Indonesia will stop approval of new coal-fired power plants with the aim of reducing carbon emissions and promoting renewable energy sources. The Government of Indonesia will permit the completion of facilities that are currently under development or have reached financial closure. The decision to halt new coal-fired power project approvals is also tied to tighter global bank financing for fossil fuels.
Indonesia’s Ministry of Finance has also recommended the creation of a carbon tax regulation as part of broader initiatives to modernise the country’s tax structure. The tax will target coal-consuming companies such as pulp and paper manufacturers, cement makers, and power generators and has the potential to have a direct impact on domestic coal usage. Coal-fired power facilities alone account for 70 per cent of Indonesia’s total greenhouse gas emissions.
The Government of Indonesia intends to minimize coal-fired power’s share in the country’s energy mix to 30 per cent by 2025 while boosting new and renewable energy sources. Gas-fired power generation is expected to account for 22 per cent of total generation in 2025, up from roughly 19 per cent in 2020. However, oil-fired generation is expected to account for 25 per cent of the total generation by 2025, down from 31.6 per cent in 2020.