IESR Study Urges Government Action for Equitable Energy Transition in Indonesia’s Coal Regions

The Institute for Essential Services Reform () emphasizes the importance of addressing the impact of the energy transition in -producing areas, asserting that both central and regional governments must be actively involved. The institute highlights the necessity of including affected communities in the energy transition process with a focus on justice, aiming to shift from a fossil-intensive economic system to a sustainable one.

In a recent study titled “Just Transition in 's Coal Producing Regions, Case Studies Paser and Muara Enim,” conducted by IESR in Paser Regency, East Kalimantan Province, and Muara Enim Regency, South Sumatra Province, findings suggest that coal-producing regions can play a role in the economic transition to clean energy. Potential factors facilitating this transition include increased awareness about diversifying regional income sources, corporate initiatives to expand beyond coal, and the implementation of corporate social responsibility (CSR) programs to empower communities. However, the study identifies obstacles such as limited local government authority, financial capacity constraints, and inadequate health and education hindering the optimization of this potential.

Fabby Tumiwa, Executive Director of IESR, stresses the need for government attention to the energy transition phenomenon in coal-producing regions. Tumiwa emphasizes the urgency of preparing for the energy transition process, recognizing that an abrupt end to the coal industry could leave regions unprepared for transformation. Tumiwa calls for a comprehensive understanding of the context of energy transition in these regions to enable active interventions by the central government.

The study also reveals insufficient economic diversification and industrial development in coal-producing regions, particularly in Paser and Muara Enim. Most of the coal production from these regions is exported, yet it has not translated into significant industrial development. Economic diversification is slow, and in Paser, the manufacturing industry's gross regional domestic product (GRDP) remains lower than agriculture. In Muara Enim, limited economic opportunities are attributed to changes in land use from rubber plantations to mining concession areas.

Martha Jesica, Social and Economic Analyst at IESR, suggests that the central and regional governments prioritize economic transformation by developing sectors of excellence in each coal-producing region. Jesica recommends focusing on promising sectors, such as education and financial services in Paser, and accommodation and food services in Muara Enim, to stimulate economic development.

Rusdian Noor, Secretary of the Regional Development Planning Agency (Bappeda) of Paser Regency, East Kalimantan, stresses the importance of central government support for investment and technological innovation in tandem with the acceleration of energy transition in coal-producing areas. He emphasizes the need for sustainable development by diversifying the economic sector.

Similarly, Mat Kasrun, Head of Bappeda Muara Enim Regency, emphasizes the involvement of his party in all policy-making related to energy transition and calls for central government support in granting discretion in authority or licensing for developing new economic sectors in the regions.

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