Jakarta – Civil society views the government’s plan to impose an export duty on coal starting in 2026 as a significant breakthrough that could change the direction of Indonesia’s energy transition funding. The policy, which was initially considered a fiscal instrument, is now seen as capable of becoming the mainstay of financing for the national solar energy programme, including President Prabowo Subianto’s ambitious target of building 100 gigawatts (GW) of solar power plants throughout Indonesia.
The Executive Director of the Indonesian Sustainable Welfare Foundation (SUSTAIN), Tata Mustasya, said on Wednesday, 3 December, that coal export duties are not merely a means of controlling exports, but could be the key driver of Indonesia’s clean energy economy. He pointed out that the biggest problem in the energy transition so far has not been technology, but funding.
“Financing has been the main obstacle to energy transition. With revenues that could reach Rp 360 trillion over the next four years, we have a real opportunity to realise 100 GW of solar energy and lead Indonesia towards green energy independence,” said Tata.
The SUSTAIN study shows that, using the October 2023 Coal Reference Price (HBA) benchmark, the application of export duties, even in a conservative scenario, could generate revenue of USD 5.63 billion, or around IDR 90 trillion, per year. If consistently applied during President Prabowo’s four-year term, the total potential revenue would reach IDR 360 trillion. This figure is considered sufficient to support the initial phase of village-scale solar energy project development.
The Ministry of Energy and Mineral Resources (MEMR) previously estimated that to meet the 100 GW target, including solar power installations in 80,000 villages, an investment of USD 100 billion, or around Rp 1,600 trillion, would be required. SUSTAIN assesses that export duty revenue of Rp 90 trillion per year could serve as initial capital to develop 18,000 villages, each with a capacity of 1 MW. This figure represents more than 20 per cent of villages in Indonesia and is seen as a realistic first step.
Tata emphasised that the government should not wait until all funding has been secured before launching the 100 GW programme. A pilot approach is considered effective in ensuring technical and institutional readiness.
“The government can allocate this funding to several pilot villages as an initial step or for piloting the implementation of the 100 GW Programme. For example, for villages in areas that are projected to experience an increase in electricity demand, or villages that do not yet have electricity, or even villages that still depend on expensive electricity from diesel fuel,” he explained.
However, SUSTAIN warns that the success of this policy depends heavily on how the state allocates revenue from these export duties. According to the organisation, without clear management, the large revenues generated by export duties could be absorbed by routine fiscal needs and fail to have a significant impact on the energy transition agenda. Therefore, Tata emphasises the need for a mechanism to ensure that the revenue is actually channelled into the 100 GW programme.
“For this policy to truly support the energy transition agenda, revenue from coal export duties must be clearly allocated and managed by the Ministry of Finance to fund the 100 GW Programme,” he said.
SUSTAIN encourages the government to establish a robust policy framework, covering export duty design and revenue management, as well as inter-ministerial coordination. Tata stated that Indonesia needs to ensure three key conditions for this policy to be effective: a fair, progressive export duty mechanism; special allocation or earmarking for the 100 GW programme; and strengthened inter-ministerial coordination to ensure measurable, accountable implementation.
“The determination of coal export duties using a progressive and equitable scheme, the allocation of special revenues, and coordination between the Ministry of Finance, the Ministry of Energy and Mineral Resources, the Ministry of Investment and Downstream Industry, the Ministry of Cooperatives, and PLN are significant to ensure accountability and effectiveness of implementation,” said Tata.
With the enormous need for investment in solar energy and increasingly limited national fiscal space, coal export duties are seen as a strategic instrument. This policy not only strengthens energy transition funding, but also affirms Indonesia’s commitment to move away from coal, a commodity that is beginning to lose its relevance at the global level. (Hartatik)
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