Energy Transition in the Electricity Sector

BAHLIL Lahadalia has every right to issue an energy transition road map in the electricity sector. But it would be wrong to hope that the content of the latest policy from the Energy and Mineral Resources Ministry is in line with its title.

Included in the Energy and Mineral Resources Minister Regulation No. 10/2025, the energy transition road map is a realization of the government’s pragmatism. As Bahlil said, this legislation is necessary for the release of an Asian Development Bank loan for the early retirement of coal-fired steam power plants (PLTUs). For almost two years, the funding commitment as part of the Just Energy Transition Partnership has been in limbo because the government does not have a proper plan.

Bahlil is under pressure. President Prabowo Subianto has promised to halt the operations of PLTUs within the next 15 years. This means that all of the components to realize this promise must be in place from the first period of the Red-and-White Cabinet government. This plan could fail if international funding does not start immediately.

The early retirement of coal-fired steam power stations plan will not be cheap. Compensation will have to be provided to power plant operators as well as people in both upstream and downstream industries affected by the halting of PLTU operations. And renewable energy power plants will need to be built to make up for the shortfall in electricity supply. There is also a risk that government spending on energy subsidies will rise sharply because it is more expensive to provide electricity from renewable sources than from coal.

Although it is not forbidden in governance, pragmatic public policies can be very dangerous. Such a policy ignores ideals, is often not accompanied by long-term planning, and can be inconsistent, undemocratic, and prone to infiltration by the interests of particular groups.

All of these risks are inherent in Minister Bahlil’s policy, which was drawn up in a non-transparent way with minimal public participation. Instead of becoming a guideline to immediately ending Indonesia’s dependence on fossil fuels, the energy transition road map actually provides a recipe for extending the lifetime of coal-fired power plants.

In this road map, PLTUs will be allowed to operate for longer if they can reduce their greenhouse gas emissions, either by co-firing biomass or making use of carbon capture technology. The government is also providing an opportunity for the construction of new PLTUs as long as they use this technology or participate in carbon trading. Bahlil’s energy transition scheme legitimizes the practice of greenwashing—creating  products or policies that appear to be environmentally friendly when in fact they are not—which is a new threat to forests and local communities.

This policy also tasks state electricity company PLN with studying which power plants are suitable for early retirement. The final decision will be made by the Energy and Mineral Resources Minister after obtaining approval from the Finance Minister and the State-Owned Enterprises Minister. But it will be difficult for this mechanism to reach objective decisions. PLN is the owner of the coal-fired power plants as well as the main player in the electricity sector. Meanwhile, the government, as has happened so many times before, is often hand in hand with extractive industry investment groups.

As well as being pragmatic, the electricity sector energy transition road map will also rightly be referred to as simply a ruse.