Enabling a Coal Transition in South Kalimantan, Indonesia

Abstract

According to the UNFCCC, the generation of electricity from coal fired power production (CFPP) is regarded as the greatest cause of climate change. Phasing-out CFPP and accelerating the deployment of renewable energy sources (RES) is, therefore, a crucial part of energy transitions for mitigating climate change. The Indonesian government has announced ambitious plans to reduce Greenhouse Gas Emissions and reach net-zero by 2060. However, despite these ambitious plans, Indonesia plans to expand their use of CFPP in the coming years and deployment of RES is limited. Research suggests that the main problem with regard to a coal transition in Indonesia arises from vested interests of powerful and influential actors in the political economy of coal in Indonesia.
The purpose of this thesis is to conduct research on possible ways to enable a coal transition in the Indonesian province of South Kalimantan. A literature review on coal transitions has revealed that policies are regarded as the main drivers for coal transitions. This thesis adopts a broader view of policies as being a part of institutions. In view of the theory of New Institutional Economics, institutions can be defined as rules that structure social interactions. The main research question of this research is: How can a coal transition in South Kalimantan, Indonesia, be enabled by influencing actors in the Indonesian political economy of coal through institutional interventions?
The research approach of this thesis is a case study on the political economy of coal in Indonesia, and more specifically in South Kalimantan. The case study is an exploratory, single case study. The research methodology for the case study combines literature reviews, a desk study, and expert interviews.
The first part of this research provides a system analysis of the political economy of coal. The second part of this research aims to explore how a coal transition in South Kalimantan can be enabled by institutional interventions. This is conducted by complementing insights from literature on coal transitions, political economy of coal- or energy transitions, and literature directly related to coal or energy transitions in South Kalimantan and Indonesia, with insights from expert interviews. The expert interviews aim to establish insights into which of the proposed institutional interventions from literature would be politically feasible, given the existing political economy of coal.
Based on the results of this case study and the expert interviews, several institutional interventions are proposed. These are complemented with insights from systems thinking and insights to overcome the prevalent systems archetypes of the Tragedy of the Commons, Rule Beating, and Policy Resistance.
Further research needs to be conducted on: (1) adaptive management, (2) how to convince key actors to accelerate a coal transition, (3) examining the required investments, how these can be distributed, and how to ensure that investments and international financial support are used for the intended purposes and not redirected or misused, (4) exploring adequate alternative pathways for economic development in South Kalimantan, and (5) modelling the proposed institutional interventions.