Potential conflicts of interest in Indonesia’s energy transition policy

Energy is a natural resource vital to the public. Therefore, many parties are interested in energy policies in a country, including Indonesia. These stakeholders include domestic stakeholders and multinational institutions. Therefore, the Indonesian Constitution (UUD 1945), specifically Article 33, explicitly states that the state controls all natural resources and important sectors of production for the prosperity of its citizens. Currently, energy policies are facing a new challenge in the form of a climate crisis. Greenhouse gas emissions from fossil-fuel combustion have contributed to the climate crisis. This climate crisis has caused ecological disasters in various countries including Indonesia. Larsen et al. (2021) revealed that in 2019, China was the largest greenhouse gas emitter (27%), followed by the United States (11%), India (6.6%), and the European Union (6.4%). The use of fossil fuels is one of the causes of the increase in GHG emissions. This has led to international pressure for countries to begin energy transitions. Indonesia is one of the countries that remains highly dependent on fossil fuels. Indonesia is the world’s largest exporter of coal. The Central Statistics Agency (BPS) Economic Statistics Report revealed that in 2022, Indonesia exported 360 million tons of coal (BPS, 2024).This situation has led to international pressure on Indonesia to undertake energy transition. However, developing countries, including Indonesia, require significant funding for energy transitions. Developed countries, which were the first to pollute the atmosphere with GHG emissions, are responsible for helping finance the energy transition in developing countries, including Indonesia. In 2022, at the G20 Summit in Bali, developed countries and Indonesia launched an energy transition funding scheme called the Just Energy Transition Partnership (JETP). On the one hand, this funding scheme can provide momentum for Indonesia to immediately undertake an energy transition and break its dependence on fossil fuels. However, politically, it has opened up international actors to gain a deeper influence on energy transition policies in Indonesia. Geopolitically, according to Simpson (2023), JETP is the response of developed countries in the G-7 to China’s Belt and Road Initiative (BRI).The JETP funding scheme differs from previous funding schemes. One difference is that this scheme incorporates an element of “justice.” The inclusion of justice in energy transition funding is expected to change the dominant structure of energy policy formulation in Indonesia. This study is necessary to determine the extent of the dominance of international financial institutions and national elites in energy transition policy in Indonesia, particularly in the JETP funding mechanism.

source:

https://journal.privietlab.org/index.php/PSSJ/article/view/557/294