INDEPENDEN — The dependence of coal-producing regions on the mining sector can no longer be seen solely as a source of economic strength, but also as a source of vulnerability. This condition has become increasingly relevant after the Indonesian government set a coal production target of around 600 million tons for 2026, a 24% decrease from the approximately 790 million tons produced in 2025.
Previously, the Ministry of Energy and Mineral Resources (ESDM) recorded Indonesia’s coal production in 2025 at 790 million tons, down 5.5% from 2024, while initial 2026 quotas for several companies have been cut by 40–70% from their 2025 realizations. This policy comes amid weakening demand from key export destinations, particularly China and India, as well as increasingly complex global geopolitical uncertainties. This indicates that regions overly dependent on coal are vulnerable to market shifts and tightening policies.
The Manager of Policy Research and Just Transition at the Institute for Essential Services Reform (IESR) stated that for regions whose economies heavily rely on coal, such as Paser Regency in East Kalimantan Province and Muara Enim Regency in South Sumatra Province, changes in market dynamics and the direction of the global energy transition pose real risks to regional economic sustainability. An IESR study titled Just Transition in Indonesia’s Coal Producing Regions: Case Studies of Paser and Muara Enim shows that this dependency is also reflected in the significant contribution of revenue-sharing funds (DBH) derived from coal mining taxes and royalties to regional budgets (APBD), reaching 20% in Muara Enim and an average of 27% in Paser.
“To address this, economic transformation in coal-producing regions needs to be directed toward competitive and interconnected local economic diversification. This means regions should not only seek replacement sectors, but also build synergies across sectors to create stronger local economic value,” Martha explained during a thematic discussion titled “Coal Dependency and the Challenges of Regional Economic Transformation” at Pesta Media 2026, organized by AJI Jakarta with support from IESR.
Martha added that the IESR study also identified several leading sectors that could be developed in coal-producing regions. In Paser Regency, sectors with development potential include financial services, manufacturing, and education. Meanwhile, in Muara Enim Regency, sectors that can be strengthened include manufacturing and accommodation and food services. More specifically, in Lahat Regency, leading commodities such as coffee can be further developed into various derivative products from coffee beans and husks. Identifying leading sectors and commodities, along with their supply chains, is crucial for the economic transformation of coal-producing regions.
“This economic transformation effort needs to be supported by three main factors: governance and financing capable of driving programs that directly impact regional income growth, the use of technology for processing and business development, and strengthening human resources,” Martha said.
Meanwhile, University of Indonesia (UI) anthropologist Suraya Afif highlighted that solutions focusing solely on reducing carbon emissions without addressing economic and social inequalities will not fully resolve the challenges of the energy transition. Therefore, community involvement is a key determinant of successful energy transition.
“A just transition requires active participation from various groups, including workers, local communities, consumers, and citizens in general. This involvement is crucial to ensure that policies truly take into account broader social and economic impacts,” Suraya emphasized.
Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, assessed that transformation is insufficient if it focuses only on reducing or controlling coal production. According to him, transformation must also promote the growth of renewable energy and create a new sustainable economy. This effort is a shared responsibility between the government and the private sector.
“Economic diversification should not rely solely on central or regional governments. Companies must be proactive in securing their future,” he said.
About the Institute for Essential Services Reform
The Institute for Essential Services Reform (IESR) is a think tank that actively promotes a low-carbon energy transition in Indonesia through data-driven policy advocacy and in-depth scientific research. Upholding the principles of equitable natural resource utilization and ecological sustainability, IESR bridges technical analysis with practical public policy. Through strategic multi-stakeholder collaboration, capacity building, and public campaigns, IESR is committed to ensuring that the transition to renewable energy is inclusive, just, and economically resilient for all Indonesians.
Pesta Media AJI Jakarta 2026 is an event organized by the Alliance of Independent Journalists (AJI Jakarta) on April 11–12, 2026, at Taman Ismail Marzuki. The event combines talk shows, workshops, film screenings, and artistic and cultural performances. Pesta Media AJI Jakarta serves as a platform to strengthen cross-sector collaboration in advancing democracy. This year’s theme highlights the environmental crisis and the development of artificial intelligence (AI) as two interconnected issues increasingly shaping the future of journalism in Indonesia.
Source: Independen.id