transition delay offers opportunity for public dialogue

Written by Mongabay Published on   7 mins read

A delay in Indonesia’s energy transition plan presents its government with an opportunity to involve the public, ensuring the outcomes benefit its society and not just specific stakeholders.
  • Observers are calling for greater public participation and transparency in Indonesia’s Just Energy Transition Partnership (JETP) deal.
  • The JETP investment plan was supposed to be published on August 16, but has been delayed until the end of this year.
  • Observers of the energy sector see the delay as an opportunity for the government to involve the public more in the drafting process to ensure justice for all people in the effort to transition away from fossil fuels and toward renewable energy.
  • Funding for the USD 20 billion JETP has been pledged by the G7 group of industrialized nations plus Denmark and Norway.

Observers are calling for greater public participation and transparency in a USD 20 billion effort by Indonesia to move away from fossil fuels and toward renewable energy, following the government’s failure to publish the plan for the phased transition in time.

Under the Just Energy Transition Partnership (JETP), signed in 2022, the G7 group of industrialized countries plus Denmark and Norway have committed to providing the funding to help Indonesia in its energy transition agenda. Before the money can start flowing, however, Indonesia has to draft an investment plan that will serve as a guideline for how the money will be used, such as shutting down coal-fired power plants and developing renewable energy.

That investment plan was supposed to be launched to the public on August 16, but has been delayed to the end of this year because the draft didn’t include data on so-called captive coal plants—a category that doesn’t feed into the grid, but instead serves specific energy-intensive industries such as metal processing.

The delay should serve as an opportunity for the JETP secretariat, the government-established body tasked to formulate the plan, to involve the public more in the drafting process, energy policy experts say. This is important to ensure the JETP funding is spent in ways that benefit society and not just specific stakeholders like companies, they add.

In particular, they point to the ramifications of a rushed phaseout of coal plants without adequate protections for those people dependent on them for their livelihoods.

A recent study by nonprofits Center of Economic and Law Studies (CELIOS) and Yayasan Indonesia Cerah (Bright Indonesia Foundation) shows that the early retirement of three power plants in the provinces of North Sumatra, Central Java and East Java could lead to nearly 5,000 lost jobs. This doesn’t count the multiple small local businesses whose livelihoods are also closely tied to the plants.

The study also found that none of the local governments in the three areas had been actively involved in the JETP discussion, which means there’s no clarity on how winding down the plants there would ensure a just transition for the local people who would be affected.

“These concerns can be mitigated and minimized if the local [governments and communities] are involved,” said Andri Perdana, a researcher at CELIOS.

Another concern is that the JETP funding will not be channeled towards local and Indigenous communities to empower them. For instance, local communities could miss out on the JETP money to build small-scale renewable power facilities such as micro-hydro plants and solar assemblies, even as their costs continue to go down. If the JETP money is targeted mostly at big companies to build large-scale renewable power plants, then the mechanism will mostly benefit the private sector, according to CELIOS executive director Bhima Yudhistira Adhinegara.

The involvement of local and Indigenous communities in the JETP discussion is thus crucial to identifying the potential for developing renewable energy solutions that suit local conditions and needs, he said.

“So there’s no more reason for communities to get sidelined in the energy transition,” Bhima said as quoted by Kompas daily. “They will also hone their skills If they’re given the chance through training. After that, they’re the ones who do the maintenance work if there are repairs needed on the community-scale renewable power facilities.”

Lack of public participation

The lack of public participation in the JETP discussion to date belies the growing public interest in pushing for an energy transition, Bhima said. He cited data from CELIOS showing that 56% of people surveyed from the agricultural sector and rural areas are interested in the early retirement of coal plants coupled with the development of renewable energy.

But “the truth is that, since the very beginning, the discussion on the JETP investment plan hasn’t been open [to the public] and participatory,” Sisilia Nurmala Dewi, head of the Indonesian chapter of the climate campaign group 350.org, said in a press release.

“While there have been dialogues with civil society, those dialogues are far from being participatory, because they’re held without any disclosure of information regarding the JETP agenda which will be discussed,” she added.

As a result, it’s unclear how much of the public voice has been incorporated into the draft of the JETP investment plan, Sisilia said. The draft investment plan still hasn’t been disclosed to the public, according to 350.org campaigner Suriadi Darmoko, which makes it hard for the public to engage in the JETP discussion in a meaningful way. He added the JETP secretariat doesn’t even have its own website for disseminating information.

