Coal Dependency in Indonesia: Understanding Carbon Lock-In Dynamics and Pathways Forward (PhD project - Rio Alfajri)

Background

Indonesia is one of the world’s largest producers and users of coal. While many countries are moving toward cleaner energy sources, Indonesia still relies on coal to power its economy. This is partly because coal is seen as cheap and locally
available. However, continued coal use creates environmental problems and
delays the shift to sustainable energy. Understanding why this dependency
exists is important for finding better ways to meet the country’s energy needs
without harming the planet.

Description

Reducing greenhouse gas emissions to net-zero by mid-century is a central global climate policy goal, aligned with the Paris Agreement’s aim of limiting global warming (Fankhauser et al., 2022; Höhne et al., 2021). Achieving this target requires a rapid phase-out of coal (Jotzo, Mazouz, & Wiseman, 2018; Lovell, Bulkeley, & Owens, 2009) - a particularly pressing challenge in coal-dependent economies like Indonesia. Indonesia’s long-term development vision, Golden Indonesia Vision 2045 (Visi Indonesia Emas 2045), sets out five major targets: achieving developed-country-level income, eradicating poverty and inequality, enhancing global leadership, improving human capital competitiveness, and reducing greenhouse gas emissions toward net-zero (Bappenas, 2024). Meeting these targets involves a delicate balancing act between economic growth and ambitious climate commitments. Coal remains Indonesia’s dominant energy source, especially for electricity generation, where coal-fired power plants account for approximately 88% of national electricity - mainly in Sumatra, Java, and Bali (MoEMR, 2022a, 2022b). In 2024, coal production is targeted at 922 million tons - an increase from 695 million tons in 2023 - with over 500 million tons allocated for export (Florentin, 2024; Reuters, 2023; Setiawan, 2024). The coal industry also supports significant employment and provides critical fiscal transfers to local governments through royalties and the revenue-sharing mechanism known as Dana Bagi Hasil (PWC, 2022; CMfMIF, 2023). Despite ratifying the Paris Agreement in 2016 (UNTC, 2025) and introducing more ambitious climate targets in the Enhanced Nationally Determined Contribution (E-NDC 2022) and Second NDC drafts (Tracker, 2024), Indonesia’s energy policies remain inconsistent. Critics argue the government is not taking serious action to reduce emissions (Tracker, 2022; WALHI, 2020). For instance, the continued emphasis on coal-based solutions like “clean coal” technologies in the Second NDC suggests a sustained role for coal rather than a commitment to phase it out. These narratives - framing coal as compatible with sustainability - can delay more transformative shifts in energy policy (Asayama & Ishii, 2017). International financial initiatives, such as the Just Energy Transition Partnership (JETP), have emerged to support energy transitions in fossil-fuel-rich countries. Yet, their effectiveness in addressing the structural roots of Indonesia’s coal dependency remains unclear. To address this, the project employs the carbon lock-in framework (Unruh, 2000; Seto et al., 2016) to explore the institutional, political, financial, and narrative mechanisms that maintain coal reliance in Indonesia. While past research has identified carbon lock-in as a major barrier to decarbonization (Schrandt, Wittmayer, & Metze, 2024; Worsham & Brecha, 2017) and explored strategies to disrupt it (Schuch et al., 2024; Sedlacek et al., 2020; Wen et al., 2025; Zhao et al., 2024), little is known about how these mechanisms function and reinforce each other in coal-dependent economies like Indonesia. This research aims to fill that gap by analyzing how multi-level governance structures (national and provincial level), entrenched political interests, and discourses around new coal technologies collectively contribute to carbon lock-in. It also examines how international finance attempts to intervene in these dynamics. Through a detailed case study of Indonesia, the study seeks to offer a more comprehensive understanding of how coal dependency is sustained - and to identify opportunities for strategic interventions to accelerate the country’s energy transition.