Indonesia has set an ambitious target to decommission all fossil fuel and coal-fired power plants within 15 years, but doubts are being raised about its feasibility due to practical constraints, Nikkei Asia reported on Feb. 21.
President Prabowo Subianto announced at the G20 summit last November that Indonesia would push for a coal phase-out within 15 years to achieve carbon neutrality before 2050. This is more than a decade ahead of the previous target of 2060.
However, the reality in Indonesia, the world's largest coal exporter and third-largest producer, is not so rosy. According to the International Energy Agency (IEA), Indonesia operates 249 coal-fired power plants with a capacity of 45.6GW, with more plants under construction. If the new plants come online, emissions from the power sector are projected to increase to 400 MtCO2 by 2030, more than double the Paris Agreement target.
Indonesia is the only country among the top 10 emitters that is increasing its reliance on coal. Coal and natural gas account for more than 80% of total electricity generation, while wind and solar power capacity was only 1GW as of the end of 2023.
Financing the energy transition is also a challenge. The $20 billion Just Energy Transition Partnership (JETP) agreement signed in 2022 has been slow to progress, and some of the funds are being provided in the form of high-interest loans, which has drawn criticism from Indonesia.
Indonesia has turned to China for help, signing a $10 billion investment deal last November. However, even if the funds are invested as planned, achieving a coal phase-out within 15 years remains a daunting task.
Above all, the coal industry accounts for 6.6% of GDP, making the economy heavily reliant on it. Coal production in 2024 reached 830.96 million tons, exceeding the government target by 17%, due to increased domestic and international demand.
Climate Action Tracker recently reported that Indonesia's climate action plan is "severely insufficient." It is assessed that efforts to promote renewable energy and dependence on fossil fuels, as well as emissions from deforestation, are complexly intertwined.
Experts advise that Indonesia needs to immediately pursue expansion of renewable energy projects, secure additional international financial support, modernize the power grid, and electrify cities to achieve its goals.
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