Indonesia to allow new coal-fired power plants under specific conditions

Indonesia has issued a presidential decree asking the energy ministry to prepare a road map for the retirement of coal-fired power plants, but it has also opened the door for new coal plant approvals under certain conditions, reversing a previous proposal to halt them.

In 2021, ministry officials had stated in a parliamentary hearing that the government will cease approvals of new coal-fired power plants, and only plants that that have started construction, or have already been approved will go ahead.

The new presidential decree that takes effect from Sept. 13 stipulates that the broader plan to halt coal-fired power by 2050 stands and new approvals will continue to be prohibited, unless they meet certain conditions regulated by the government.

The first condition states that new coal-fired power plants should be integrated with industries that focus on boosting value for the country or with strategic national projects that create jobs or boost economy growth.

The second condition is that within 10 years of the coal power plant officially starting operations, the project must commit to reduce greenhouse gas emission by 35% compared with Indonesia's average coal plants emission in 2021, by deploying new technologies, using carbon offsets, and building new renewable energy power generation.

According to the third condition, the new coal power plants must halt operation by 2050 at the latest, the presidential decree said.

The decree also aims to accelerate the development of new renewable power projects.

Indonesia has committed to reduce greenhouse gas emissions to achieve net zero emissions by 2060 or sooner, Energy and Mineral Resources Minister Arifin Tasrif said Sept. 15. "For this reason, efforts are needed to mitigate climate change by reducing carbon emissions (decarbonization) but while maintaining energy security," Tasrif said.

To increase the share of renewable energy in the power sector, state-owned power company Perusahaan Listrik Negara or PLN, must speed up the retirement of its coal fleet by replacing it with renewable energy supply, end electricity purchase contracts from other coal-fired power generators and assess electricity supply and demand issues in the long run, he said.

Under the decree, the government may provide fiscal support through the state budget for the early retirement of coal-fired power plants and boost renewable energy.

Indonesia has abundant renewable energy potential with a total capacity of around 3,000 GW, including 24 GW from geothermal. During the last five years, new renewable power plants have continued to increase but the pace remains slow.

"The potential of new renewable energy will be utilized as much as possible to accelerate the energy transition. In 2060, the capacity of new renewable energy generation is targeted to reach 700 GW from solar, hydro, wind, bioenergy, marine, geothermal, including hydrogen and nuclear," Tasrif added.