Danantara’s expensive waste-to-energy plan won’t solve any problems

If anything, it’s creating new ones

The writer is a waste-management professional currently pursuing a master’s degree in Biological and Environmental Engineering at Cornell University. This op-ed reflects the author’s own analysis and views and does not necessarily represent those of The Reformist.

The Ragpicker (1869) by Edouard Manet (Wikimedia Commons/Public Domain)

You might be familiar with the regret of signing an expensive, multi-year gym contract. But what if that contract required you to keep gaining weight just to justify the monthly fee? You’d be paying a premium to actively work against your goal of getting fit.

This, unfortunately, is the logic behind Indonesia’s championed solution to its national waste problem.

We are on course for decades-long, multi billion dollars waste-to-energy (WtE) facilities development. They look sleek, but what’s alarming is that to make their exorbitant costs viable, these facilities require a massive, guaranteed supply of trash for the next 30 years.

This creates a perverse incentive. We are financially locked into a system that must actively discourage the things that make a city cleaner; like recycling to reduce waste, or composting to keep the plants fed.

It is a “solution” that functionally bans us from ever solving the problem. We’re paying a massive premium for business math that is simply, as they say, “not mathing.”

Gov’t latest ambition to roll-out the WtE mega project

At the end of September 2025, Indonesia’s sovereign wealth fund Danantara announced that they will push Indonesia’s long standing WtE agenda. This project took off with the Presidential Regulation (Perpres) 109/2025 as its launchpad; backing the government’s agenda to introduce WtE as the solution to our waste management problems.

According to bisnis.com, the super-holding will commit around a total of Rp66-99 trillion for the WtE facilities development across 33 sites. Each facility is projected to handle 1.000 tonnes of waste per day. In another news, Tempo reported that the operational revenue will rely on power purchase by state-owned electricity company PLN for 30 years at USD 20 cents/kWh, almost 50 percent higher than what was mandated in the preceding regulation, Perpres 35/2018, at USD 13,35 cents/kWh.

Triple-kill: Neither good for people, profit, nor planet

In 2005, rising methane concentration caused a deadly explosion in West Java’s Leuwigajah open-dumping landfill, killing 157. This has since pulled the alarm to do something about Indonesia’s waste management problem.

Since Jokowi’s tenure, the government had been keen to champion WtE as the solution to the country’s complex waste management landscape. Unfortunately, it’s not that simple.

Assessing from the lens of sustainability’s “People, Profit, Planet” (3Ps), we could see a big picture that there is more harm than good in practicing this solution.

1. People: Damaging the marginalized and vulnerable informal sector

The informal sector has been the backbone of waste management in Indonesia. Indonesia Waste Picker Association (Ikatan Pemulung Indonesia, or IPI) estimated there are 3,7 million waste pickers across 25 provinces in the country who rely on combustible dry waste such as plastic waste as their source of income.

On the other hand, that is the very same kind of waste WtE needs to fuel its power generation.

Assuming 15 cities across 12 provinces (as per Perpres 109/2025) will build WtE facilities, that means that around 1.8 million waste pickers’ livelihood would be significantly impacted by removing access from their main source of income.

Moreover, landfill sites, likely to be sites for WtE facilities, will be privatized and therefore displacing informal workers. The scale of the negative consequences this project poses is overwhelming compared to the claim that each facility would provide 500-1000 new jobs.

2. Profit: The business math is ‘not mathing’

The shocking part about this decision is the reliance on power purchase agreement (PPA) and also the USD 20 cents/kWh price point. While this price is theoretically enough to cover all costs associated with the facility, a big question mark has to be put on the PLN’s financial health.

The price is 4-5x higher than electricity from coal power plants and at least 2x higher than renewable sources at 10-20 MW scale based on Presidential Regulation (Perpres) 112/2022 (see annex 1). While a more detailed calculation needs to be done, a ballpark estimate yields a Rp9 trillion of additional expense for PLN to purchase electricity from 33 WtE facilities annually, more than half of their 2024’s net profit.

Moreover, this electricity will mostly be absorbed into the Java grid system where it already surpassed the required redundancy; meaning PLN will buy a very premium electricity that has no demand.

WtE facilities are also not exempted from business risk, as there are many technical aspects that can influence the output. This ultimately shifts the assumed potential revenue.

In conclusion, the current WtE scenario developed is potentially a cannibal scenario between Danantara portfolios, which falls off as counterintuitive since these portfolios should be enhancing rather than killing each other.

3. Planet: Encouraging a wasteful society

WtE facilities will create a lock-in effect towards the waste management landscape. Due to its intensive capital requirements, all policies will be heavily geared to cater to its needs to ensure it generates the desired output. This means that all efforts and policies angled for waste reduction principles, which is the higher priority, won’t be encouraged as it will reduce the WtE’s feedstock.

In fact, it will create a perverse incentive to generate more waste; justified as means to fulfill the WtE feedstock.

In the grand scheme of things, where Indonesia is struggling to even provide a proper source separated collection system, WtE facilities development is a ticking time bomb that will accelerate environmental destruction through its domino effect.

It is also imperative to understand that the triple bottom line does not capture the entire picture of threats associated with WtE facilities. There are risks along the project life cycle from the development to the monitoring of WtE that are too big to overlook.

Two of many apparent examples are governance accountability and public health hazards. These risks are very much visible due to the scale of the finance involved; and the well-known dangers of material combustion from past WtE facilities in countries with similar waste characteristics and human resources to Indonesia. To ensure that we minimize all these risk factors is a gargantuan task; given that there are 33 facilities to monitor with different technical nuances and governance setup.

How the budget could have been used instead

Rp66 trillion is a massive budget for waste management. This amount can be leveraged to impact beyond 33 sites, perhaps enough to drive impact across the country.

The key question here is how to approach the issue that a sound solution can be discovered. Unless the deconstruction is done properly, the government (in this case Danantara) will always arrive at false solutions such as WtE.

How to arrive at a real solution?

First, one should think about waste in specific categories – not seeing it as a mixed waste like the status quo – as each type of waste has their own characteristic and value to be leveraged.

In the case of Indonesia, organic waste has to be seen as a single group of waste due to its dominance in Indonesia’s waste composition, up to 50 percent. Another category is the recyclables, either low or high value. While it consists of several material types, in general they have a similar value and best available treatment method in the waste supply chain. Focusing on these two groups would be impactful as both cover around 60-80 percent of the total waste generated in Indonesia.

Next, after determining which types of waste to focus on, one should determine the type of solution to leverage. The best solution to approach the waste ordeal is a solution that is as close as possible to the generator, replicable, low financial requirements, and has less associated risks. These requirements are made to ensure that the solution keeps waste at its best possible state, flexible to Indonesia’s nuances and changing conditions, and does not pose more harm than the waste itself.

By focusing on these aspects, the solution adopted will not only have a clear market value that can be commercialized, but also fulfill its primary mission to solve the waste management challenge without creating a new hazard.

Finally, one should think about how a solution should be delivered; and how to enable a collaborative business model that involves grassroot communities and private entities. Rather than doing a centralized solution that will create a negative collateral and displace vulnerable communities, the solution has to be implemented in a way that encourages existing stakeholders and new stakeholders to collaborate to achieve the desired output. This way, the economic value won’t only benefit facility owners, but also the vulnerables - improving their livelihood.

At the end of the day, waste management is a truly complex issue, rich in technical and social nuances. Using WtE as a solution that oversimplifies the matter at hand will only lead Indonesia to a murkier layer of the topic.

The available budget made by Danantara can be leveraged to propel better solutions that will not only generate profit, but also promote social justice, and proper environmental preservation.

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