Celios, Cerah: Early retirement of coal plants, expansion of renewables positively impacts economy and society

Jakarta – A recent study found that the early retirement of coal-fired power plants, which are then replaced by renewable energy-based power plants, can provide significant economic benefits. The research by Yayasan Indonesia Cerah and the Center of Economic and Law Studies (Celios) highlights the importance of welcoming the early retirement of coal-fired power plants by intensifying renewable energy development.

This finding emerged from modelling the early retirement scenarios of coal-power plants Cirebon-1, Pelabuhan Ratu, and Suralaya, which showed an increase in gross domestic product (GDP) of Rp 82.6 trillion.

Economist and Director of Celios, Bhima Yudhistira, explained that the economic impact of coal power plant closures is highly dependent on mitigation efforts, regulatory readiness, and commitment to accelerate renewable energy development as a replacement for coal power plants.

The study highlights two different scenarios. The first scenario shows the closure of coal-fired power plants without replacement. In contrast, the second scenario involves the construction of renewable energy plants and closing the coal-fired power plants.

“Our study shows that the coal power plant closure scenario in three locations can reduce GDP by Rp 3.96 trillion, create a risk of reducing the workforce by 14,022 people, and increase the number of poor people by 3,373 people. Meanwhile, the second scenario, where the development of renewable energy plants accompanies the closure of coal-fired power plants, is actually able to contribute Rp 82.6 trillion to the economy, absorb 639 thousand workers and reduce poverty by 153,755 people nationally,” Yudhistira explained.

Celios recommends that developed countries involved in the Just Energy Transition Partnership (JETP), including governments and financing institutions, include more power plants in early retirement programs. The importance of this step is emphasised so that the energy transition process can run efficiently and be accompanied by accelerated development of transmission infrastructure and renewable energy.

Cerah Executive Director Agung Budiono added that the early retirement of PLTU is an important step in achieving energy transition goals to support climate ambition. However, he also emphasised that this step must be accompanied by accelerated renewable energy development to achieve significant economic impacts.

The Coordinator of Energy Conservation Program Preparation, Ministry of Energy and Mineral Resources (EMR), M Arifuddin, stated that the ministry is developing a roadmap for the retirement of coal-fired power plants. He emphasised that the research results from Yayasan Indonesia Cerah and Celios will be an important foundation in preparing this policy. (Hartatik)

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