ADB ETM Pilot Withdrawn: A critical moment for coal retirement in Indonesia and beyond

NGO Forum on ADB Statement on ETM Withdrawal in Indonesia 

In December 2025, reports confirmed that the Cirebon 1 transaction under the Asian Development Bank’s Energy Transition Mechanism (ETM) would not proceed. The Government of Indonesia has instead opted for a “phase-down” approach, allowing the plant to operate until the end of its technical life, projected at 2035. While this decision represents a setback for early coal retirement and renewable energy transition efforts, it also marks a critical moment that demands a fundamental reassessment of how coal retirement is conceived, financed, and implemented.

Indonesia, as one of the world’s largest coal consumers and exporters, cannot afford a slow or incremental approach to coal phaseout. Nor can the global community, given the narrowing window to limit warming to 1.5°C. Accelerated coal retirement is an imperative to public health and development. The failed Cirebon 1 deal underscores that the ETM, as currently designed, is ill-equipped to deliver the just, rapid, and equitable transition that Indonesia and other coal-dependent countries urgently need.

Cirebon 1 was positioned as the flagship pilot of ADB’s ETM when it was launched in November 2022 after a Memorandum of Agreement (MOA) was signed between the CEP, PT PLN, and Indonesian Investment Authority. After several years of development, negotiations, and technical work, its failure to reach financial close exposes a deeper problem. The ETM has failed to establish a credible proof of concept that early coal retirement can be achieved at scale through this model. Rather than accelerating the exit from coal, the mechanism has revealed structural weaknesses that undermine both climate ambition and justice.

From its inception, Forum Network and civil society groups have raised serious concerns about the ETM’s design. Chief among these is the risk that the mechanism functions primarily as a refinancing vehicle for coal companies rather than a tool for genuine transition. Concessional loans, guarantees, and blended finance instruments are being used to de-risk coal assets and compensate owners, often multinational corporations with long track records of coal expansion and no binding commitments to exit fossil fuels.

In Indonesia, the owners and operators of Cirebon 1, including Marubeni and KEPCO, PT Indika, and ST International, are well documented as coal expansionists. Moreover, 1.5 kilometers away from the plant is a second unit, Cirebon 2, which is being built by the same consortium and JERA. Channeling public and concessional finance to such actors effectively rewards continued reliance on fossil fuels. A similar dynamic is evident in the Philippines, where Aboitiz Power Corporation, a major fossil fuel player, operates the STEAG plant in Mindanao under the ETM framework. The same company is also expanding its coal fleets despite the standing coal moratorium. In these cases, the financial burden is ultimately borne by taxpayers, while the fossil fuel industry is kept financially viable and politically entrenched.

Compounding these issues, the ETM has increasingly drifted away from its stated goal of “early retirement.” In practice, the focus has now shifted toward asset repurposing and false techno-fixes rather than permanent coal phaseout. Technical studies associated with ETM pilots indicate plans to replace coal with so-called “transition” technologies such as ammonia/biomass/hydrogen co-firing, waste-to-energy, and even coal-to-gas switching (as seen in Kazakhstan). These approaches prolong fossil fuel lock-in, divert resources from proven renewable solutions, and create new environmental and social risks.

Equally troubling is the manner in which the ETM has been developed and implemented. The mechanism has been characterized by limited transparency, delayed or inaccessible public documentation, and inadequate engagement with affected communities, workers, and civil society. Decisions with profound implications for livelihoods, health, and local environments have been made without meaningful participation or consent. 

The withdrawal of the Cirebon 1 pilot should therefore be understood not as an isolated setback, but as evidence that the current ETM model is fundamentally misaligned with the goals of a just energy transition. What is needed now is a new coal retirement framework that places people, communities, and ecosystems at its core, and that genuinely accelerates the transition away from coal.

True energy security will not be achieved by prolonging coal operations under the guise of transition. It will come from decisive public policy, robust regulatory frameworks, and investment strategies that prioritize energy democracy, workers’ rights, community well-being, and environmental restoration. Coal retirement must be rapid, irreversible, and equitable.

Key Recommendations for ADB and National Governments

• Adopt stringent eligibility criteria that categorically exclude companies that are actively expanding or investing in coal and other fossil fuel operations.

• Mandate full transparency, including the timely public disclosure of all ETM-related documents, studies, financial structures, and decision-making processes.

• Institutionalize meaningful public participation, ensuring early, continuous, and inclusive consultations with affected communities, workers, Indigenous peoples, and civil society organizations.

• Require credible and verifiable transition plans from coal plant operators, including clear timelines for decommissioning, renewable energy replacement, and workforce transition.

• Ensure accountability for past harms, compelling coal plant operators to remediate environmental damage, address public health impacts, and provide reparations to affected communities.

The failure of the ETM pilot in Indonesia must serve as a wake-up call. Half-measures are no longer sufficient. A new coal retirement model, grounded in justice, climate science, and public interest, is urgently needed to deliver a truly just, rapid, and equitable energy transition for Indonesia and the world.

ENDORSED BY: 

NGO Forum on ADB, Regional

AbibiNsroma Foundation, Ghana

Aksi! for Gender, Social, and Ecological Justice, Indonesia

Alternative Law Collective (ALC),  Pakistan

Asian Peoples' Movement on Debt and Development (APMDD) Asia, Regional

Bangladesh Working Group on Ecology and Development (BWGED), Bangladesh

Bank Climate Advocates, United States

Bank Information Center, United States

Bantay Kita, Inc. - Resource Justice Network Philippines

Bir Duino-Kyrgyzstan, Kyrgyzstan

Center for Environmental Justice, Sri Lanka

Centre for Human Rights and Development (CHRD), Mongolia

Centre for Research and Advocacy, Manipur, India 

Coastal Livelihood and Environmental Action Network (CLEAN), Bangladesh

Community Resource Centre, Thailand

debtWATCH, Indonesia

Forum on Ecology and Development (FED), Bangladesh 

Freedom from Debt Coalition (FDC), Philippines 

Friends of the Earth Japan, Japan

Global Alliance for Incinerator Alternatives (GAIA) - Asia Pacific

groundWork, Friends of the Earth, South Africa, South Africa

Growthwatch, India

Indian Social Action Forum (INSAF), India

Indus Consortium, Pakistan 

Inisiasi Masyarakat Adat (IMA), Indonesia

International Accountability Project, Global

Japan Center for a Sustainable Environment and Society (JACSES), Japan

Jubilee Australia Research Centre, Australia

Kazakhstan International Bureau for Human Rights, Kazakhstan

Mekong Watch, Japan

MiningWatch Canada, Canada

Nash Vek Public Foundation, Kyrgyzstan

Oyu Tolgoi Watch, Mongolia

Peace Point Development Foundation-PPDF, Nigeria 

Philippine Movement for Climate Justice (PMCJ), Philippines

Recourse, Netherlands/International

Rivers without Boundaries Coalition, Mongolia 

Sa Merdeka Flores, Indonesia

Society for Peace and Sustainable Development, Pakistan

Trend Asia, Indonesia

Urgewald, Germany

WALHI! Friends of the Earth Indonesia, Indonesia

Forum ETM Statement, January 2026.pdf

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