Energy transition has been widely discussed in several global initiatives. In 2016, 191 parties signed the Paris Agreement as a manifestation of cooperation in combating climate change and improving investment for sustainable low-carbon development. As one of the countries participating in this international treaty, Indonesia is firmly committed to tackling climate change by gradually making renewable energy one of the leading development agendas. In 2015, the Government of Indonesia (GoI) pledged to reduce emissions from 2020-2030 by 29% (unconditional) up to 41% (conditional) against the 2030 business-as-usual scenario, an increased unconditional commitment compared to the 2010 pledge of 26%1. The notion of negative externalities from coal-based energy usage gives global retention on the transition into more sustainable and clean energy.

The transition, to some extent, provoked some countries to build JETP (Just Energy Transition Partnership) initiated by the European Union, French, Germany, United Kingdom, and United States.2 The JETP was launched in 2022 alongside the G20 Indonesia Presidency. This long-term partnership with Indonesia aims to mobilize an initial $20 billion (€19.4 billion approximately) in public and private financing over a three-to-five-year period, using a mix of grants, concessional loans, market-rate loans, guarantees, and private investments, under Asia Development Bank (ADB) and PT. Sarana Multi Infrastruktur (SMI), the JETP financing is managed under the Energy Transition Mechanism (ETM).3 Though the ETM is still being developed and under review, the scheme– by far– only concerns two main mechanisms; (i) Carbon Reduction Facility/CRF, and (ii) Clean Energy Facility/CEF.

The ETM has not incorporated the aspect of risk mitigation and presumably affected actors from the energy transition scenario in Indonesia, while on the other hand, there might be several groups affected by the transition. For instance, the energy transition requires nickel extraction as part of the component for renewable energy products, while at the same time, nickel extraction affects deforestation.4 Moreover, nickel extraction potentially generates environmental effects, biodiversity, land use, and social resistance. While the energy transition creates opportunities in “green jobs,” the labor market shifting from the “brown job” requires a clear pathway.

Risk mitigation is crucial in energy transition long-term planning. We can learn from Germany how misplanning on energy transition led to higher costs and delayed economic diversification. We can also learn from Australia how social assistance from subnational governments to affected unemployed could lead to citizen participation in economic diversification. While in Canada, the budget allocated for the transition is carried out by the central and regional governments. Furthermore, the Canadian government has committed to setting aside funds from oil and gas profits for transition financing.5This narrative might draw the question of what just transition means. How to minimize the risk and detrimental effects of the transition in Indonesia? What aspect of justice that we need to put into concern?

Though the definition of just energy transition is still widely being discussed, we refer to the justice aspect of the energy transition as described by Jakob and Steckel (2016) on reconciling the approach with consideration of the most vulnerable group.6 Just Energy transition needs to consider and address the issue that might be affected by the transition, i.e., unemployment, environmental degradation, and inequality. Hence, sustainable solutions while ensuring equality and inclusivity are needed to ensure the justice aspect of the energy transition.

Justice in energy transition should embodied in three aspects; (i) Distributional, (ii) Recognition, and (iii) Procedural.7 The distributional aspect asserts that the rewards, resources, rights, obligations, and other relevant items are allocated relatively among relevant actors. The distributional part identifies the scale of impacts on several factors; (i) income and livelihood distribution, (ii) health impact, and (iii) environmental amenities. At the same time, the recognition emphasizes how individuals and specific groups should be represented (including marginalized, indigenous, and women). Stakeholders identification becomes crucial to fulfill the aspect of recognition. Just energy transition should also entail a fair governance and decision-making procedure. This procedure could also be the platform for inclusivity, local knowledge, reducing barriers to information, and also ensuring representation during the process. Align with that, Oxfam (2022) also reiterates the aspect of remedial justice, where people should be fairly compensated for any harm resulting from energy projects or for loss and damage from climate change.8.

These four aspects of justice in the energy transition can be pinpointed to reflect the current milestone of the Energy Transition Policy in Indonesia. Just transition requires a policy package, especially in financing– the aspect the government needs to incorporate as part of ETM. Hence, to support just energy transition, we need a long-term vision due to the complexity of the social dimension. Financing just energy transition is beyond providing incentives for clean energy and disincentive for the brown energy sector, but also offers social protection for those presumably affected by the transition.

Author: Azhania N. Siswadi

  1. ENDC Republic of Indonesia, 2022, https://unfccc.int/sites/default/files/NDC/2022-09/23.09.2022_Enhanced%20NDC%20Indonesia.pdf
  2. Just Energy Transition Partnership https://ec.europa.eu/commission/presscorner/detail/en/IP_22_6
  3. Pers Release, BKF Kementerian Keuangan 2022 https://fiskal.kemenkeu.go.id/files/siaran-pers/file/1657866407_siaran_pers_country_platform_etm_final.pdf
  4. Investigating Rainforest Destruction: The Nickel Mines Clearing Indonesian Forests https://pulitzercenter.org/stories/investigating-rainforest-destruction-nickel-mines-clearing-indonesian-forests
  5. Gabriela and Simamora 2020. Ensuring Just Energy Transition in Indonesia: Case Studies from Four Countries. IESR
  6. Jakob and Steckel, 2016. The Just Energy Transition. WWF
  7. McCauley et al, 2013 and Jenkins et al, 2016 in Fikri Muhammad 2023 (Preliminary Finding on Justice of Indonesia Energy Transition)
  8. Oxfam 2022. Towards a Just Energy Transition: Implications for communities in lower- and middle- income countries
Energy Transition