Energy Transition across Asia: Lessons from Pakistan and Indonesia

What Two Emerging Economies Reveal about Balancing Energy Security, Economic Development, and Decarbonization

Asia's energy transition will be decided in economies that must expand electricity supply while honouring climate commitments. This issue brief compares Pakistan and Indonesia, two rapidly growing power systems that rely heavily on coal and have pursued markedly different transition strategies. Indonesia has built formal, internationally financed architecture through the Just Energy Transition Partnership (JETP) yet has utilized only about one-sixth of the financing committed. Pakistan has no comparable framework; instead, it has delivered narrow, executable reforms, including renegotiated power purchase contracts, domestic coal development, and a rooftop solar expansion driven by households rather than planners. Drawing on 2025 and 2026 data, the brief argues that institutional durability, rather than technology or financing, is the binding constraint on transition in both countries. It concludes with three lessons for other Asian economies: transition pathways are specific to each country, governance capacity must be built alongside generation capacity, and domestic resources can support rather than obstruct decarbonization.

Introduction

Developing Asia now accounts for nearly four-fifths of global coal demand,[1] and it is also where the next decade of the global energy transition will be decided. International pledges made in Paris or Glasgow mean little until they are tested against the needs of hundreds of millions of households awaiting reliable electricity, and against governments that answer to voters who want the lights on tonight rather than a lower emissions curve in 2050.

Pakistan and Indonesia are an unusually clean pair for testing that tension. Both are large, coal-endowed economies with fast-growing power demand, and both have made international commitments to cut that dependence: Indonesia through the Just Energy Transition Partnership (JETP), Pakistan through its own targets and a United Nations-facilitated scoping process now underway. Building generation is turning out to be the easy part for both. What is hard is building institutions that can hold a long-term investment plan together and outlast a four-year political cycle.

The implications extend beyond either country. Vietnam, Bangladesh, the Philippines, and others are approaching the same fork, in some cases with less institutional depth than Jakarta or Islamabad currently has. If governance, rather than financing, technology, or resource endowment, is the real constraint on transition, the sharpest lessons for the rest of Asia will come from observing where each country's institutions bend and where they hold.

Part I. Pakistan: Energy Security as the De Facto Transition Strategy

Current Situation

Pakistan's installed generation capacity reached 49,651 MW by mid-2026, about 8.5 percent higher than a year before. What that growth is actually made of matters more than the headline number. Renewables' share of installed capacity climbed from 12.4 to 20.3 percent in a single year,[2] and almost none of that came out of a national renewable energy plan. It came from rooftops. Net-metered solar alone added 7,319 MW, and solar now supplies over a quarter of the country's electricity — put there mostly by households and businesses reacting to power tariffs that had doubled, not by utilities working through a procurement schedule.[3] Thermal generation still makes up roughly half of installed capacity, but even that has quietly changed character: domestic Thar lignite is now doing part of the job once done by imported coal and regasified liquefied natural gas (RLNG).[4] None of this happens apart from Pakistan's chronic circular debt, which passed Rs 2.6 trillion — about $9.3 billion — in mid-2025 and still shapes nearly every tariff and dispatch decision made today.[5]

Major Achievements

The clearest success story is Thar Block II. Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Limited marked seven years of commercial operation in July 2026, having mined 38 million tonnes of coal and generated over 27,000 GWh of electricity since 2019 — consistently among the cheapest power in the national fleet.[6] SECMC is now preparing a Phase III mine expansion, and the Thar Coal Rail Connectivity Project — built to move that coal to cement plants and power stations nationwide — is still on schedule for completion by late 2026.[7]

On the fiscal side, the federal cabinet's January 2025 renegotiation of legacy take-or-pay contracts with 14 independent power producers, converting them to take-and-pay terms, is projected to save Rs 1.4 trillion over the life of those contracts, with roughly Rs 137 billion a year passed through to consumers. A broader renegotiation spanning 29 IPPs and government power plants puts total projected lifetime savings closer to Rs 3.5 trillion.[8] Nuclear generation has grown alongside it, supplying 19.1 percent of national generation between July and March of FY2025, at roughly a fifth the per-unit cost of RLNG.[9]

Major Challenges

None of this has touched the underlying debt problem. Unpaid power dues linked to the China-Pakistan Economic Corridor (CPEC) reached Rs 423 billion in recent reporting, Rs 54 billion of it owed to the Thar coal project itself. Meanwhile, weak distribution company performance — line losses and weak bill recovery — added a further Rs 397 billion to circular debt in FY2024–FY2025.[10] Transmission hasn't kept up with generation either. The 4,000 MW Matiari to Lahore HVDC line, paid for on a 100 percent availability basis, ran at just 35 percent utilization over the same year — power produced where it isn't needed, needed where it isn't produced.[11]

