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The climate crisis has caused ecological disasters in various parts of the world, threatening all life on earth. As fossil fuels mainly contribute to this greenhouse gases (GHG) emission, it is crucial that the world transition towards green energy as one of the efforts to mitigate GHG emissions. Indonesia, as a large coal exporter, must be involved in this energy transition.

Last year, the Indonesian government announced a new energy transition funding mechanism called the Just Energy Transition Partnership (JETP). In this funding mechanism, several G7 member countries will mobilise funding for Indonesia’s energy transition. JETP will provide funds amounting to USD 20 billion or around IDR 310.4 trillion.

JETP will significantly accelerate Indonesia’s transition to reducing cumulative greenhouse gas emissions by more than 300 megatonnes by 2030 and reducing by far more than 2 gigatonnes by 2060 from Indonesia’s current projections.

However, capital owners in the fossil energy industry have an important role in making strategic policies in Indonesia, including in the energy sector. They are oligarchs, who control the government, whoever the president is. President Joko Widodo is not part of the oligarchs, but they exist in his circle.

The oligarchs’ influence in the presidential circle is reflected in the government’s policies in the energy sector, which sides with the interests of investors in the fossil industry. Prior to the launch of JETP, President Jokowi issued Presidential Regulation Number 112 concerning the Acceleration of Development of Renewable Energy for the Provision of Electricity. Ironically, contents of the regulation actually provide ‘protection’ for coal, one of the fossil energies sources that causes the climate crisis.

Presidential Decree No. 112 still opens space and even provides certainty and protection for plans for the development of new power plants before 2030, counter to the spirit of energy transition. In fact, currently coal plants have caused an oversupply of electricity in Indonesia.

Institute for Development of Economics and Finance (INDEF) found that in 2021, the electricity capacity was 349 thousand Gigawatt hour (GWh). Meanwhile, electricity sold during that period was only 257 thousand GWh, which means there was a 26.3% difference. This oversupply has also forced the State Electricity Company (PLN) to issue regulations limiting the use of solar energy at the household scale.

Influence of oligarchs in the energy sector can also be seen in the funding policies of state-owned banks (BUMN). A joint research by 350 Indonesia and a coalition of civil society revealed that Bank Mandiri issued USD 3.19 billion in loans to 10 coal companies between 2015 and 2021. Bank Rakyat Indonesia (BRI), from 2015-2021, has provided loans worth USD 122.5 million to three coal companies. Meanwhile, Bank Negara Indonesia (BNI), provided loans of USD 53.4 million to three coal companies. In fact, state-owned banks should be at the forefront of funding for renewable energy, in fact they continue to choose to fund dirty coal energy.

In 2023, Indonesia will enter a political year ahead of the legislative and presidential elections in 2024. In a political year, oligarchs in Indonesia will start pouring funds into the campaigns of legislative and presidential candidates, to secure their businesses, including businesses in the fossil energy sector.

This political year is the starting point for the future of the energy transition including the JETP mechanism. Will the new government, under the results of the 2024 presidential election, remain committed to carrying out the current energy transition or cancel all energy transition initiatives?

There is no definite answer to the above question. It is possible that the newly elected government will be more committed to the energy transition, but it could also be the other way around. The more funding from oligarchs, owners of fossil energy businesses, for legislative and presidential candidates in the 2024 election, the stronger their influence will be on the new government. That is, the stronger the possibility for the new government in 2024 to reject the energy transition agenda.

If the next government in 2024 prefers to carry out the oligarch agenda, it will be difficult for Indonesia to get out of its dependency on fossil energy. The new government, which is already controlled by oligarchs, may not directly reject the energy transition agenda. The new government could offer a false solution to extend the use of fossil energy. The false solution could be clean coal technology.

So, will the Indonesian people as citizens remain silent when the energy transition agenda is hijacked by the oligarchs, the owners of the fossil energy industry? The Indonesian people should not be silent. The Indonesian people must always urge the election committee to immediately make new rules to limit funding from the oligarchs to legislative and presidential candidates in the 2024 elections.

The Indonesian people must start campaigning to include energy transition in debates during the legislative and presidential election campaigns in 2024. Finally, the Indonesian people must choose legislative and presidential candidates who have the courage to continue the energy transition agenda, and reject the oligarchs’ agenda.

About the blog author

Firdaus Cahyadi is Indonesia’s Team Leader. For more insights related to Indonesian climate and energy landscape, you may follow Firdhaus on Twitter.

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