This project examines how transition credits can be used to accelerate the early retirement of coal-fired power plants (CFPPs) serving mining and downstream mineral industries in Indonesia, where captive and off-grid coal generation plays a growing role in meeting industrial electricity demand. These plants are often built for long-term operation, creating significant emissions lock-in at a time when rapid reductions are needed to meet national and global climate goals. 

The project adopts a comprehensive approach that goes beyond carbon accounting. It assesses the policy and regulatory framework governing electricity, carbon markets, and financial systems to determine how early retirement can be legally authorized and enforced. In parallel, it evaluates methodological adjustments required to ensure that transition credits reflect high-integrity emissions reductions from permanent coal plant cessation, including baselines, additionality, permanence, leakage, and alignment with Indonesia’s NDC. 

Recognizing that pilot projects alone are insufficient, the project also explores pathways for scaling up early retirement across the mining and mineral-processing sector. This includes identifying standardizable contractual arrangements, regulatory templates, and institutional coordination mechanisms. Finally, the project analyzes the financial and technical feasibility of early retirement, including stranded asset compensation, foregone cashflows, refinancing options, replacement power solutions, and system reliability implications, to ensure that transition credits support outcomes that are environmentally credible, economically viable, and socially acceptable. 

Objectives 

• Assess the potential for transition credits to enable early retirement of CFPPs in mining and downstream mineral industries. 

• Identify policy and regulatory reforms needed to authorize, govern, and enforce early retirement within Indonesia’s electricity and carbon-market frameworks. 

• Develop methodological adjustments for high-integrity transition credits, including baselines, MRV, permanence, leakage, and NDC alignment. 

• Analyze financial feasibility, including stranded asset risks, foregone revenues, refinancing mechanisms, and PPA renegotiation options. 

• Propose scaling-up strategies to move from pilot projects to sector-wide implementation.