Regulators have also started working against their own success story. NEPRA's shift from net metering to net billing in February 2026 has already begun slowing the rooftop solar boom that was carrying most of the renewable gains — trading a genuine, bottom-up clean energy story for short-term fiscal relief.[12] Underneath it all, domestic gas reserves keep declining, pushing the system further toward the very imported fuel and coal dependence the government says it wants to cut.[13]

Governance Issues

There is no Pakistani equivalent of Indonesia's JETP — no international partnership group, no comprehensive investment plan, no dedicated delivery unit. What exists instead is a scoping mission by the UN Economic and Social Commission for Asia and the Pacific (UN ESCAP), which visited in late 2025 and reported back in January 2026 on what an eventual Energy Transition Investment Plan might look like.[14] That puts Pakistan roughly where Indonesia stood before its own JETP was announced, in November 2022.

Domestically, Thar coal governance runs on two tracks that don't always speak to each other. Provincial bodies — the Sindh Coal Authority and the Thar Coal and Energy Board — handle mining allocation and pricing, while capacity payments, circular debt, and IPP contracts get negotiated federally.[15] What has actually moved in 2026 has moved through narrow, single-purpose instruments — IPP renegotiation, NEPRA's prosumer rules, targeted budget lines for Thar connectivity — precisely because each one sidesteps the years of sustained institutional custodianship a JETP-style compact would require.[16]

Key Takeaways

Pakistan's experience is a useful counterweight to Indonesia's. Energy security and decarbonization don't automatically move together: Thar coal cuts import dependence and fuel costs, but it is defended entirely in balance-of-payments terms, and nobody is formally tracking what it is doing to emissions.[17] Distributed adoption can also outrun formal planning — and the regulatory response here has been to slow it down rather than build the system around it. Generation-side wins mean little if what sits beneath them is broken: a cheap coal plant or an efficient nuclear unit does not matter much if the DISCOs cannot collect revenue and the transmission line built to move that power runs at a third of its capacity. Narrow reforms can succeed exactly where broad multilateral frameworks stall — but going without an externally monitored framework has a real cost: nobody outside government is positioned to ask whether Pakistan's transition spending is actually cutting emissions, or just cutting the import bill.

Part II. Indonesia: Navigating the Political Economy of Coal Phase-Down

Current Situation

Indonesia's energy transition is a study in contrasts. Renewables reached 17.89 percent of the national energy mix by April 2026, already ahead of the government's own 16.46 percent target.[18] Coal, however, still supplies 64.87 percent of national electricity generation, and installed coal capacity of 60,705 MW places Indonesia fourth in the world.[19] President Prabowo Subianto has set a target of 100 GW of solar capacity, and PLN, the state utility, is now revising its 2025–2034 electricity supply business plan (RUPTL) to accommodate it.[20] In parallel, the Ministry of Energy and Mineral Resources is working to finalize the 2026–2035 National Energy General Plan (RUEN) by September 2026,[21] while the JETP framework separately targets net zero for the power sector by 2050.[22] Running these processes side by side means Indonesia is negotiating its transition on paper and in practice at once — a governance problem at least as much as a technical one.

Major Achievements

Indonesia has turned part of this ambition into results. By February 2026, the government reported roughly US$3.5 billion utilized from the Just Energy Transition Partnership and the Asia Zero Emission Community (AZEC) combined, against JETP commitments of about US$21.4 billion and AZEC programs of roughly US$500 million.[23] The Sulawesi Green Energy Corridor and a Green Bond Development Facility, both financed under JETP, are early signs that green finance instruments are starting to move from pledge to deployed capital.[24]

On the build-out itself, 43 percent (22.57 GW) of the 52.8 GW renewable target is now at some stage of execution — though only 0.78 GW is actually operating, a gap that captures both the momentum and the slow grind of implementation. Sumatra already draws 41.76 percent of its power from renewables, the highest share of any Indonesian region, and construction on the 55 MW Dieng Unit 2 geothermal plant began in June 2026, targeting completion by 2028.[25] Non-power sectors are moving too: B50 biodiesel, blending 50 percent palm-based fuel, launched in July 2026.[26] The economic case is increasingly quantifiable as well — every US$1 billion invested in renewables is estimated to generate US$1.41 billion in returns, and the green economy is projected to support up to 4.4 million new jobs by 2029.[27]

