An assessment of climate transition risk and opportunities for Indonesia’s State-Owned and largest Electricity Company

Abstract

The electricity sector is one of the top emitting sectors of GHG emissions in Indonesia. Hence, it is of strategic focus for Indonesia’s low carbon economy transition. This study assesses climate transition risks and opportunities for Indonesia’s state-owned and largest electricity company. The assessment indicates climate change to be a material risk to the company, leading to potential financial impact of multi-billions of dollars. Key risks identified include reputational risk, stakeholder pressure to reduce greenhouse gas emissions, increasing costs of operating coal and early retirement of fossil fuel based plants. Besides climate risks, our analysis also identified potential climate transition opportunities resulting in new revenue streams, such as battery-based electric vehicles and electric cooking stoves. Adopting an integrated approach for achieving a low carbon energy transition, which would mitigate the potential risks while capitalizing on transition opportunities, is recommended.