By: Larasati Eka Wardhani
Edited By: Stephen Shiwei Wang
Introduction
The world is grappling with a climate emergency that necessitates a rapid shift toward low-carbon development.1 The International Energy Agency stated that there can be no new fossil fuel energy projects that can proceed if the world wants to meet the goal of limiting global temperature rise.2 To avoid the worst effects of climate change, countries worldwide have prioritized limiting global warming to 1.5°C by the end of this century.3 Suppose the world crosses the 1.5°C threshold; according to IPCC, it will cause severe climate change impacts (i.e., more frequent and severe droughts and heatwaves).4 To minimize its impact, countries worldwide have committed to reducing their greenhouse gas (GHG) emissions, such as carbon dioxide (CO2), to align with the Paris Agreement. GHG emissions are generated through energy production, such as burning fossil fuels for electricity and heat. To reach net zero carbon emissions, the decarbonization effort should primarily focus on increasing the share of Renewable Energy (RE) that produces low or no CO2 emissions.5 The need for a transition to RE is a pressing issue in Asia, as it is the world’s highest projected carbon emissions and where most of the world’s proposed coal-fired power plants are planned to be built.6
According to the European Union’s emissions database, Indonesia ranked seventh in global GHG emissions in 2023; Indonesia emits 1.20 GtCO2e of the total 52.96 GtCO2e globally (Reuters, 2024).7 Indonesia has thus committed to retiring 15% of Coal-Fired Power Plants (CFPP) by 2030. This is a significant shift because over 60% of power in Indonesia is produced with coal. Specifically, over 80% of electricity is from coal, gas, and diesel power plants. To reduce the dependence on coal, based on Indonesia’s National Energy Planning, Indonesia planned to install 45.2 GW of RE capacity in 2025, or around 17 to 19% of the energy mix, and 31% by 2050.8 Further, the state-owned electricity company, Perusahaan Listrik Negara (PLN), pledged to be carbon neutral by 2060.9
The Energy Transition and Its Social Aspects
The energy transition is defined as a geographical process that involves the reconfiguration of current patterns and scales of economic and social activity.10,11 There is an increasing awareness that societies are important for the energy transition’s success.12 This perspective emphasizes the importance of examining the transition in the places where it occurs and highlights the interconnectedness of actors and changes at different scales.13,14,15 Additionally, there is a need to emphasize the importance of examining re-scaling processes in energy governance, as these can reveal “who is impacted, who holds the capacity to act, and where the boundaries of responsibility are drawn.” 16
The switch to RE in Indonesia has significant social and economic consequences.17 The social and economic impacts of the energy transition are varied, as they influence employment patterns, income distribution, and overall societal well-being. Even though the energy transition is anticipated to benefit the environment by reducing emissions and generating new opportunities in the energy sector, it may also pose significant socioeconomic challenges, particularly for the workforce. Specifically, the changes in the economy’s structure could potentially create (green) job opportunities and trigger job losses. Thus, addressing the implications for job losses in conventional energy industries is essential. Recent studies emphasize the importance of implementing fair and sustainable policies to support displaced workers and underserved communities during this shift.18 Incorporating RE into Indonesia’s energy mix can boost the economy, reduce fossil fuel reliance, create jobs, improve energy access, and lower environmental impacts. However, to achieve this objective, the government, private sector, and civil society should collaborate and solve the need for partnership.19
The Indonesian Just Energy Transition Partnership (JETP)
The involvement of the private sector and foreign investment has a critical role in helping the transition in Indonesia. By working with the government and international financial institutions, Indonesia can increase the growth of RE infrastructure and improve access to clean and affordable energy for the Indonesian population.20 This effort is connected to Indonesia’s global agenda in meeting GHG emissions goals outlined in the Paris Agreement. To keep Indonesia’s commitment to the Paris Agreement and the global warming limit of 1.5°C above pre-industrial levels. In 2022, Indonesia and the International Partners Group (IPG), led by the United States and Japan, announced the Just Energy Transition Partnership.21 The JETP Joint Statement aims to limit emissions in the energy sector to a peak of no more than 290 MtCO2 by 2030, with a goal of achieving net-zero emissions by 2050. The JETP mobilized a $20 billion funding package with financial support and technical assistance from countries in the Global North to support Indonesia’s just-energy transition.22 Given Indonesia’s significant dependence on coal, the Joint Statement outlines several measures to reduce reliance on both on- and off-grid coal-fired power plants. These include accelerating the retirement of existing plants, halting the development of new on-grid coal-fired power plants, and limiting the construction of captive coal-fired plants.
