Jakarta – In an effort to promote greater transparency and fiscal justice in the energy transition sector, the National Secretariat of the Indonesian Forum for Budget Transparency (Seknas FITRA) held the Workshop on Research Design Development and Program Kickoff on Monday (22 June 2026) at Hotel Grand Cemara, Jakarta. The event, which focused on the research initiative “Accountability of Climate Resilience and Energy Transition Financing in Indonesia: Nickel Downstreaming and Fiscal Justice for Producing Regions,” featured Aryanto Nugroho, National Coordinator of Publish What You Pay (PWYP) Indonesia, as the main discussion facilitator.
In his presentation titled “Transparency, Accountability, and Socio-Ecological Justice in Nickel Downstreaming,” Aryanto sharply unpacked what he referred to as the “Nickel Downstreaming Paradox.” He emphasized that although nickel is consistently promoted as a strategic commodity for low-carbon technologies, the ecological reality on the ground tells a different story.
“Current downstreaming practices are driving deforestation, water pollution, loss of livelihoods, and high emissions because the majority of smelters still rely heavily on coal-fired power plants (PLTUs),” Aryanto stressed.
He cited smelter operations in industrial estates such as Indonesia Morowali Industrial Park (IMIP) in Morowali and Indonesia Weda Bay Industrial Park (IWIP) in Halmahera, which continue to depend on captive coal-fired power plants that are unfortunately excluded from the Just Energy Transition Partnership (JETP) early retirement (phase-out) scheme.
Questioning Compliance Gaps and the “Red Carpet” for Industry
In addition to highlighting environmental impacts, Aryanto also outlined the paradox from the perspective of economic compliance. Referring to Indonesia’s 2024 EITI Validation Score, he noted that the country’s extractive industry transparency remains in the “Fairly Low” category with a score of 67.
These accountability challenges are further exacerbated by the leakage of value-added through indications of trade misinvoicing, as well as the complexity of Beneficial Ownership (BO), where smelter ownership structures are often layered and concealed through foreign entities. At the same time, the extractive industry continues to enjoy a “red carpet” in the form of tax exemptions and fiscal incentives that ultimately reduce the state’s real revenue potential.
This situation creates another paradox for regions: the inequity between “producing regions” and “conservation regions.” Nickel-producing regions are forced to bear the greatest ecological damage, while regions that strive to protect forests and river basins (watersheds) are instead penalized with limited fiscal capacity because they do not engage in resource exploitation.
As a solution, PWYP Indonesia proposed three instruments within the fiscal justice chain: (1) Ecological Taxation at the upstream level, based on the Polluter Pays Principle; (2) Ecological Fiscal Transfer (EFT) in the middle stage to recognize and provide incentives for regions that protect nature; and (3) Exit Costs at the downstream level to ensure that post-mining environmental restoration costs are fully borne by corporations, rather than becoming a burden on regional government budgets.
Recommendations for the Research Design
To support the development of Seknas FITRA’s research instrument, PWYP Indonesia put forward several strategic recommendations. Aryanto proposed a “Four Layers of Accountability” approach covering: budget transparency (input), measurable emissions reduction (output), equitable distribution across regions and social groups (outcome), and environmental restoration and economic diversification (legacy).
Furthermore, PWYP Indonesia encouraged a paradigm shift so that research no longer views local communities merely as stakeholders, but instead recognizes them as right-holders.
“The research must mainstream the principles of Gender Equality, Disability, and Social Inclusion (GEDSI). Indigenous communities, women, and vulnerable groups must be positioned as primary resource persons, not merely secondary informants,” Aryanto explained.
He also emphasized the importance of applying a dual unit of analysis that traces the intersection between the value chain (from mining to electric vehicles) and the fiscal chain (from central government revenues to regional government expenditure).
“No single source can stand alone. Data triangulation between the national and regional budgets (APBN/APBD), EITI reports, UN Comtrade data, company disclosures, and field verification is the key strength of this research instrument,” he concluded.
Within this collaborative framework, PWYP Indonesia is fully committed to supporting the research by providing working datasets, a proven GEDSI analytical framework, and access to its coalition networks in Indonesia’s energy transition mineral-producing regions. (AN)