Test case for ‘just transition’ hits political headwinds

Indonesia has signaled it is unlikely to go ahead with plans to shut the Cirebon-1 coal power plant years ahead of schedule, even as Jakarta courts billions of dollars for a greener energy transition. The plant in West Java had been held up as a flagship case under the Just Energy Transition Partnership, a G7-backed scheme meant to help emerging economies move away from coal. Officials had previously agreed in principle to close the unit around 2035, seven years before the end of its planned life. Now the government says newer, more efficient plants like Cirebon should run longer while older, dirtier units are retired first.

The reversal exposes the tensions between climate finance promises and the political cost of changing power systems that still depend heavily on coal. Indonesia’s chief economic minister argued that shutting down relatively modern plants too early could force the state to spend more on electricity subsidies and grid upgrades. At the same time, JETP partners have already pledged more than $20 billion in loans and guarantees, with a pipeline of solar, wind and transmission projects waiting for approval. Climate groups warn that prolonging “clean coal” facilities risks locking in emissions beyond 2035, making it harder for Indonesia to reach its net-zero goal by 2060. For investors, the message is that early-retirement deals will be slow, project-by-project negotiations rather than quick, template solutions.