Jakarta – The Publish What You Pay (PWYP) Indonesia Coalition argues that the government’s planned 2026 coal production cut must serve as a catalyst for a Just Energy Transition, not merely as a tool to stabilize market prices. This decision should strategically advance Indonesia’s decarbonization efforts with clarity and accountability.
As is known, the government, through the Ministry of Energy and Mineral Resources (ESDM), is reducing coal production by 40-70% relative to the 2026 Work Budget Plan (RKAB) proposed by business owners. ESDM Minister Bahlil Lahadalia set the production figure at around 600 million tons, a 24% decrease from the 2025 realization of 790 million tons.
PWYP Indonesia’s National Coordinator, Aryanto Nugroho, explained that this policy provides momentum to align field realities with national commitments. The National Energy General Plan (RUEN), for example, has mandated a coal production quota of 400 million tons since 2019, but in practice, production has continued to soar, reaching a record 836.1 million tons in 2024.
“The 2026 coal cuts must demonstrate genuine production control. Achieving a just energy transition requires firm implementation, not rhetoric. Decarbonization is impossible if production continues to exceed environmental limits,” said Aryanto.
PWYP Indonesia continues to push for a strategic reduction policy, not one focused solely on maintaining global market supply, which has led to falling coal prices.
Aryanto also noted that the international financial system is now being guided toward a greener economy.
“Global investors are moving away from coal. Persisting with high production risks leaves Indonesia with stranded, unsellable assets. A just energy transition protects our economy from future fossil fuel dependency,” he added.
PWYP Indonesia researcher Wicitra Diwasasri insists the planned production cuts must be fully transparent, especially in the approval of Work Plan, Budget, and Cost (RKAB). Without clear criteria, the policy risks corruption and undermining public trust.
“The lack of transparency in setting the RKAB quota will act as a ‘red carpet’ for the rise in illegal mining and coal laundering practices through Mining Business Permits (IUPs) that still have quotas. We must not let the good intentions of these cuts simply shift production from recorded to unrecorded. If that happens, the environment will remain damaged, but the country will lose out on potential Non-Tax State Revenue (PNBP) entirely,” Aryanto emphasized.
PWYP Indonesia urges the government to disclose data on who receives quotas and the basis for their considerations. Transparency is key to ensuring this policy doesn’t benefit only a handful of large players with lobbying access while disadvantaging compliant companies.
Wicitra stated that market fluctuations in 2025 indicate high volatility. As much as 80% of Indonesia’s coal production is exported (Wuppertal Institute, 2025), making its dependence on consumer countries such as China and India highly risky.
“Using workers as a shield to resist production cuts is a step backward. The threat of layoffs is actually evidence of the company management’s failure to implement business transformation early on. These cuts should serve as a wake-up call for businesses to immediately transition to a more stable and sustainable green sector,” said Aryanto.
The 2025 PWYP Indonesia study on the Opportunities and Challenges of Coal Mining Business Transition shows that shifting to renewable energy (PLTS, PLTB, PLTA) is the most sustainable option due to its low emissions and guaranteed long-term sustainability.
Meanwhile, the study’s risk finding is that if coal businesses in Indonesia are slow to make the transition, they will be left behind by other countries, having to compete with technology, financing, and operational efficiency, as has been done by Coal India (hydrogen & fertilizer), Glencore-Swiss (agroforestry & non-energy), Anglo American (transition metals), and Shenhua & China Coal (new energy & logistics).
The new National Energy Policy, through Government Regulation (PP) Number 40 of 2025, has actually provided a foundation for business actors to transform. Article 36, paragraph 3 requires non-renewable energy business entities to participate in reducing GHG emissions and developing renewable energy sources.
“The articles in PP 40/2025, including Article 30 on funding support and Article 40 on decarbonization participation, present an opportunity for coal companies to diversify. The shift to the green sector will actually open up new business opportunities and create higher-quality jobs for Indonesia’s future,” concluded Wicitra.
Contact Person
Aryanto Nugroho: aryanto@pwypindonesia.org
Wicitra Diwasasri: wicitra@pwypindonesia.org