More than two years after launching its Net Zero Emission Roadmap in 2022, the Indonesian government has introduced the long-awaited Energy Transition Roadmap for the Power Sector. Issued under Minister of Energy and Mineral Resources (MoEMR) Regulation No. 10/2025, the roadmap is intended as a technical guide to help achieve Indonesia’s ambitious goal of reducing emissions by 41% by 2030.

For many businesses and investors, the regulation was expected to bring clarity and direction to align operations with the government’s long-term energy transition strategy. Yet, despite high expectations, the roadmap leaves many questions unanswered and lacks clear, detailed objectives—raising concerns about the pace and seriousness of Indonesia’s transition.

The roadmap builds on Presidential Regulation No. 112/2022, which sought to gradually reduce dependence on fossil fuels. Yet, the criteria for coal plant retirement remain heavily skewed toward economic considerations such as financing, technical lifetime, and operating efficiency—while environmental costs are sidelined.

Crucially, the regulation makes coal retirement conditional rather than mandatory. Article 12, for example, requires that early retirement be backed by available financing and a feasibility study conducted by state utility PLN. This effectively ties coal retirement to political will at the ministerial level, raising doubts about whether Indonesia can deliver on its promise of a fair and sustainable energy transition. Critics argue this business-first approach prioritizes the financial interests of plant operators over Indonesia’s Paris Agreement commitments.

Civil society groups have long identified specific coal plants that could be retired without significant fiscal burdens. The Institute for Essential Services Reform (IESR) estimates that 72 coal-fired power plants, with a total capacity of 43.4 GW, should be retired between 2022 and 2045. Between 2025 and 2030 alone, 18 plants (9.2 GW) could be phased out, split between PLN (5 GW) and private operators (4.2 GW).

The financial cost of early retirement is projected at US$4.6 billion by 2030 and US$27.5 billion by 2050, with PLN expected to cover about one-third and private developers the rest. While these costs are substantial, the long-term savings far outweigh them. By 2050, early retirement could save the government US$96 billion (Rp 1,582 trillion)—almost half of the 2025 state budget—through reduced subsidies and avoiding healthcare costs tied to air pollution.

Unfortunately, instead of fully committing to renewable energy, the roadmap leaves the door open for continued coal use through technological stopgaps such as Carbon Capture and Storage (CCS) and Carbon Capture, Utilization, and Storage (CCUS).

Global evidence suggests these technologies are expensive and largely ineffective. According to IEEFA, 13 large-scale CCS/CCUS projects worldwide reduced only 39 million tons of CO₂ per year—a negligible share of the 36 billion tons emitted globally in 2021. Similarly, the inclusion of biomass co-firing—burning biomass alongside coal—presents major risks. Indonesia projects 54 GW of co-firing capacity by 2060, but this strategy could accelerate deforestation for biomass feedstock and, paradoxically, increase overall emissions.

These measures, often labeled “false solutions,” may delay the urgent and inevitable shift away from fossil fuels.

A truly just energy transition requires coal phase-out to be mandatory, not conditional. Beyond reducing climate risks, early retirement could prevent an estimated 110,000 premature deaths annually in Indonesia linked to air pollution.

Financing challenges, often cited as the main barrier, can be addressed through innovative mechanisms, mobilizing creative financing structures and strengthening its political commitment. Indonesia has an opportunity to lead the region in building a resilient, renewable-powered economy.

Several innovative mechanisms are already on the table:

• Debt-for-climate swaps, allowing government debt to be converted into financing for coal retirement.
• Increased coal royalties, which could both raise state revenues for transition financing and serve as a disincentive for future fossil fuel investment.

For investors, developers, and policymakers, the Energy Transition Roadmap signals both opportunities and uncertainties. While Indonesia has made bold commitments, the reliance on conditional measures and interim “solutions” underscores the need for policy certainty, financing innovation, and stronger political will. The coming years will determine whether Indonesia seizes this moment to lead in Southeast Asia’s clean energy transformation—or risks being left behind by clinging to fossil fuels.

If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author:
Budhi Satya Makmur