ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter

Indonesia aims to dump coal plants for carbon neutrality by 2060

State utility envisions gradual cuts until all power comes from clean sources

Indonesia aims to gradually wean itself off reliance on coal-fired power plants.   © Reuters

JAKARTA -- Indonesian state utility Perusahaan Listrik Negara is aiming to phase out coal-fired power as the country brings forward its carbon neutrality ambitions to 2060.

The expedited schedule comes on the heels of a decision earlier in the month to stop the construction of new coal-burning plants as well as government plans to introduce a carbon tax.

It also follows criticism President Joko Widodo received from local media for failing to make a stronger commitment to curb greenhouse gas emissions at the Leaders Summit on Climate, hosted by U.S. President Joe Biden in April.

Darmawan Prasojo, PLN's deputy CEO, revealed the plan at a parliamentary hearing on Thursday. The company will look to replace 1.1 gigawatt worth of coal and gasified coal-powered power plants with renewable energy by 2025. It will also retire a total of 49 GW of coal-fueled power plants in stages by 2056.

Indonesia's energy demand is expected to reach 1,800 terawatt-hours in 2060, of which PLN expects 53% to come from solar and wind sources. Currently, 60% of the archipelago's energy comes from coal, while less than 1% comes from solar and wind, according to the International Energy Agency.

"The target in 2060 is that all power plants in Indonesia will already use clean energy," said Prasojo. "From this, we believe we can reach carbon neutrality by 2060."

Indonesia, the world's largest coal exporter by weight, has an unconditional 29% emissions reduction target by 2030 under the Paris Agreement, while government officials said in March that the country is hoping to achieve net zero emissions by 2070.

Major developed countries -- including Japan, the U.S., South Korea and in Europe -- have declared they are committed to achieving net zero greenhouse gas emissions by 2050. Among the 10 members of the Association of Southeast Asian Nations, three -- Cambodia, Myanmar and Laos -- have made such a declaration, according to Climate Action Tracker.

At a separate event, Luhut Binsar Panjaitan, coordinating minister for maritime affairs and Investment, also spoke on Thursday about phasing out coal power plants. "Fossil energy has become a common enemy [of the world]," said Luhut, known as President Joko Widodo's right-hand man. "The Indonesian government will also be able to gradually retire the coal power plants because international banks no longer want to fund fossil energy."

Indonesia was the world's 10th largest emitter of Co2, according to IEA.

PLN's plan envisions nuclear power being a substantial part of the energy mix. According to the materials presented to parliament, nuclear energy will become a factor in 2040 "to maintain system reliability as the development of nuclear technology becomes more secure."

Indonesia has harbored nuclear power ambitions on and off since the establishment of its National Nuclear Energy Agency in 1958. Though strong public resistance has long prevented any large-scale development, Jakarta reignited its aim by including provisions in a controversial omnibus law, passed through parliament in October, which intends to encourage private sector investment in nuclear energy.

The new PLN plan follows its pledge to stop building new coal power plants after the construction of those that are already in the pipeline, reported by local media in mid-May. The new coal power plants are part of government plans to develop 35 GW of additional power capacity.

The finance ministry is also contemplating the introduction of a carbon tax. In a document released last week outlining the economic framework and fiscal policies for next year, it said such a levy could be applied to fossil fuels and emissions released by factories or vehicles, as well as "carbon intensive" industries such as pulp and paper, cement, power generation and petrochemicals.

Indonesia's aim to achieve carbon neutrality by 2060 is "clearly possible" and could "even be accelerated to around 2050," said Fabby Tumiwa, executive director of the Institute of Essential Services Reform, an Indonesian think tank focused on energy and the environment.

But PLN's plan "will require certainty from the government," Tumiwa said, adding that a presidential decree may be a way to ensure that the phasing out of coal power plants takes place.

Construction of renewable power plants will require private investment as PLN will not be able to shoulder all the cost, he said. The challenge, he added, is to "design a bankable project" with "the government supporting the investment climate."

Additional reporting by Ismi Damayanti

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more