The JETP partnership is more than financing. It is about a transition that balances environmental sustainability with socioeconomic equity. It is about justice in all forms. Central to this approach is the concept of a “just transition,” which is built on three principles:
-
-
- distributive justice, which ensures the economic benefits of energy transitions are shared broadly;
- procedural justice, which emphasizes the importance of accountability and the inclusion of all stakeholders in decision-making processes;
- restorative justice, which seeks to address the historical and ongoing harms caused by environmental degradation.
-
The JETP emphasizes the importance of ensuring a just transition for workers, communities, and vulnerable groups directly or indirectly impacted by the accelerated energy shift. A just energy transition should create jobs in emerging sectors, ensure affordable energy, and enhance community resilience. Those who are most impacted by economic changes must have an opportunity to participate actively in the transition process.
The energy transition brings its own set of challenges. As Indonesia moves toward RE and retires its aging coal-fuelled power plants, workers in the coal industry will lose their jobs, and businesses reliant on the sector, such as coal transportation workers and equipment maintenance teams, will become obsolete. This will affect individuals and communities in coal-dependent regions. Per the OECD, job gains are expected to be distributed across multiple sectors, with significant growth in electricity, gas, and manufacturing areas. In contrast, job losses are likely to be concentrated in fossil fuel-related industries, particularly in sectors like coal mining.
According to the Global Energy Monitor, Indonesia will experience one of the most significant layoffs in the coal mining sector, as the country is the world’s leading coal producer. Indonesia has 160 coal mines and 234 coal-fired power plants.23 The country relies on the coal industry to employ roughly 160,000 workers. Based on the calibrated Indonesian Labour Force Survey Data, it is estimated that approximately 31,000 jobs will be lost by 2030, while the energy transition is expected to create 1.12 million jobs during the same period.24 Even though Indonesia has an opportunity to create new jobs through this transition, it also brings significant challenges: high initial costs, technological constraints, and the need for extensive infrastructure upgrades.
To minimize the negativities of the energy transition, a broader perspective on the opportunity costs associated with coal suggests that companies should compensate coal workers for lost wages resulting from the early closure of coal mines to support workers during the transition away from coal effectively.25 This compensation should address the immediate financial impact on these workers and include the costs associated with retraining and reskilling programs. As the coal industry gradually declines and RE sources expand, retraining programs are essential to help workers transition into emerging sectors, particularly the rapidly growing RE industry. These programs could offer new skill sets that align with the evolving energy landscape, ensuring that workers can take advantage of new employment opportunities. For example, coal workers who risk losing their jobs due to the coal phase-out could be retrained to qualify for positions in solar, wind, or other RE sectors. This approach ensures a just transition for coal workers and supports the broader goal of accelerating the shift to cleaner, more sustainable energy sources. The development of JETP policies supported this perspective as it included many stakeholders, from government and policymakers to investors, civil society organizations, and affected communities. This approach is critical for drafting effective and equitable policies that serve the broad public interest without burdening the most vulnerable populations.
