Energy transition in Indonesia - lessons learned from Germany and Australia

The IKI project "Clean, Affordable and Secure Energy for Southeast Asia (CASE)" organised a virtual exchange on coal phase-out strategies.

When talking about energy transition, it is commonly understood that the processes are complex and specific to national circumstances. The political landscapes, resource availability, power market set-ups, and regulations provide different starting positions for a coal phase-down in each country, with further important factors including social considerations related to job security and energy affordability. However, there are also commonalities that can be shared across countries. These include the strategies to ensure coal phase-out target achievement, to establish a just workforce transition, and to maximize socio-economic benefits of the energy transition.

Indonesia, whose energy supply has so far been heavily reliant on fossil fuels, can thus learn from the coal phase-down experiences of other countries and use this evidence to develop its own set of energy transition solutions that suit Indonesia’s specific challenges.

With these considerations in mind, the Indonesian chapter of the IKI supported Clean, Affordable, and Secure Energy for Southeast Asia (CASE) programme held a virtual seminar as a platform for Indonesia’s government officials, business leaders, and the public, to understand the coal phase-out in Germany and Australia.

Coal phase-out process in Germany

Focusing on Germany, a speaker from The Federal Ministry for Economic Affairs and Climate Action (BMWK) presented the countries objective to reduce the carbon footprint of its energy system by phasing out coal while upscaling renewable energies. Germany showcased a strong political will to accelerate coal phase-out through the establishment of a ‘Coal Exit Commission’. The coal phase-out process was done through several means, one of which is the auctioning scheme for hard coal and the negotiations for lignite power plants. This innovative mechanism provided an important lesson for the government to design a phase-out system that is suitable and effective for the country’s power sector landscape.

Just Transition in Australia

The second part of the seminar focused on Australia. The Victorian government became a champion of a just energy transition by establishing the Latrobe Valley Authority (LVA). Despite having the second-largest lignite reserve in the world, the Victorian government invested approximately a quarter of a billion dollars to ensure the former coal mine and power plant workers undergo an equitable and sustainable transition. The transition is made possible by the LVA’s consistent engagement with the community to co-design a sustained life beyond coal. Economic diversification and transition toward expanding job sectors need to be undertaken based on the strengths and opportunities in the local context. This localized and personalized approach is a unique strategy that Indonesia can adopt from the Latrobe Valley.

Lessons-learned from the online seminar

Over 200 participants attended the discussion, with around 30% representing Indonesia’s governmental bodies. Through a post-event survey, CASE had identified that the session on regulation and socio-economy aspects in Germany garnered the most interest. The participants were also interested to join similar future events by CASE on topics ranging from renewable energy technology, energy crisis, to Net-Zero Emissions roadmap and funding.

A CASE Insight synthesizing these lessons-learned and further evidence of how Indonesia could follow these transformational steps was published in early April 2022.

Outlook

As a follow up of this discussion, CASE is planning to organize a side event on the G20 Development Working Group in August 2022, inviting G20 representatives to speak about their strategies to incorporate decarbonization measures into their national development policies.