Indonesia’s current transition from fossil-based energy to renewable sources requires strategic considerations of how its investment needs and impacts should be equitably distributed among all stakeholders. With an ambitious target to generate 61% renewable energy (RE) in the Electricity Supply Business Plan (RUPTL) 2025-2034 and President Prabowo’s bold remark on achieving 100% RE by 2035, a rigorous assessment of transition costs and benefits is instrumental in ensuring that Indonesia’s energy transition is not only successful but its outcome truly just and sustainable.
This paper “Investment Needs Of Indonesia’s Just Energy Transition: A Framework” by Climate Policy Initiative presents a framework for categorizing transition costs across different levels and actors-individuals, companies, communities, and governments. By applying a standardized yet flexible approach, policymakers can assess these costs more accurately based on specific contexts and objectives. Recognizing and addressing the financial challenges of the transition is crucial, particularly for EMDEs, which have less fiscal capacity than advanced economies to proactively deal with transition impacts. Transition costs-whether from lost revenue or increased expenses-can be significant, but greater accuracy in understanding these impacts will help mitigate risks and uncover broader socioeconomic opportunities.
By applying this framework in key initiatives such as Indonesia’s JETP and Energy Transition Mechanism (ETM), stakeholders at all levels can make informed decisions about just transition finance that pave the way for a more equitable, sustainable, and prosperous energy future.
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