The Indonesian government has recently faced criticism after the 2025–2034 Electricity Supply Business Plan (RUPTL) was released without including early retirement plans for coal-fired power plants (CFPPs). Minister of Investment Bahlil Lahadalia explained that financial constraints are the primary reason for not retiring CFPPs early.
"Come on, this country needs money. You want to retire [CFPPs]? Sure, I’ll retire them tomorrow morning. But is there any donor willing to fund it?"
— Bahlil Lahadalia, May 26, 2025
This statement has sparked debate. Is it really true that delaying the early retirement of coal-fired power plants benefits the national economy? Or is it actually adding to long-term economic burdens?
Early Retirement of CFPPs Saves Trillions of Rupiah
A study by the Centre for Research on Energy and Clean Air (CREA) revealed that retiring just two major CFPPs in West Java (Cirebon-1 and Pelabuhan Ratu) by 2035 could prevent economic losses of IDR 129 trillion (approx. USD 8 billion). These two power plants contribute to annual economic losses of around IDR 10 trillion each due to public health costs, productivity loss, and environmental degradation.
Therefore, early retirement is not an economic liability. On the contrary, it is a smart financial move with high potential savings.
Additionally, shutting down these two coal plants could save more than 11,400 lives from premature death caused by air pollution.
The Heavy Health Burden from CFPP Emissions
Coal power plants are among the largest sources of air pollution in Indonesia. Emissions of sulfur dioxide (SO₂), nitrogen oxides (NOₓ), and fine particulate matter (PM2.5) contribute significantly to respiratory and cardiovascular diseases, as well as lung cancer.
In 2022, CREA reported that air pollution from CFPPs caused around 10,500 deaths and contributed to healthcare costs of approximately USD 7.4 billion (over IDR 118 trillion) in that year alone.
Over the next few decades, early retirement of coal plants could prevent 180,000 premature deaths and save up to IDR 1,500 trillion in healthcare costs.
Environmental Damage with Long-Term Impact
The environmental cost of coal is enormous. Beyond toxic emissions, coal combustion produces fly ash and bottom ash, both of which contain hazardous substances such as mercury, arsenic, and lead. These pollutants often contaminate soil and water, affecting local communities and ecosystems.
CFPPs are also major contributors to greenhouse gas emissions, exacerbating the climate crisis. Every year, Indonesian coal plants emit hundreds of millions of tons of CO₂ into the atmosphere, contributing to more severe droughts, floods, and crop failures, all of which have real and growing economic consequences.
Delaying Retirement: Short-Term Relief, Long-Term Pain
On the surface, continuing CFPP operations may appear cost-effective. However, the “savings” are only temporary. The long-term costs, from declining public health to environmental degradation and climate disaster, far outweigh the perceived financial relief.
Meanwhile, the cost of renewable energy is falling. According to IEA and IRENA data, solar and wind are now cheaper than building new coal power plants in many regions. Renewable energy is not only clean, but also economically viable and increasingly competitive.
Delaying CFPP retirement means delaying Indonesia’s transition to a sustainable energy system, missing out on long-term savings and global leadership in clean energy.
Early CFPP Retirement is a Future-Focused Investment
Contrary to claims that early retirement is a drain on the state budget, it is actually a strategic investment for Indonesia’s future. Healthier citizens, cleaner air, and a more resilient economy are all outcomes that stem from a decisive shift away from coal.
Other countries such as Vietnam, the Philippines, and South Africa are already working on Just Energy Transition plans, partnering with international donors to fund early coal retirement through mechanisms like the Just Energy Transition Partnership (JETP).
Indonesia can follow a similar path. Early retirement does not have to be fully state-funded. With the right international collaboration, development bank support, and private sector participation, the country can unlock the capital needed to exit coal and build a cleaner, safer energy system.
Early retirement also opens up economic opportunities in green jobs from solar panel installation to energy efficiency services, helping absorb any employment losses from CFPP closures.
Conclusion: Delaying Retirement Is Not Economically Wise
All evidence suggests that delaying the early retirement of CFPPs is not a financially sound decision. The real economic burden of coal includes:
Rising public health costs from air pollution
Environmental degradation and ecosystem loss
Accelerating climate-related disasters
Missed opportunities for long-term savings and green investment
Instead, accelerating CFPP retirement is a strategic investment. It enables Indonesia to reduce future economic risks, improve public health, and position itself as a regional leader in renewable energy development.
With proper planning, financial support, and political will, early retirement is not only possible, it's the smartest path forward.
