Shortly after President Donald Trump announced the U.S. withdrawal from the Paris Agreement on January 27, Indonesia began considering a similar move.
"If the United States (the world's second-largest emitter after China) does not comply with an international agreement, why should Indonesia?" said Hashim Djojohadikusumo, Indonesia's special envoy for climate and energy, during a sustainability forum in Jakarta on January 31.
He highlighted the disparity in per capita carbon emissions, noting that the U.S. emits approximately 13 metric tons per person per year, while Indonesia's figure stands at just 3 metric tons.
The U.S. withdrawal has created a dilemma for developing nations like Indonesia in achieving their energy transition goals. While one of the world's biggest polluters shirks responsibility, Indonesia—despite its comparatively lower emissions—remains burdened with emission reduction obligations.
Although no official decision has been made, a growing number of Indonesian officials are questioning the fairness of the country’s commitment to the Paris Agreement, especially as financial support from developed nations becomes increasingly uncertain.
Indonesia’s Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that without sufficient funding, developing renewable energy and retiring coal-fired power plants early would be difficult to achieve.
The U.S. exit from the agreement has also intensified global debates on climate justice. Developing nations like Indonesia argue that they are being unfairly burdened with responsibilities that do not match their contributions to global emissions.
Climate Justice or Climate Politics?
However, these statements contradict President Prabowo Subianto’s commitment to retiring coal-fired power plants (PLTUs) within the next 15 years while also expanding renewable energy capacity by 75 GW within the same timeframe.
The gradual phaseout of coal-fired power plants is part of Prabowo’s broader ambition to achieve net-zero emissions by 2050, a decade earlier than the previous target.
On the other hand, Indonesia still plans to build new coal plants, with a moratorium on new projects only taking effect in 2040. This raises questions about the alignment of national energy policies with the country’s ambitious energy transition goals.
Is Cheap Coal Really Cheap for Indonesia?
Several studies suggest that Indonesia can achieve its energy transition targets in line with the Paris Agreement scenario, even before 2040. The assumption that fossil energy is cheaper is also being challenged.
According to transisienergiberkeadilan.id, the cost of coal-fired power generation appears lower, with the levelized cost of electricity (LCoE) in 2020 ranging from $4.59 to $11.85 cents per kWh, depending on the type.
However, this calculation does not account for subsidies and the domestic market obligation (DMO) policy, which caps coal prices at $70 per ton. Without the DMO, the LCoE for coal power could exceed $10 cents per kWh. In June 2022, when coal prices surged, this cost even reached $16 cents per kWh.
In contrast, the LCoE for solar power in 2020 ranged from $4.09 to $10.09 cents per kWh, making it more competitive since it requires no fuel. Additionally, the government has allocated subsidies and electricity compensation for low-income households to keep tariffs affordable, totaling $8 billion (Rp123 trillion) between 2017 and 2022.
Beyond economic costs, other factors remain unaccounted for, such as healthcare expenses and CO2 emissions. A 2019 Greenpeace report estimated that if these externalities were factored in, the true cost of coal-fired electricity could reach $14 cents per kWh. This aligns with IMF recommendations urging countries to include social and environmental impacts in coal energy cost calculations.
Will Indonesia Risk 40% of Its GDP?
Sisilia Nurmala Dewi, Indonesia team lead for 350.org, warns of significant economic losses if Indonesia withdraws from the Paris Agreement and fails to address climate change. The government itself estimates that climate change could cost Indonesia up to 40% of its GDP by 2050.
Norly Mercado, 350.org’s Asia regional director, also suggests that Indonesia redirect fossil fuel subsidies toward renewable energy as a way to strengthen mitigation efforts and offset the financial shortfall left by the U.S. withdrawal.
Moreover, Mercado sees the absence of U.S. leadership on climate issues as an opportunity for Indonesia to strengthen its own role in global climate leadership and push Western nations to fulfill their obligations in financing a just energy transition.
