he creation of a new task force signals growing government support for the early retirement of coal-fired power plants, but experts warn the initiative may fail unless it is backed by strong political will and international funding.

The Energy and Mineral Resources Ministry will form a joint working team to accelerate the exit from coal power, as outlined in Ministerial Regulation No. 10/2025, which took effect on April 10.

Article 6 of the regulation bans new coal plant development, except under strict conditions, such as integration with strategic industries and with a commitment to reducing carbon emissions by at least 35 percent from 2021 levels, and with operations ending no later than 2050.

The regulation’s appendix assigns state-owned electricity company PLN to review the early retirement strategy, supported by domestic or international funding, to implement a faster coal phase-out.

Agung Budiono, executive director of renewables pressure group Yayasan Indonesia Cerah, said forming a joint working team was a promising step, but its impact would depend on a well-defined mandate and a strict implementation timeline.

“Without transparent, inclusive engagement, especially with civil society and affected communities, the team is at risk of becoming another bureaucratic formality, further delaying coal phase-out plans that have languished for years,” he told The Jakarta Post on Tuesday.

The formation of a working team alone does not prove the government’s determination for coal plant retirement, according to the Indonesian Center for Environmental Law (ICEL).

A serious commitment would require a broader revision of the legal framework, including the National Electricity Master Plan (RUKN), which still counts on coal through 2060, said senior ICEL strategist Grita Anindarini.

“Without addressing such policy gaps, the energy transition risks remaining stalled and largely symbolic,” she told the Post on Wednesday.

The regulation makes no mention of the Cirebon-1 coal plant, widely viewed as a test case for early shutdown.

The plant’s retirement is a pilot project under the Energy Transition Mechanism (ETM), an Asian Development Bank (ADB)-backed financing platform for the early coal plant retirement and other projects to support the country’s energy transition.

Indonesia and the ADB have agreed on a provisional deal with the owners of Cirebon-1 to shutter the 660-megawatt coal-fired power plant almost seven years earlier than its operational life set out in the power purchase agreement (PPA).

When asked about the upcoming government task force, an ADB spokesperson told the Post on Wednesday that the institution welcomed the issuance of the regulation as "a significant step forward."

“It paves the way for power plant retirement and repurposing for the shift to cleaner options. The regulation formally presents a new tool for an accelerated and sustainable just energy transition for Indonesia.”

“Tracking the progress of the Cirebon-1 plant's retirement is critical, as it will set a precedent for other power plants,” Nevi Cahya Winofa, a renewables and power analyst at research firm Rystad Energy, told the Post on Wednesday.

She suggested the government act upon on the business opportunities presented by grid access, skilled labor and other resources freed up by retired coal fleets, such as by replacing them with a multipurpose battery energy storage system (BESS) or a more flexible gas-fired asset.

Nevi said the new rule set a legal precedent and signaled growing government support, but warned the plan still hinged on funding from international financiers.

The early retiring of Indonesia’s coal plants, half of which are under 10 years old, can be costly, because the government would need to compensate their owners for lost operational time.

Cutting emissions from coal, the dirtiest fossil fuel, is seen as a crucial part of Indonesia's strategy for achieving net zero emissions in the electricity sector by 2050.

The Finance Ministry expects the cost of replacing the generating capacity of Cirebon-1 with renewable energy sources to reach Rp 21.4 trillion (US$1.3 billion), mostly for subsidies to cover the more expensive process of generating electricity from renewables.

Despite the government’s cautious approach to shutting down coal plants, momentum is building for the move, as many of Indonesia’s coal plants operate at lower capacity factors or are incurring financial losses.

Nevi estimated that Indonesia has 90 percent excess installed capacity, the highest among Southeast Asia countries.

“Reducing excess capacity can enhance system efficiency and ease the financial burden on PLN,” she said.

Early coal retirement gains momentum

Indonesia risks missing out on investment opportunities without a well-executed energy transition.

Shifting to renewables is key to boosting Indonesia’s regional competitiveness, as neighboring countries Malaysia, Vietnam and Thailand have begun attracting green-focused industries by liberalizing their power markets, according to Nevi.

With coal still accounting for more than 60 percent of the electricity mix, Indonesia risks losing investment appeal and facing export penalties under mechanisms like the EU’s Carbon Border Adjustment Mechanism (CBAM), which targets carbon-intensive goods and production, she added.

Moreover, declining renewable energy costs made clean power competitive with fossil fuels, offering the potential to lower electricity prices due to minimal operating costs. “Long-term investment in grid infrastructure is essential to support this transition,” Nevi said.