KOMPAS.com — CERAH Policy Strategist Al Ayubi believes the royalty hike should be strategically utilized to support [energy transition efforts].
He made this statement in response to the government’s decision to raise mineral and coal royalty rates through Government Regulations (PP) No. 18/2025 and No. 19/2025 on Friday (9/5/2025).

The royalty increase is expected to boost state revenue. However, Ayubi emphasized that the additional funds should not merely serve as fiscal income but must be purposefully allocated to accelerate a just and sustainable energy transition.
“The royalty hike should not only be seen as additional state revenue but must serve as a momentum to improve the governance of the extractive industry to accelerate the energy transition,” Ayubi said in an official statement.

He stressed the importance of clearly allocating funds to develop the green energy sector, including subsidies for renewable energy and incentives for eco-friendly investments.

This urgency arises because, in the 2020–2024 National Medium-Term Development Plan (RPJMN), the government allocated only around Rp34.2 trillion annually for renewable energy, far below the actual need of Rp148.3 trillion per year.

As a result, national energy mix targets and emission reduction commitments under the Nationally Determined Contributions (NDC) continue to face challenges.
Data from the Institute for Essential Services Reform (IESR) shows that from 2019 to 2021, private investment was dominated by fossil energy at 73.4 percent, while renewable energy received only 26.6 percent.

According to Ayubi, this funding gap is a significant obstacle to Indonesia’s energy transition.
“Therefore, the additional funds from the mineral royalty hike must be immediately allocated to bridge the renewable energy funding gap,” he asserted.

Echoing Ayubi, Publish What You Pay (PWYP) Indonesia National Coordinator Aryanto Nugroho emphasized that royalty policies should serve as a strategic tool to reduce reliance on coal.

“These funds must be used to reduce coal production and phase out coal-fired power plants (PLTU) in PT PLN’s grid as well as captive PLTUs built for specific purposes, such as in mineral downstream processing areas,” Aryanto said.

The 2025–2029 RPJMN still sets coal production at 700 million tons per year, far exceeding the safe limit of 400 million tons outlined in the National Energy Plan (RUEN).

Thus, Aryanto believes the royalty hike should serve as a corrective tool in energy sector governance to ensure tangible benefits for communities, especially those directly affected by the extractive industry.

“The government should avoid allocating additional royalty revenue to other downstream projects proven uneconomical and environmentally harmful,” Aryanto stressed.

For context, the new policy introduces progressive royalty rates for minerals like nickel, from a flat 10 percent to 14–19 percent, depending on the Mineral Reference Price (HMA).

Adjustments for coal are based on permit types: royalties for Mining Business Permits (IUP) have increased, while those for Coal Mining Concession Agreements (PKP2B) or Special Mining Business Permits (IUPK) have decreased.

Source: Kompas