Conclusion
Inclusivity is not merely a choice but an absolute necessity for achieving lasting change. As we navigate the complexities of the global transition toward sustainability, it is critical that the journey is rooted in the core principles of equity, collaboration, and justice. These principles must guide the policies we implement and how we approach challenges at every level—from local communities to international negotiations. In addition to these values, the commitment of developed nations to provide substantial financial support at concessionary rates plays a crucial role in making this transition possible, especially for countries with fewer resources, like Indonesia. This narrative holds great promise for Indonesia, but it also offers valuable lessons for the world at large. It reminds us how deeply interconnected environmental sustainability is with social and financial equity, both within individual nations and across the globe. The challenges we face, whether in energy, climate change, or poverty, cannot be solved in isolation. The experiences and innovations emerging from one part of the world can inspire and guide others, shaping a shared vision for progress. The JETP initiative is reimagining the global energy landscape and redefining what it means to make progress together. This re-imagination is not just about transitioning from fossil fuels to RE; it is about doing so in a way that ensures inclusivity, fairness, and shared prosperity. By engaging all stakeholders, such as governments, businesses, civil society, and communities, we are fostering collective action that makes it possible to achieve a cleaner, more sustainable energy future without leaving anyone behind.
Works Cited
1. Intergovernmental Panel on Climate Change (IPCC). 2023. Climate Change 2021 – The Physical Science Basis: Working Group I Contribution to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge University Press. https://doi.org/10.1017/9781009157896
2. International Energy Agency (IEA). 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Report: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050
3. UNFCC. 2024. “The Paris Agreement.” United Nations Framework Convention on Climate Change. https://unfccc.int/process-and-meetings/the-paris-agreement
4. Halimatussadiah, Alin, Milda Irhamni, Teuku Riefky, Muhammad Nur Ghiffari, and Fachry Abdul Razak Afifi. 2024. “Employment Impacts of Energy Transition in Indonesia.” LPEM-FEB UI Working Paper 081, Jakarta, Indonesia: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia. https://lpem.org/wp-content/uploads/2024/09/WP-LPEM_081_August_2024.pdf
5. Ravillard, Pauline, J. Enrique Chueca, Mariana Weiss, and Michelle Carvalho Metanias Hallack. 2023. “Implications of the Energy Transition on Employment: Today’s Results, Tomorrow’s Needs.” Inter-American Development Bank (IDB). https://doi.org/10.18235/0003765
6. Evans, Simons, Rosamund Pearce. 2020. “Mapped: The world’s coal power plants in 2020.” Carbon Brief. March 26. https://www.carbonbrief.org/mapped-worlds-coal-power-plants/.
7. Suroyo, Gayatri, and Fransiska Nangoy. 2024. “Global plan for early ditch of coal power hits Indonesia hurdle.” Reuters. Last modified September 24. https://www.reuters.com/sustainability/climate-energy/global-plan-early-ditch-coal-power-hits-indonesia-hurdle-2024-09-25/
8. Junida, Ade Irma. 2024 “Pemerintah revisi target bauran EBT pada 2025 jadi 17-19 persen” [Government Revisited the target of the mix of New and Renewable Energy to 17 – 19% in 2025]. Jakarta: Antara. January 17. https://www.antaranews.com/berita/3920271/pemerintah-revisi-target-bauran-ebt-pada-2025-jadi-17-19-persen
9. Jong, Hans Nicolas. 2021. “Indonesia to Retire Coal-Fired Power Plants While Also Adding More.” Mongabay News. June 8. https://news.mongabay.com/2021/06/indonesia-to-retire-coal-fired-power-plants-while-also-adding-more/
