In the village of Muara Bakah, located along the Barito River in Kalimantan, eastern Indonesia, the primary source of income and livelihood for the local population is linked to mining. On the other side of the river, in front of their houses, a coal transporter can be seen. Coal barges sail back and forth daily, right in their front yard.
Almost everyone in the village depends on a local coal mine for their livelihood. However, the local workers mainly occupy non-managerial positions, such as truck drivers, security personnel, janitors and catering staff. The leadership positions are filled by external recruits from renowned Indonesian universities, due to a bachelor’s degree.
There is not even a high school in Muara Bakah village. To go to high school, they must have a goddamn boat to the center of the district, which takes about 40 minutes one way and costs almost $5 in fuel per day. Some parents choose a more realistic path for their children and have them take the equivalent of a high school exam (known as “paket C”) without having to go to school.
There’s a moment from the village I can’t forget. The coal transporter shines brightly at night, but the village is dark, lit only by the moonlight. One evening a child asked me, “Why is our village dark? Isn’t coal used to generate electricity?” It was a question I couldn’t answer so easily.
The situation in Muara Bakah village mirrors that of many other villages in Kalimantan. Over the past two decades, coal companies have prospered and expanded their operations, ranging from small illegal operations to large mining concessions with powerful backers. There is no denying that the mining sector has benefited the local economy. Hotels and guesthouses have sprung up, in addition to car and boat rentals, t-shirt printers, restaurants, workshops and motorcycle taxi ranks.
However, these activities cannot last long. Change is inevitable. With the current energy transition efforts of the Indonesian government, the local economy in Kalimantan could collapse if not accompanied by real efforts to support a just energy transition.
The government of President Joko Widodo aims to phase out coal mining activities by 2030, phase out all coal-fired power plants by 2050, and transition to renewable energy sources. This transition is likely to lead to a significant drop in coal demand, resulting in reduced mining activity and consequent job losses in the coal industry. Impacts will affect not only the small communities that depend on the sector for their day-to-day needs, but also various supporting economic activities, including micro, small and medium-sized enterprises (MSMEs) and infrastructure development in coal mining areas.
Even with the current significant mining tax revenues, the government is struggling to extend electricity infrastructure to remote villages due to budget constraints. Once the coal business declines, the situation will get even worse.
In this respect, policymakers are now racing against time. The main problem is that many communities around coal mines cannot simply switch jobs, mainly because of their lack of education and skills. The limited awareness of both local communities and regional governments regarding the energy transition only increases the challenges ahead.
Implementing a just energy transition is key to Indonesia’s development in the coming years. We must ensure that the energy transition is implemented to protect vulnerable communities and prevent economic inequality from widening.
Several efforts need to be made. First, the government must ensure the participation and involvement of communities around coal mining areas in programs related to the green energy transition. We must ensure that the wishes, needs and aspirations of local communities are heard by the government. In other words, energy transition policy should not be determined exclusively through a top-down approach by officials in Jakarta.
Second, training programs must be tailored to equip local communities with skills that align with future economic projections and job demands. The programs can include a wide variety of initiatives ranging from vocational training and internships to training in technology, renewable energy and other sustainable industries.
Third, funding for energy transition training programs should be managed by local governments in partnership with local community organizations (village councils, traditional organizations and local NGOs). Indonesia is expected to receive $20 billion in funding under the Just Energy Transition Partnership (JETP) program, an effort by industrialized countries, multilateral development banks and other donors to help developing countries accelerate their green energy transition. Local contexts and knowledge must be taken into account when implementing JETP, which is currently being managed by the national government. In addition to fostering trust and community involvement, a bottom-up approach will produce a more substantial and sustainable impact in the long run.
Fourth, there is a need for innovative regulations that encourage mining companies to actively contribute to the energy transition. Job training programs involving collaboration between the government, the private sector and affected communities should be promoted, targeting people living near mining sites. In addition, infrastructure development programs funded by mining taxes should allocate more resources to areas close to mines, with clear and measurable planning, implementation and evaluation systems.
Ultimately, a fair energy transition that emphasizes bottom-up approaches, including active community participation, local knowledge and participatory decision-making, will deliver better outcomes for people. Agreements and the design of JETP programs should not be determined solely by central government officials, ignoring the voices of local communities.