Major Challenges

The scale of what remains is sobering. Coal's 64.87 percent share of the national power mix hides a stark regional split: Java-Bali, home to most of Indonesia's population and industry, draws 70.99 percent of its electricity from coal and just 10.01 percent from renewables.[28] Thirty-four coal plants remain "constrained" within the RUPTL,[29] and 3,140 MW of coal capacity is still under construction — the fourth-largest such pipeline anywhere in the world.[30]

Captive coal power — built to serve industrial users such as smelters, outside the regulated grid — adds a further complication. Analysis behind the 2023 Comprehensive Investment and Policy Plan (CIPP) identified a captive pipeline that could reach roughly 30 GW by 2030, and new proposals kept appearing through 2025, effectively opening a side door around the country's own phase-down commitments.[31] The net effect is a widening gap between Sumatra's renewable success and Java-Bali's continued coal dependence — a reminder that national-level statistics can conceal deeply uneven regional transitions.

Governance Issues

Indonesia has recognized that hardware alone will not deliver this transition, and has begun building institutional scaffolding around it. The Affordable and Sustainable Energy Transition (ASET) program, backed by the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), runs on two reform tracks: policy and regulation, and governance and fiscal sustainability.[32] A dedicated Energy Transition and Green Economy Task Force (Satgas TEH), stood up in March 2025, now coordinates across ministries,[33] while civil society groups continue pressing for the transition to formally incorporate Gender, Disability, and Social Inclusion (GEDSI) principles.[34] Reform priorities on the table now include carbon governance, transparency in critical minerals supply chains, and strengthening PLN's finances — all of which will decide whether announced targets ever become delivered infrastructure.

Key Takeaways

Indonesia's experience reinforces a wider truth for the region: transition is shaped as much by governance, institutional capacity, and implementation as by technology. Large financing commitments such as JETP's are necessary, but nowhere near sufficient on their own; without matching implementation capacity and policy reform, utilization keeps lagging commitment — roughly US$3.5 billion drawn against more than US$21 billion pledged makes that plain. "Coal phase-down" is also a more honest framing than "coal phase-out" for economies where coal is woven into industrial policy and regional livelihoods; Indonesia's own construction pipeline reflects that reality rather than any lack of intent. The Sumatra-Java-Bali divide shows that national targets have to be translated into region-specific strategies, not applied uniformly. And energy policy is increasingly tangled up with industrial policy, as downstream projects like electric-vehicle battery production get built alongside green energy infrastructure.[35] Finally, an equitable transition needs deliberate inclusion and transparency built in, with civil society acting as a real check on whether reforms serve broader social goals or just look like they do.

Comparative Analysis

Set side by side, Pakistan and Indonesia share more in common structurally than their headline strategies suggest. Both are large, coal-endowed democracies running power sectors under real fiscal stress, and both show a real gap between announced ambition and delivered infrastructure. Both have also discovered that the hardest part of the transition sits not in generation, but in the institutions that move electricity from plant to customer and actually collect payment along the way. Java-Bali's coal-heavy grid next to Sumatra's renewable success mirrors Pakistan's own geography of mismatch, where cheap Thar power sits far from the load centers a poorly utilized HVDC line was built to serve.

Where the two countries diverge sharply is in how they are governed through the transition. Indonesia built the architecture first: the International Partners Group, working groups (four at launch, five since 2024), a Comprehensive Investment and Policy Plan, a dedicated task force, and, from January 2026, a German-funded JETP Delivery Unit.[36] That architecture has translated only about a sixth of its committed financing into actual utilization so far, because building the institutions to receive and deploy the money took time the architecture itself never budgeted for. Pakistan has done nearly the opposite: almost no formal architecture, but a series of discrete, executable reforms — IPP renegotiation, a coal rail line, a prosumer tariff change — each moved close to schedule, and none of them answerable to any stated decarbonization target.

Both countries also share a coordination gap between central and provincial or regional government — whether that is Jakarta's national targets outrunning PLN's own grid economics, or Islamabad's fiscal reforms running on a track separate from Sindh's provincial coal institutions. Whichever country closes that particular gap first, rather than the one that announces the bigger number, is the one likelier to actually get this right.

Three Lessons for Asia

1. Every transition pathway is different.

Indonesia is running a formal, internationally financed decarbonization program that is struggling with execution. Pakistan is running an unstated, domestically financed energy-security program that cuts import dependence and may or may not be cutting emissions along the way. Neither model transplants cleanly onto Vietnam, Bangladesh, or the Philippines.

Policy implication: each government needs to name, honestly, which problem it is actually solving — security, decarbonization, or both — before it designs institutions to match.

