Few countries talk about the energy transition as fluently as Indonesia does. Fewer still have done less about it. At the G20 summit in Rio in late 2024, President Prabowo Subianto pledged to retire every coal and fossil-fuel power plant within fifteen years. A few days later, his senior envoy walked the promise back and clarified that Jakarta only intended to “phase down” coal, not shut it down. That small linguistic retreat tells you most of what you need to know. Indonesia has learned to speak the language of transition while it keeps building the infrastructure of carbon lock-in. The country is not moving away from coal. If anything, it is digging in.
The numbers are blunt. Indonesia added the third-highest volume of coal capacity in the world in 2024, bringing its fleet to 54.7 gigawatts, the fifth largest anywhere, with another 26.7 GW planned by 2030. Coal still supplies about 68 per cent of national electricity. Renewables reached just 13.9 per cent by the end of 2024, missing even the revised 17 to 19 per cent target for 2025. The original 23 per cent renewables goal has quietly been pushed from 2025 to 2030. When a government keeps moving the goalposts, you stop wondering whether it will score, and start wondering whether it is still playing the same game.
The captive coal loophole
The sharpest contradiction sits in what policy experts call “captive” coal: plants built to power private industrial zones rather than the public grid. They mostly feed nickel smelters. Captive coal capacity nearly quadrupled between 2019 and 2025, going from 5.5 GW to nearly 20 GW. No other country has expanded this segment at that speed during a decade when the rest of the world was trying to decarbonise. More than 65 per cent of the fleet powers metal smelters, and another 5 GW is in the pipeline.
Presidential Regulation 112/2022 was supposed to put a moratorium on new coal plants. It also carved out generous exemptions for “national strategic projects” and vertically integrated industrial operations. The exemption turned into a highway. Thirty-three captive plants in Sulawesi now power Chinese-financed nickel smelters that feed the global electric-vehicle battery supply chain. The irony is almost too perfect. Coal burned in Indonesia to make the metals that will electrify cars in Europe and North America. The clean-energy transition has a dirty underside, and it has an address in Morowali and Weda Bay.
A just transition that isn’t
Indonesia’s Just Energy Transition Partnership (JETP), signed at the 2022 G20 Bali Summit, was supposed to change the trajectory. Twenty billion US dollars was pledged by wealthy nations to accelerate coal retirement and speed up renewables. The figure was later raised to USD 21.4 billion after Germany stepped in to replace the departing United States. Three years on, only about USD 3.1 billion has actually been approved, roughly 14.5 per cent of the total. The 2025 JETP Progress Report now projects that fossil fuels will still supply 53 per cent of installed capacity by 2030, with coal alone at 30 per cent.
The ambition has been downgraded. Only 1.6 GW of coal capacity is now being considered for early retirement, down from 5 GW. The late-2025 cancellation of the Cirebon-1 plant’s early retirement, one of the JETP’s most-watched pilot projects, was a clear signal. Institutional inertia and financial self-interest are stronger than the political will to actually close coal plants. There is also a scope problem. The JETP mandate covers only on-grid power, which leaves the fastest-growing part of the coal fleet outside the agreement entirely. The diplomatic optics are pristine. The atmosphere does not care.
Why coal still rules: political economy, not technology
The usual excuse, that renewables are intermittent or immature, is getting harder to take seriously. Indonesia sits on the equator with some of the best solar irradiance in the world. A real coal phase-out could save the country USD 34.8 billion in electricity subsidies and USD 61.3 billion in health-related costs, up to four times the potential losses from stranded assets and foregone coal revenue. This is not an engineering problem. It is a political-economy problem.
Nickel downstreaming is the crown jewel of Indonesia’s industrial policy. It has also enriched a narrow elite that includes current and former ministers with direct links to mining concessions. These actors have every reason to protect the coal-smelter complex that pays their rents. Resource nationalism, dressed up in the language of Article 33 of the 1945 Constitution, provides the ideological cover. Captive coal provides the cheap, ring-fenced electricity that makes the model run. Under this logic, a genuine transition is not just inconvenient. It threatens the distributional order that sustains political power in the first place.
Perusahaan Listrik Negara (PLN), the state utility, makes things worse. Its take-or-pay contracts with independent power producers guarantee payment for coal-fired electricity whether it is used or not, which structurally disincentivises renewable integration. PLN’s own internal planning targeted 62 per cent coal in 2025, more than double the 30 per cent ceiling in the government’s own National Energy Policy. When a state utility openly plans to miss a binding government target by a factor of two, you are no longer looking at a policy-design problem. You are looking at an accountability problem.
The coming credibility reckoning
Jakarta often frames all of this in terms of sovereignty: the right of a middle-income country not to be lectured by industrialised polluters. That argument has real moral weight. It also loses force quickly when a government abandons its own targets, riddles its own moratorium with loopholes, and watches its utility plan to blow through a legally binding ceiling. A harder commercial reckoning is coming too. The EU’s Carbon Border Adjustment Mechanism and tightening environmental standards from global automakers mean coal-powered Indonesian nickel will increasingly struggle to reach premium markets. Analysts warn that Indonesia risks being locked into a “dirty nickel” positioning just as customers pivot to low-carbon alternatives. The captive-coal strategy that looks like industrial policy today may end up looking, within a decade, like a stranded-asset strategy executed at continental scale.
What an honest transition would require
None of this means Indonesia cannot transition. It means Indonesia has to stop pretending it already is. An honest transition starts with closing the captive-coal loophole through amendments to Perpres 112/2022 and imposing binding emissions caps on industrial power. It requires reforming PLN’s take-or-pay arrangements so that renewables are not structurally disadvantaged at dispatch. It requires a concrete, public list of coal plants slated for retirement, with firm dates, instead of the current roadmap’s vague scoring exercise that weighs financial availability above emissions impact. And it requires decoupling the nickel-downstreaming agenda from its carbon-intensive foundations, by integrating renewables directly into the industrial parks themselves.
Indonesia’s energy transition has become a study in strategic ambiguity. Ambitious enough to attract foreign climate finance. Vague enough to protect domestic coal interests. Complex enough to make accountability difficult. That arrangement has worked diplomatically for several years. It is unlikely to keep working for several more. Indonesia will eventually transition, because the global economy will force it to. The real question is whether that transition gets designed in Jakarta, on Indonesian terms, or whether it gets imposed from outside by carbon tariffs, divesting investors, and climate shocks that no ministerial speech can deflect. Coal still rules in Indonesia not because renewables have failed. It rules because the political system has not yet decided it wants renewables to succeed. Until that decision is made and defended in public, every new commitment will sound exactly like the last one. Loud, quotable, and largely unbuilt.
