Indonesia’s efforts to join the OECD offer a strategic opportunity to align environmental and energy governance with international standards. This collaborative report by CELIOS and ICEL highlights several regulatory gaps that hinder a just and sustainable transition, particularly in environmental assessments, energy pricing, transparency, governance, and climate finance.
The report’s findings show that the Environmental Impact Assessment (EIA) process remains exclusionary, with no legal guarantee of the principle of Free, Prior, and Informed Consent (FPIC) and limited recognition of cumulative impacts in coal-mining areas. Energy pricing does not reflect environmental and health costs, making coal appear cheaper than renewable energy. Transparency is also weak, as there is no requirement to disclose power purchase agreement (PPA) data, emissions, or real-time air quality around coal-fired power plants. Meanwhile, overlapping authorities across ministries, the absence of a cross-sectoral body to oversee the energy transition, and weak coordination between central and regional governments further slow progress.
The report also highlights governance risks in climate finance and green investment instruments such as Danantara, where ministries’ dual roles and legal immunity weaken accountability. Meanwhile, PLN’s monopoly over electricity transmission creates market distortions and conflicts with the OECD principle of competitive neutrality. To meet OECD standards, Indonesia needs to pursue systemic reforms—strengthening institutions, ensuring transparency, and building a participatory, inclusive transition framework aligned with the Paris Agreement and OECD values.
I ndonesia’s bid to join the OECD offers a strategic moment to align its environmental and energy governance with international standards. A collaborative report by CELIOS and ICEL highlights key regulatory gaps that undermine a just and sustainable transition, particularly in the areas of environmental assessments, energy pricing, transparency, governance, and climate finance.
Findings show that the Environmental Impact Assessment (EIA) process remains exclusionary, with no legal guarantee of Free, Prior, and Informed Consent (FPIC) and limited recognition of cumulative impacts in coal regions. Energy pricing still hides environmental and health costs, making coal appear cheaper than renewables. Transparency is weak, with no obligation to disclose PPAs, emissions data, or real-time air quality around coal plants. At the same time, fragmented institutional responsibilities, lack of a cross-sectoral transition body, and weak coordination between central and regional governments slow progress.
The report also flags governance risks in climate finance and green investment instruments like Danantara, where dual ministerial roles and legal immunities undermine accountability, while PLN’s monopoly distorts competition and contradicts OECD principles. To meet OECD standards, Indonesia must pursue systemic reform—strengthening institutions, ensuring transparency, and adopting participatory, inclusive frameworks that align with the Paris Agreement and OECD values.
Indonesia's Accession to the OECD 2025 Download