2. Institutional durability is the real constraint.

Indonesia's own custodianship has shifted repeatedly since 2022: the JETP Secretariat's implementing agency changed in October 2024, a new task force took over steering on Indonesia's side in March 2025, the United States withdrew from the partnership in early 2025, and a Delivery Unit replaced the Secretariat entirely in January 2026.[37] Pakistan, by contrast, has never built anything comparable in the first place. Neither gap is really about technology — both countries deploy solar, coal, geothermal, and nuclear competently enough. It is the organizations asked to manage the transition, not the hardware, where each country is actually being tested.

Policy implication: governments and their partners should fund delivery units, regulatory capacity, and utility revenue recovery with the same deliberateness they fund power plants.

3. Domestic resources can support a transition rather than block it.

Thar coal and Sumatra's geothermal and hydro potential are both cheap domestic options that cut import exposure while a longer transition plays out. Treating "energy transition" as a synonym for "no more fossil fuel development" misreads what these resources are actually doing for both economies right now, and risks losing exactly the domestic coalition the transition will eventually need to succeed.

Policy implication: transition plans should sequence domestic resource use against explicit, monitored emissions targets, rather than leaving the two tracks unconnected.

Conclusion

Neither of us set out to rank Pakistan against Indonesia, and we'd push back on any reading of this brief that does. Indonesia's JETP architecture and Pakistan's Thar-led energy-security program are answers to different questions, shaped by different fiscal constraints, different state structures, and different relationships with international finance. Judging one against the other on a single scorecard would flatten exactly the country-specific realities that matter most here.

What the two cases share is a verdict on where the region's attention should actually go next: not another pledging conference, and not a technology debate over solar versus coal versus nuclear on cost curves that shift every eighteen months anyway — but governance. That means institutions built to outlast a minister's term, regulators who can protect long-term investment from short-term politics, and utilities capable of actually collecting the revenue that pays for the power they already generate. Cooperation between countries like ours — sharing what worked, and being honest about what didn't — is a cheaper way to close that gap than either of us discovering it alone.

