Can Indonesia really achieve a net zero power sector by 2040?

The IEA 2050 scenario shows that by far the biggest and quickest emissions cuts come from the electricity sector. It turns from the biggest emitting sector in the 2020’s to the first sector to hit net zero, in 2040. The CO2 emissions from the electricity sector are expected to grow around double and reach its peak in the 2020’s, compared to 2010.

Indonesia by far is the largest coal generating country in ASEAN, and among top 10 globally. The IEA shows that a “net zero by 2050” pathway means that unabated coal power will need to be phased out by 2040. This would need to start in the 2020’s. It is also important to note that unabated coal needs to fall drastically starting in the 2020s. The report highlights that in the 2050 NZE scenario, coal-fired generation in 2030 would be 70% lower than the announced pledges scenario due to the high flexibility of coal power leading to less operational time.

To accelerate the transition in the electricity sector, the annual electricity sector investment should be tripled in this decade to reach almost USD 40 billion, and increased by eightfold in the following decade to around USD 80 billion, compared to 2010s; around 50% of which should be placed on renewable energy development.

According to Indonesia’s Ministry of Energy and Mineral Resources, the investment target for renewables by 2025 is around USD 36 billion, or USD 7 billion per year. This is insufficient and needs to increase to USD 20 billion per year until 2030. Much of this investment should be particularly allocated to solar and wind, followed by investment in flexible grid technology to accommodate high penetration of renewables across the country’s spread-out geography.

The average energy system cost under the 2050 NZE scenario will be slightly higher in the short-term compared to the other two scenarios due to the high investment, but it “pays dividends in the long term” in the form of lower fuel bills.

There will be additional 500,000 new jobs in the energy supply sector, the majority coming from the electricity sector. At the same time, the transition will affect 230,000 job losses, which mainly come from the coal mining industry. Although the net gains of the energy sector employment reach 265,000 jobs, just energy transition policies should be in place to ensure the transitions are socially inclusive and support the current employment that would be at risk in the transition process, particularly in the coal-producing regions.