Indonesia has set forth an ambitious roadmap to steer away from fossil fuels and achieve net-zero emissions by 2050, a decade ahead of its previous goal. President Prabowo Subianto, addressing the G20 Summit in Brazil, unveiled a plan to phase out all coal-fired and fossil-fueled power plants within 15 years.
This groundbreaking initiative, titled “From Coal to Clean: Indonesia’s 15-Year Plan for Energy Revolution,” envisions replacing the country’s fossil fuel capacity with over 75 GW of renewable energy. Indonesia aims to harness its abundant geothermal resources and expand solar and wind infrastructure to make this transition possible. This marks a significant departure for a nation heavily reliant on coal and natural gas, which currently account for nearly 80% of its electricity production.
Indonesia’s coal-fired power plants emitted over 185 million metric tons of CO₂ equivalent (MtCO₂e) in 2023, positioning the country as a notable contributor to global power sector emissions. Despite the dominance of coal in its energy mix, Indonesia’s combined wind and solar capacity by the end of 2023 was less than 1 GW, underscoring the substantial transformation required to meet its climate targets.
The country is resolute in its commitment to pivot towards renewable energy and emerge as a frontrunner in the green energy transition. Indonesia’s bold agenda builds upon the $20 billion Just Energy Transition Partnership (JETP) deal inked in 2022, which involves nations like the U.S., Japan, and European countries. This partnership aims to facilitate early coal plant retirements and accelerate the adoption of renewable energy sources.
Nevertheless, progress has been sluggish, with a significant portion of the pledged funding yet to materialize. Officials emphasize the urgency of receiving support to realize Indonesia’s sustainability objectives. President Prabowo’s recent announcement underscores the country’s determination to lead by example and adopt a more assertive stance towards reducing carbon emissions. While his predecessor initiated the JETP deal, Prabowo’s leadership aims to surmount the hurdles that have impeded its advancement.
In a recent development, Indonesia sealed a $10 billion agreement with China at the Indonesia-China Business Forum, focusing on economic growth in clean technology, biotechnology, water conservation, and mining. The event spotlighted Indonesia’s nickel industry, with Chinese firms like GEM Co. partnering with PT Vale on a $1.42 billion HPAL plant. Investments by Tsingshan and Huayou Cobalt further underscore Indonesia’s pivotal role in supplying nickel for electric vehicles, batteries, and green technologies.
Indonesia is poised to leverage its abundant natural resources to propel its energy transition and achieve net zero emissions. With a wealth of geothermal energy potential, the country is primed for large-scale renewable energy projects. In addition to geothermal energy, Indonesia plans to expand its solar and wind capacity to fill the void left by retiring fossil fuel plants. Biodiesel production, utilizing palm oil, will also play a crucial role in the transition, as emphasized by President Prabowo.
Beyond energy generation, Indonesia’s vast rainforests offer a unique opportunity to generate carbon credits. The country aims to produce over 550 million tons of carbon credits, aiding in offsetting emissions and bolstering the global fight against climate change. President Prabowo recently unveiled plans for a $65 billion green economy fund by 2028, which will leverage carbon credit sales from large-scale environmental projects such as forest preservation and reforestation, managed by a specialized entity to centralize sustainable activities nationwide.
Indonesia’s nickel industry stands as a linchpin in its economic strategy, with the country accounting for over half of the world’s mined nickel in 2023. Despite fluctuations in nickel prices, Indonesia’s cost-effective production remains robust. S&P Global Commodity Insights projects Indonesia’s mined nickel output to reach 2.1 million metric tons in 2024, surpassing 50% of global production and doubling the country’s 2020 levels, solidifying Indonesia’s position as a leading player in the nickel market.
Hashim Djojohadikusumo, Indonesia’s climate envoy to COP29, outlined the nation’s objective to install 100 GW of new energy capacity over the next 15 years, with 75% of it derived from renewable sources. This ambitious plan, requiring a massive budget of $235 billion, technology advancements, and scientific expertise, raises questions about its feasibility. With renewables constituting less than 15% of Indonesia’s energy mix currently, substantial investments in infrastructure, technology, and workforce training are imperative to achieve the target.
Moreover, Indonesia’s reliance on coal exports as a significant revenue source adds complexity to the transition. Retiring coal plants will necessitate financial backing from international partners and a clear strategy to manage the social and economic repercussions on coal-dependent communities. President Prabowo’s leadership signals a new era in Indonesia’s energy policy, with the global community closely monitoring the country’s journey towards net zero emissions as a litmus test for large-scale energy transitions in emerging markets.
If successful, Indonesia’s endeavor will demonstrate that even coal-dependent economies can transition to sustainable energy through appropriate policies and support.