Notes

1. International Energy Agency, "Coal," in Global Energy Review 2025 (Paris: IEA, 2025), https://www.iea.org/reports/global-energy-review-2025/coal.
2. "Pakistan Shifts toward Cleaner Energy as Installed Capacity Hits 49,651 MW," BOL News, June 2026, https://www.bolnews.com/pakistan/pakistan-shifts-toward-cleaner-energy-as-installed-capacity-hits-49651-mw/.
3. "Pakistan Shifts toward Cleaner Energy."
4. "From LNG to Thar: Rethinking Pakistan's Energy Transition," Business Recorder, 2026, https://www.brecorder.com/news/40430046/from-lng-to-thar-rethinking-pakistans-energy-transition; "Pakistan Shifts toward Cleaner Energy."
5. "Pakistan Energy Sector 2026: Who Owns It and Can It Keep Up?," Digital Pakistan, April 2026, https://digitalpakistan.pk/pakistan-energy-sector-2026/.
6. "SECMC and EPTL Mark Seven Years of Strengthening Pakistan's Energy Security," The Friday Times, July 8, 2026, https://www.thefridaytimes.com/08-Jul-2026/secmc-eptl-mark-seven-years-strengthening-pakistan-s-energy-security.
7. "Thar Block II: SECMC Prepares for Phase III Expansion," Business Recorder, July 2026, https://www.brecorder.com/news/amp/40429258; "Thar Coal and Pakistan's Imperative for Energy Sovereignty and Economic Resilience," The Friday Times, June 19, 2026, https://www.thefridaytimes.com/19-Jun-2026/thar-coal-pakistan-s-imperative-energy-sovereignty-economic-resilience.
8. "Revision of Agreements with 14 IPPs Approved to Reduce Power Cost with Rs137bn Annual Savings for Consumers," Dawn, January 14, 2025, https://www.dawn.com/news/1885176; "Economic Survey 2024-25: Capacity Payments Weigh Heavily on Electricity Users," Dawn, June 10, 2025, https://www.dawn.com/news/1916119.
9. "Economic Survey 2024-25."
10. "Rs423b CPEC Power Dues Unpaid," Express Tribune, 2026, https://tribune.com.pk/story/2617766/rs423b-cpec-power-dues-unpaid; "Weak Discos Performance Major Contributor to Circular Debt," The Nation, January 17, 2026, https://www.nation.com.pk/17-Jan-2026/weak-discos-performance-major-contributor-circular-debt.
11. "Weak Discos Performance."
12. "The Existential Crisis of the Grid: Can Pakistan Break the Circular Debt Chain in 2026?," HUM News English, March 2026, https://humenglish.com/latest/the-existential-crisis-of-the-grid-can-pakistan-break-the-circular-debt-chain-in-2026/.
13. "Pakistan Shifts toward Cleaner Energy."
14. "UN Body to Help Pakistan Develop Its Energy Transition Plan," Dawn, January 2026, https://www.dawn.com/news/1965208.
15. Thar Coal and Energy Board, official website, 2026, https://www.tceb.gos.pk/.
16. "The Existential Crisis of the Grid"; "Thar Block II."
17. "From LNG to Thar"; "Thar Block II."
18. "Indonesia's Renewable Energy Mix Gains Pace, Beats 2026 Target," ANTARA News, June 2026, https://en.antaranews.com/news/419901/indonesias-renewable-energy-mix-gains-pace-beats-2026-target; "Indonesia Records 17.89 Percent Energy Mix, Exceeding Target," ANTARA News, May 2026, https://en.antaranews.com/amp/news/418049/indonesia-records-1789-percent-energy-mix-exceeding-target.
19. "Indonesia Records 17.89 Percent Energy Mix"; "Indonesia," Global Coal Countdown, Bloomberg Philanthropies, 2026, https://bloombergcoalcountdown.com/countries/ID.
20. "Analysis: Indonesia Pushes 100 GW Solar Plan beyond RUPTL," The Jakarta Post, March 26, 2026, https://www.thejakartapost.com/opinion/2026/03/26/analysis-indonesia-pushes-100-gw-solar-plan-beyond-ruptl.html.
21. "Indonesia Targets New National Energy Plan by September 2026," ANTARA News, July 3, 2026, https://en.antaranews.com/amp/news/421433/indonesia-targets-new-national-energy-plan-by-september-2026.
22. "Energy Transition Indonesia: Just Energy Transition Partnership (JETP) Commitments," SIPET, 2026, https://www.sipet.org/JETP-country.aspx.
23. "Indonesia Uses $3.5 Bln from JETP, AZEC for Green Economy Projects," ANTARA News, February 10, 2026, https://en.antaranews.com/news/403850/indonesia-uses-35-bln-from-jetp-azec-for-green-economy-projects.
24. "Indonesia Secures US$3.5 Billion in JETP-AZEC Funding," Tempo.co, February 11, 2026, https://en.tempo.co/read/2086536/indonesia-secures-us3-5-billion-in-jetp-azec-funding.
25. "Indonesia Records 17.89 Percent Energy Mix"; "Indonesia Advances Energy Independence with Dieng Geothermal Project," ANTARA News, June 26, 2026, https://en.antaranews.com/amp/news/420436/indonesia-advances-energy-independence-with-dieng-geothermal-project.
26. "Indonesia to Launch B50 Biodiesel in July 2026, Saving 4 Million KL of Fuel," Palm Oil Magazine, April 4, 2026, https://www.palmoilmagazine.com/biodiesel/2026/04/04/indonesia-to-launch-b50-biodiesel-in-july-2026-saving-4-million-kl-of-fuel/.
27. "Clean Energy Investments Can Power Indonesia's Growth and Advance Its Net-Zero Goals," World Resources Institute, October 14, 2025, https://www.wri.org/news/release-clean-energy-investments-can-power-indonesias-growth-and-advance-its-net-zero-goals; "Indonesia Secures US$3.5 Billion."
28. "Indonesia Records 17.89 Percent Energy Mix."
29. "President Prabowo's 100 GW Solar Ambition Demands Coal Phase-Down," RRI.co.id, June 19, 2026, https://rri.co.id/en/national/2505309/president-prabowos-100-gw-solar-ambition-demands-coal-phase-down.
30. "Indonesia," Global Coal Countdown.
31. "Indonesia," Global Coal Countdown; "Energy Transition Indonesia."
32. "56368-003: Supporting Affordable and Sustainable Energy Transition Policy Reforms," Asian Development Bank, 2026, https://www.adb.org/projects/56368-003/main.
33. "Energy Transition Indonesia."
34. "Promoting Social Accountability in Indonesia's Energy Transition," PWYP Indonesia, September 9, 2025, https://pwypindonesia.org/en/promoting-social-accountability-in-indonesias-energy-transition/.
35. "Indonesia Secures US$3.5 Billion."
36. "Energy Transition Indonesia."
37. "Energy Transition Indonesia."

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily represent the views, policies, or positions of the organisation.