Putra and I come from regions facing strikingly similar paths in the global energy transition.
My hometown is in Shanxi province, northern China, while Putra’s family is from South Sumatra and he has lived in East Kalimantan, both provinces of Indonesia. They are the largest coal-producing provinces in their respective countries and coal has been an economic backbone for decades. The sector supports hundreds of thousands of workers. However, within the next three decades, as both countries reduce coal dependency and pivot towards cleaner energy sources, 90% of these coal jobs are expected to disappear.
These regions will need significant investment and human resources to accelerate structural and just transitions in their industries and labour forces.
Coming from non-profits focused on decarbonisation and just transition issues, Putra and I realised that achieving a coal-free and decarbonised future requires us to learn from and share with each other.
Putra is based in Jakarta and works at the Energy Shift Institute (ESI), while I work at the Manila-based People of Asia for Climate Solutions (Pacs).
In late July 2024, Pacs co-hosted a field trip to Shanxi to find synergies between China and Indonesia’s major coal-producer provinces. Together, attendees from both countries, who work in government, civil society groups, universities and think-tanks, mapped out imagined pathways to a coal-free future for the two countries. I believe such dialogues are more valuable than ever, given today’s geopolitical uncertainties and the continued growth of CO2 emissions.
Below, Putra and I reflect on some important lessons that came out of the trip.
Why Shanxi, East Kalimantan and South Sumatra?
Zhao: They are the major coal-producing provinces in their countries. Annually, Shanxi produces around 1.4 billion tonnes of coal, accounting for one-fifth of China’s total production, while East Kalimantan and South Sumatra produce about 300 million and 100 million tonnes respectively. The long history of coal development across these economies means it will take time to wean them off it. But without the transition, we cannot imagine a coal-free future in these countries.
Adhiguna: The role of the two Indonesian provinces as major exporters of coal is somewhat mirrored by Shanxi’s status as “exporter” to the rest of China. Thus, the three provinces share something in common in terms of looking beyond coal. Coal companies from Indonesia can take valuable lessons from the transition path of their counterparts in Shanxi. Such companies are at the “coal face” of the energy transition, as Indonesia’s key coal export destination, China, shifts towards cleaner energy.
Surprising insights from the Shanxi exchange
Zhao: I was particularly struck by the integration of highways and solar-power generation. On the Taiyuan-Xinzhou expressway, enormous metallic “sunflowers” made of solar panels shimmer in the sunlight. These solar installations line the highway and its intersections, leaving a strong impression. China’s energy-transition achievements felt tangible and real, especially to someone like me, who has often only encountered them on paper. Shanxi now leads the nation in transmitting green power to other provinces. Meanwhile, Shanxi is also exploring other pillars to promote economic diversification for a safe and harmonious transition. However, the transition remains largely centred on the coal sector, for example, coalbed methane extraction, zero-carbon mining, and hydrogen utilisation.
Adhiguna: What impressed me was how Shanxi’s enterprises are leveraging their expertise and capital from the coal sector to pivot toward clean energy. One company we visited is exploring hydrogen application in heavy transportation through its existing coal operations. While coal-based hydrogen isn’t considered a clean activity, its potential use in such transportation and other industrial applications, where electrification is a challenge, also positions companies to enter the hydrogen end-use space in the future. Ideally, of course, this hydrogen should eventually come from renewable sources.
Another key observation was the technical acumen of Chinese enterprises. Even small and medium-sized companies demonstrated significant innovation and technological diversification. At one site, dozens of clean-energy technologies were on display. At another, the walls of its entrance hall were proudly lined with patent certificates. From geothermal energy to energy-efficient buildings, and solar technology to photovoltaic panel manufacturing, rapid progress in each area was evident.
Why has Shanxi, or China more broadly, achieved such rapid technical progress in the coal transition? Can this be replicated in Indonesia or other Southeast Asian countries?
Adhiguna: A significant difference between the Indonesian provinces and Shanxi is the level of industrialisation. Shanxi benefits from a broader and deeper industrial base. However, China wasn’t inherently endowed with these technologies. It took a decade for what once seemed impossible green technologies to become a reality. Other countries can draw lessons from this process.
In the short term, there is a need for more exchanges to deeply analyse provincial economic structures and potential sectoral investments. For Indonesian coal enterprises, documenting Shanxi’s pathways toward coal-industry transformation is crucial, especially as Indonesia’s key coal export destinations transition to cleaner energy.
At present, East Kalimantan and South Sumatra are working to diversify their economies into areas like palm oil and forestry, learning from past downturns in the oil and gas sectors. These downturns have imposed cyclical patterns on the provinces’ economies, emphasising the need to better balance near- and longer-term economic stability.
Zhao: Comprehensive policies are a critical advantage that Shanxi has in its transition, which may be difficult for other countries to replicate. However, Shanxi’s long-standing history with the coal sector means it will take time to break free from this dependency. Energy transition is not just about phasing out coal, but also developing renewable energy. In reality, Shanxi remains heavily reliant on coal, which could lead to long-term carbon lock-in across sectors such as coal mining, coal power and coke production.
Just transition lessons from both regions
Zhao: The issue of justice is profound. In 2021, Shanxi’s coal mining industry employed 878,600 people. It is projected that, between 2020 and 2060, 796,000 jobs in the sector will be lost, not to mention the impacts on related industries. Therefore, I believe economic diversification, fairness and equity in the transition process, and international energy partnerships, are all critical.
Adhiguna: Indonesia’s Just Energy Transition Partnership (JETP) might serve as a reference. Signed during the G20 Leaders’ Summit in Bali in 2022, the plan has faced notable hurdles. But it has been instrumental to focus attention on the need for a “just” process for affected communities in the green transition, both in the mining regions and in places where the coal is used.
Zhao: Yes, if we could establish a “Just Energy Transition Brotherhood” where developed Chinese provinces and cities provide support for Shanxi’s transition, it would greatly help Shanxi achieve its energy transition goals and play a key role in realising China’s carbon neutrality targets.
What can we learn from Indonesia’s pledge to phase out coal by 2040?
Adhiguna: Indonesia needs to translate such political statements into near-term targets and tangible project plans. Investors in clean energy are waiting to enter the country, but clarity on the plans is much needed. China, as the leader in clean technology, is a natural partner for Indonesia, a country endowed with many renewable resources. With the recent US government decision to back out from the Paris climate agreement, there is a vacant space of global leadership; one in which China can play a great role as South-South partner, investor and clean tech provider.
Zhao: Under the impetus of the Belt and Road Initiative (BRI), cooperation between China and Indonesia continues to deepen and strengthen. On 10 November 2024, a joint statement between the two countries highlighted their commitment to expanding cooperation in new energy vehicles, lithium batteries and photovoltaic products. Moving forward, more high-quality projects will be launched to support the clean-energy transition in Indonesia.
For China, and Shanxi in particular, what I have learned is that a coal-free future requires bold imagination and strategic vision. Green technologies that seemed unattainable just a decade ago are now becoming a reality, and the rapid expansion of renewable energy will further accelerate the phase-out of coal.
Therefore, the collapse of coal industries, and consequently the economies of these coal-heavy provinces, will likely happen sooner and faster. What must be offered even sooner – in fact, immediately – is support, guidance and preparation for people in the coal communities whose transitions will take much more time.