10. Bridge, Gavin, Stefan Bouzarovski, Michael Bradshaw, and Nick Eyre. 2013. “Geographies of Energy Transition: Space, Place and the Low-Carbon Economy.” Energy Policy 53 (February): 331–40. https://doi.org/10.1016/j.enpol.2012.10.066
11. Calvert, Kirby. 2016. “From ‘Energy Geography’ to ‘Energy Geographies’: Perspectives on a Fertile Academic Borderland.” Progress in Human Geography 40 (1): 105–25. https://doi.org/10.1177/0309132514566343
12. Krumm, Alexandra, Diana Süsser, and Philipp Blechinger. 2022. “Modelling Social Aspects of the Energy Transition: What Is the Current Representation of Social Factors in Energy Models?” Energy 239. January. https://research-ebsco-com.proxy.library.cornell.edu/linkprocessor/plink?id=1f6343d7-3735-3981-9001-bcbe04a94618
13. Kennedy, Sean F. 2018. “Indonesia’s Energy Transition and Its Contradictions: Emerging Geographies of Energy and Finance.” Energy Research and Social Science 41 (July): 230–37. https://doi.org/10.1016/j.erss.2018.04.023
14. Power, Marcus, Peter Newell, Lucy Baker, Harriet Bulkeley, Joshua Kirshner, and Adrian Smith. 2016. “The Political Economy of Energy Transitions in Mozambique and South Africa: The Role of the Rising Powers.” Energy Research & Social Science 17 (July): 10–19. https://doi.org/10.1016/j.erss.2016.03.007
15. Gailing, Ludger, Andrea Bues, Kristine Kern, and Andreas Rohring. 2020. “Socio-Spatial Dimensions in Energy Transitions: Applying the TPSN Framework to Case Studies in Germany.” Environment and Planning A 52 (6): 1112–30. https://research-ebsco-com.proxy.library.cornell.edu/linkprocessor/plink?id=40a4223d-647f-3faa-85e3-8d401032556c
16. Bridge et al. 2013. “Geographics of Energy Transition.”
17. Sistriatmaja, Muhammad Bagus, Bhimo Rizky Samudro, Yogi Pasca Pratama, and Andri Prasetyo. 2024. “Energy Transition as a Way to Improve the Welfare of Indonesian Society.” Multidisciplinary Reviews 7 (12):2024283. https://doi.org/10.31893/multirev.2024283
18. McCauley, Darren, Vasna Ramasar, Raphael J. Heffron, Benjamin K. Sovacool, Desta Mebratu, and Luis Mundaca. 2019. “Energy Justice in the Transition to Low Carbon Energy Systems: Exploring Key Themes in Interdisciplinary Research.” Applied Energy 233 (January): 916–21. https://research-ebsco-com.proxy.library.cornell.edu/linkprocessor/plink?id=36229948-a1a7-3eaf-a294-1db590b313f4
19. Udin, Udin. 2020. “Renewable energy and human resource development: Challenges and opportunities in Indonesia.” International Journal of Energy Economics and Policy 10, no. 2: 233-237.
20. Smirnova, Elena, Sebastian Kot, Eugeny Kolpak, and Viktor Shestak. 2021. “Governmental Support and Renewable Energy Production: A Cross-Country Review.” Energy 230. September. https://research-ebsco-com.proxy.library.cornell.edu/linkprocessor/plink?id=b65a6c38-88b3-3783-b7b0-81842fe56e66
21. SIPET. 2024. “JETP Indonesia”. https://www.sipet.org/jetp-country.aspx
22. United Nations Development Programme (UNDP). 2024. “Indonesia Just Energy Transition Partnership (JETP).” https://www.undp.org/indonesia/projects/indonesia-just-energy-transition-partnership-jetp
23. Abdullah, Maryati. 2024. “A Path to Justice: The Ford Foundation’s Commitment to an Energy Transition in Indonesia.” Ford Foundation. https://www.fordfoundation.org/news-and-stories/stories/a-path-to-justice-the-ford-foundations-commitment-to-an-energy-transition-in-indonesia/
24. Halimatussadiah et al. 2024. “Employment Impacts of Energy Transition in Indonesia.”
25. Adrian, Tobias, Patrick Bolton, and Alissa M. Kleinnijenhuis. 2022. The Great Carbon Arbitrage. IMF Working Paper. https://www.imf.org/en/Publications/WP/Issues/2022/05/31/The-Great-Carbon-Arbitrage-518464
