Jakarta – Publish What You Pay (PWYP) Indonesia held another PWYP Knowledge Forum (PKF) entitled “Justice in Indonesia’s Energy Transition” online on February 24, 2023. PKF is a discussion and knowledge-sharing forum organized regularly by the PWYP Indonesia coalition to improve understanding and capacity, as well as develop public discourse related to issues, topics, and policies in the natural resource sector.

Featured as resource persons in this PKF were Fikri Muhammad, Senior Analyst of Economics and Governance from Climateworks Center, and Azhania N. Siswadi, a researcher from PWYP Indonesia as moderator. The background of this topic is related to the issue of energy transition that encourages the development of renewable energy. The big goal of the energy transition will not be separated from the social and economic impacts that will arise in the future. Social impacts and environmental risk mitigation are essential parts of the energy transition. The energy transition will have a significant impact on labor dynamics, social protection, and economic diversification.

Fikri began his presentation by elaborating on the importance of equity in the energy transition due to the complex challenges of its dynamics in the economic, social, and political context of Indonesia. For example, coal production in East Kalimantan contributes to their economy by 35%, and in Muara Enim, South Sumatra, the mining sector contributes more than half a percent of their economy. Therefore, affected communities need to receive compensation that meets their needs when the energy transition takes place. From the definitions provided, the concept of a just energy transition creates three principles of energy justice that must be included in policy making, including; Justice for Who (identifying who the stakeholders are), How (procedures must be fair), and What (distribution of rewards/resources based on justice).

Fikri also discussed the chain of the rules of energy transition in policymaking. He began by opening a question of how the concept of justice can be institutionalized in policies and regulations in the energy sector. Fikri explained that the energy transition had been encouraged in various countries through JETP (Just Energy Transition Partnership). The JETP has been implemented in South Africa as the pilot, which Indonesia later adopted.

Continuing the development of Indonesia’s commitment to the energy transition, Fikri stated that for the size of a developing country, Indonesia took a leap in developing renewable energy. From the government’s projection in developing the energy transition, 2060 is Indonesia’s net-zero target. However, the government does not wholly eliminate power plants, and it is projected that there will still be dependence on power plants due to power plants financing that has already been running amid investment in renewable energy.

The importance of equitable energy must also be based on the legal basis in the law in its implementation. For example, electricity obtained from renewable energy-based communities must be able to be purchased at an affordable price and provide benefits to all people can be seen from the 1945 Constitution, electricity law, and Indonesian energy law. It is also essential to consider environmental laws as a crucial point in realizing justice in the energy transition. For example, when it comes to pollution, emitters must take responsibility for addressing the issue. In return, the public also has the right to sue if they feel aggrieved.

However, the unique problem regarding justice that arises on the as the precedent in the energy transition. In practice, extractive companies do not compensate communities affected by the energy transition, whether they’re tangible or intangible compensation, such as educational skills on renewable energy. For this reason, regulations and policies are needed to ensure that the impact of the energy transition is genuinely mitigated. The concept of justice has existed for a long time but has not been specific to renewable energy and energy transition. The idea is already included in the Nationally Determined Contributions (NDCs) and Long-Term Low Carbon and Climate Resilience (LTC-LCCR) strategies.

In implementing the NDC and LTC-LCCR, the government has made several efforts, including; promoting alternative economic activities that are more sustainable or green jobs through green investment, increasing capacity in the community for employment, as well as planning to realize renewable energy justice policies to be determined nationally. Unfortunately, this aspect of the NDC and LTC-LCCR is still a commitment and not legally binding.

Fikri also presented a case study that reflects the equitable energy transition and implementation of the NDC and LTC-LCCR in Sawahlunto. The region’s coal mining economy shifted to tourism due to declining production and the 1998 monetary crisis. It took two centuries for the government of Sawahlunto to turn its primary sector into a new one. Reflecting on this case, the central government should anticipate the dynamics of justice in the energy transition.

Author: Ersya S. Nailuvar
Reviewer: Aryanto Nugroho