Jakarta—Although the legal instruments and funding for the early retirement of coal-fired power plants are available, analysts believe that the main obstacle to accelerating the energy transition is a lack of political will at the government level.
In a discussion with the media on Friday, February 7, Muhamad Saleh, a legal researcher at the Center for Economic and Law Studies (CELIOS), said that the mandate in Presidential Regulation No. 112 on the Acceleration of Renewable Energy Development provides a strong legal basis for immediately issuing a roadmap for the early retirement of coal-fired power plants (PLTU).
Speakers at the discussion considered that the government must immediately issue a road map for the early retirement of PLTU following the mandate of Presidential Regulation (Perpres) No. 112 concerning the Acceleration of Renewable Energy Development for Electricity Supply, but the realisation is still on hold.
“Perpres 112 should encourage the Ministry of Energy and Mineral Resources to issue a road map for the early retirement of PLTU. The legal instruments are there, all that is needed is a commitment to follow it up,” Saleh said.
Meanwhile, Tata Mustasya, the Executive Director of the Sustainable Welfare Foundation (SUSTAIN), highlighted that the government has innovative financing options, such as increasing levies on coal production, which can be explicitly allocated to fund the energy transition.
“By increasing the levy on coal production, we can get significant additional revenue. These funds can be used to fund the early retirement of power plants, the construction of transmission networks, and the development of renewable energy. This disincentive will force the coal industry to reduce production,” Tata explained.
According to him, the increase in levies has the potential to reach a large enough figure, so there is no need to wait for grants or funds from abroad.
On the other hand, Minister of Energy and Mineral Resources (MEMR) Bahlil Lahadalia recently admitted that retiring PLTU requires a large investment. However, Bahlil stated that funding priorities are currently allocated to other programs, so the government invites national and international institutions to support the transition.
“We still open the opportunity to retire the PLTU early as long as it does not harm the country. If there is funding with low interest or support from investors, of course, we will consider it. But right now, many other priorities must be addressed,” Bahlil said.
However, experts argue that this inconsistency hinders the acceleration of the national energy transition. They argue that funding from increased coal production levies should be prioritised to support the transition to clean energy.
“Don’t let policy uncertainty make us lose momentum in reducing emissions and reducing fossil energy subsidies. The PLTU early retirement policy must be implemented immediately with existing funding sources, not continuing to rely on external funds,” said Tata.
Observers also highlighted that this policy is not only about reducing emissions but also related to improving the quality of health and saving the subsidy budget, which has been very large due to the operation of coal-fired power plants.
With clear legal instruments and potential funding through coal levies, experts hope the government will immediately show consistent political will to encourage the early retirement of coal-fired power plants. This step is considered crucial so that Indonesia can accelerate the transition to renewable energy and achieve the Net Zero Emission target that has been set. (Hartatik)
