Indonesia’s Constitutional Court is weighing a petition from Indigenous communities to strike down provisions of the 2024 Conservation Law that would let the government designate ancestral lands as conservation areas without obtaining free, prior, and informed consent – a ruling that could determine whether the country’s energy transition proceeds on contested terrain or forces developers to negotiate land rights upfront.
How the 2024 Conservation Law Rewrites Land-Use Authority
The law, formally Law No. 32 of 2024 on Conservation of Biological Natural Resources and Their Ecosystems, replaced a 1990 statute and expanded the Ministry of Environment and Forestry’s power to declare “conservation areas” – including national parks, wildlife sanctuaries, and nature reserves – on lands that Indigenous peoples have managed under customary (adat) tenure for generations. The petitioners, coordinated by the Indigenous Peoples’ Alliance of the Archipelago (AMAN), argue that Articles 10, 11, and 13 bypass the constitutional guarantee of adat recognition and the 2013 Constitutional Court ruling (Decision 35/PUU-X/2012) that removed customary forests from state forest zones. Under the challenged provisions, the ministry can issue a designation decree after consultation with local governments and “relevant stakeholders,” a term the law does not define to include Indigenous communities as rights-holders.
Indonesia’s land registry remains fragmented: the Agrarian Ministry estimates only 30 percent of the country’s 190 million hectares of state forest zone has been legally gazetted, and overlapping permits for plantation, mining, and energy concessions are routine. The new law adds a conservation overlay that can be imposed unilaterally, creating a third layer of claim atop existing concession maps and unresolved adat territories. For energy developers, this means a site cleared for a solar farm or transmission corridor today could be reclassified as a conservation area tomorrow without the project proponent’s input, let alone the affected community’s consent.
Collision Course with the Energy Transition’s Land Hunger
Indonesia’s Just Energy Transition Partnership (JETP) targets 44 percent renewable electricity by 2030, requiring an estimated 18-22 gigawatts of new solar and wind capacity plus thousands of kilometers of transmission lines. PLN, the state utility, has identified roughly 400,000 hectares as “suitable” for utility-scale solar, much of it in eastern Indonesia – Papua, Maluku, and East Nusa Tenggara – where adat land claims are strongest and formal titling is thinnest. Meanwhile, the nickel downstreaming push that anchors the country’s battery supply chain strategy has already converted over 700,000 hectares of forest in Sulawesi and Halmahera to mining and smelting zones, often on contested customary land.
If the Constitutional Court upholds the law’s current wording, the ministry gains a de facto veto over energy siting: it can declare a conservation area that overlaps a permitted project, forcing the developer into administrative limbo or compensation negotiations with the state rather than the community. That points to a surge in stranded-asset risk for projects that secured permits under the old framework but lack adat agreements. By comparison, projects that have negotiated benefit-sharing and land-lease deals with Indigenous groups – such as the 150 MW Cirata floating solar reservoir in West Java, which involved local fishing cooperatives – have avoided litigation and maintained construction timelines. If this trend holds, the market will bifurcate: projects with documented FPIC will command lower cost of capital and faster permitting, while those relying solely on central-government permits will face rising legal and reputational exposure.
International finance is already pricing this risk. The Asian Development Bank, World Bank, and major commercial lenders apply Environmental and Social Standard 7 (Indigenous Peoples) and IFC Performance Standard 7, both of which require FPIC for projects affecting Indigenous lands. Japanese and Korean export-credit agencies, which back much of Indonesia’s coal and gas fleet and are now underwriting early renewables, have signaled they will not finance projects where conservation designations create unresolved Indigenous rights disputes. A 2023 ADB internal review found that 40 percent of its Indonesia energy portfolio had “significant Indigenous peoples impacts” requiring enhanced due diligence – a share that will rise as deployment shifts eastward.
Who This Affects
- Utility planners (PLN, IPPs): Must integrate adat mapping into site screening before permit applications; budget 12-18 months for community negotiation on any project in eastern Indonesia.
- Renewable developers (solar, wind, hydro): Expect lenders to require FPIC documentation at financial close; projects without it will face higher equity returns demanded by investors – typically 200-300 basis points above consented projects.
- Critical mineral miners (nickel, cobalt, bauxite): Conservation designations can now be layered atop existing mining permits (IUP), creating dual regulatory risk; secure adat agreements before expanding concession boundaries.
- Transmission grid operators: Right-of-way acquisition for 500 kV lines across Sumatra, Java, and Sulawesi will require corridor-level FPIC processes, not just tower-by-tower compensation.
- Policy analysts and ESG raters: Track the Constitutional Court’s reasoning – a narrow ruling preserving ministry discretion will keep land risk high; a broad affirmation of adat consent will force regulatory overhaul.
What to Watch Next
- Constitutional Court hearing schedule and amicus briefs from ministries, AMAN, and industry associations – oral arguments typically conclude within 60 days of filing, with a ruling 30-90 days after.
- Whether the Ministry of Environment and Forestry issues implementing regulations (Peraturan Pemerintah) that define “relevant stakeholders” to include Indigenous representatives – a regulatory fix that could moot the court challenge.
- ADB and World Bank project pipeline disclosures for Indonesia in 2025-2026 – watch for FPIC conditionality in new renewable and transmission loan agreements.
- PLN’s updated 10-year electricity supply plan (RUPTL 2025-2034) – note how many gigawatts of new solar/wind are sited in provinces with active adat mapping disputes (Papua, Maluku, NTT, Sulawesi).
- Indonesia’s carbon market regulation (Presidential Regulation 98/2021 implementing rules) – conservation-area designations generate avoidance credits; if Indigenous rights are sidelined, credit integrity risks rise for buyers.
Bottom line: The court’s decision will either embed Indigenous consent into Indonesia’s energy-transition land governance or leave it as a negotiable afterthought – and the difference, measured in project delays, financing costs, and stranded assets, runs into the billions of dollars.
Read the full report at Eco-Business
Note: facts and figures attributed above to Eco-Business (Asia sustainability & energy — strong China/India coverage) reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
Leave a Reply