Raden Raditya Yudha Wiranegara, a senior researcher at the Institute for Essential Services Reform (IESR), a Jakarta-based think tank, and part of the JETP secretariat’s working group tasked to draft the investment plan, acknowledged the lack of transparency in the process. This has made it difficult not just for the public to access information, but also for the working group itself, he said.

“[The process needs to be] more transparent. Because, honestly, even within the secretariat’s working group itself, transparency is something that’s still difficult to be achieved,” Raditya told Mongabay. “We have signed NDAs with the state utility, PLN, and the energy ministry [to share data], but it’s still difficult for them to be more open in sharing with us data that’s needed for us to do modeling.”

The energy ministry’s secretary-general, Dadan Kusdiana, said the government would involve the public more in the drafting of the JETP investment plan.

“The people of Indonesia will get a chance to review the investment plan document completely and give input and responses that will be considered in the final revision of the document,” he said as quoted by Kompas.

More grants please

Besides promising greater public involvement, the government also plans to use the additional time to iron out more details in the investment plan. This includes the composition of the funding: how much should come in the form of grants, how much from concessional loans, market-rate loans, guarantees, and private investments

Indonesia’s JETP deal is expected to comprise USD 10 billion in public sector pledges and USD 10 billion from private lenders, coordinated by the Glasgow Financial Alliance for Net Zero, which includes Bank of America, Citibank, Standard Chartered and other major banks.

The Indonesian government is pushing for a greater proportion of grants in the JETP funding, which currently make up only USD 160 million of the total funding, or less than 1%. As a proportion, this is less than the share of grants in a similar JETP deal for South Africa, which stands at 4%.

Grants, unlike loans, don’t have to be paid back. But with so few of them in the current JETP deal, there’s no “justice” aspect in the mechanism, according to JETP secretariat deputy head Paul Butarbutar.

Studies show that historically rich countries are the ones most responsible for climate change, as they’ve been burning fossil fuels to develop their economies for much longer than Global South countries like Indonesia—and yet it’s the latter that face disproportionate challenges when addressing climate risks.

A study recently published in the journal Nature Sustainability found that all the 39 high-emitting countries of the Global North owe a total of USD 192 trillion, or USD 6.2 trillion per year over 31 years, to the rest of the world for having blown through their carbon budget—the amount of CO2 the world can release without overshooting the Paris Agreement threshold for global warming—back in 1986.

These figures are only for what’s known as atmospheric appropriation, and don’t include payments that rich countries may owe the Global South for the costs associated with decarbonizing or adapting to climate change.

Therefore, it’s important that industrialized nations provide a greater amount of grants than loans in the JETP mechanism, Suriadi of 350.org Indonesia said.

“Developed, industrialized countries who are donors in the JETP need to be more serious in helping developing nations break from fossil fuel dependency,” he said. “Don’t make the issue of energy transition an opportunity to trap [developing countries] with new loans.”

Besides the issue of funding composition, the JETP mechanism also falls short on funding for early retirement of coal-fired power plants, Butarbutar said. For Indonesia to shutter its entire coal fleet by 2040, the country will need USD 37 billion. Yet of the USD 20 billion pledged under the JETP deal, only a small amount is allocated for the shuttering of coal plants, Butarbutar said.

Reuters recently reported that JETP investors perceive that funding coal power plant retirement, which may include compensating the owners to shut down operations earlier than the asset’s life cycle, is the same as funding coal.

Since many banks across the world have pledged to stop funding coal in a bid to tackle climate change, they might be reluctant to fund the retirement of coal-fired power plants, and choose to spend their money on renewable development instead.

Without the early retirement of its coal plants, Indonesia will not be able to truly transition toward renewable energy, as there will be less room for renewables to be developed, said IESR executive director Fabby Tumiwa.

“We need to shut down our coal plants,” he told Mongabay. “Without it, it’s going to be difficult to reach our renewable energy target of 34% [by 2030].”

This article first appeared on Mongabay and was originally written by Hans Nicholas Jung, an environmental journalist and staff writer at Mongabay. It has been republished here under the Attribution-NoDerivatives 4.0 International (CC BY-ND 4.0) Creative Commons license.


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