JAKARTA—When the energy transition confronts difficult economic conditions within a country, addressing the transition’s unequal impact becomes both more challenging and more imperative. In Indonesia, with an economy recently described as a “ ticking time bomb ,” coal mining has long been the main driver of GDP in certain regencies and provinces. Pursuit of the energy transition in such places raises the tricky political question of how to support economic diversification, and boost economic growth, in these areas while also combating climate change.
The answer may seem obvious: reducing vulnerability to economic shocks caused by the shift away from fossil fuels requires broadening income sources. But that is easier said than done. A just energy transition requires a wider transformation that includes creating meaningful job opportunities, closing human-capital gaps, and alleviating poverty. Most importantly, these efforts must be highly localized to account for each area’s unique strengths and each community’s specific needs.
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