In May 2021, Indonesia’s biggest utility company, Perusahaan Listrik Negara (PLN), pledged to phase out fossil fuels by 2060 in order to achieve carbon neutrality. The announcement marks a dramatic shift in the country’s electricity policy that has long been dependent on fossil fuels, especially coal.
It is a sign that decisions by major lenders – including Japan, South Korea and the Asian Development Bank – to divest from coal have severely restricted the country’s options for financing coal plant infrastructure.
The destruction of carbon sinks in forest and carbon-rich peatlands are currently the biggest contributor to Indonesia’s carbon emissions. The energy sector will surpass these as the largest contributor to Indonesia’s carbon emissions by 2026 to 2027.