The Platform

Oro Oro Ombo, Indonesia. (Ifan Bima/Unsplash)

Indonesia has a long way to go before it meets any net zero emissions pledges.

In 2022, at the Annual MPR and DPR Joint Session, Joko Widodo, Indonesia’s outgoing president, articulated a vision for “Indonesia Maju,” centered around the ambitious goal of a green energy transition. This vision, which President Widodo discussed with optimism at the 2021 National Development Planning Conference, suggests that the successful implementation of this green agenda could significantly elevate Indonesia’s trajectory of national development.

The country has made concerted efforts to lower carbon emissions and facilitate a transformation from reliance on fossil fuels to the adoption of green energy solutions. A pivotal moment in this journey was the 2022 G20 Summit in Bali, where Indonesia launched the Just Energy Transition Partnership (JETP). This initiative, supported by a substantial $20 billion financing scheme from the International Partners Group (IPG)—including the European Union, United States, Canada, Denmark, France, Germany, Norway, and the United Kingdom—was coordinated by the Glasgow Financial Alliance for Net Zero (GFANZ). Each member country’s commitment involves a significant financial contribution, emphasizing their collective endorsement of Indonesia’s sustainable energy transition.

In her role as Indonesia’s Foreign Minister, Retno Marsudi has been pivotal in advancing diplomatic relations to support this transition. Her efforts include engaging with Norway, where she met with Norwegian Foreign Minister Anniken Huitfeldt to sign a memorandum of understanding on the forestry sector. This agreement secures a $250 million commitment from Norway, aimed at bolstering Indonesia’s implementation of the JETP.

Reflecting on these developments, the Indonesian Ministry of Environment and Forestry has expressed a positive outlook. The initiatives undertaken are seen as foundational steps toward achieving a significant reduction in greenhouse emissions—aiming for a decrease from 29% to 41% by 2030. This optimistic projection is grounded in the tangible actions and international partnerships that Indonesia has established, reinforcing its commitment to a sustainable and inclusive energy future.

Despite considerable initiatives, Indonesia faces substantial hurdles in its transition to green energy. Although the nation frequently touts its commitment to clean energy, it remains heavily reliant on non-renewable sources. A 2024 study by the Center of Economic and Law Studies (CELIOS) underscores a deep dependency on coal and oil, attributed to economic advantages and substantial opportunities for mining, perpetuating Indonesia’s ‘addiction’ to non-renewable energy.

In the coal sector, for instance, production surged from 100.51 million barrels to 167.41 million barrels, reaching a peak of 299.19 million barrels in 2022. Despite declines in 2020 and 2021, these figures did not represent significant progress toward sustainability.

This lack of commitment is also reflected in the financial sector, where both private and state banks continue to support non-renewable projects. Notably, on May 12, 2023, leading Indonesian banks including Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA), and Bank Permata allocated close to $2 billion for the construction of a 1.1-gigawatt coal-fired power plant in North Kalimantan, managed by PT Adaro Energy Tbk.

Bhima Yudhistira, director of CELIOS, highlights that although these investments yield high returns, significant pressure exists to transition away from coal, evidenced by banks like CIMB Niaga, Standard Chartered, Mizuho Bank, and HSBC withdrawing from coal investments.

Despite setting a green energy mix target of 44% by 2030, actual progress lags considerably. In early 2023, Kompas reported that renewable energy accounted for only 12.3% of Indonesia’s energy consumption in 2022, merely a 0.1% increase from the previous year, and significantly below the government’s target of 23% for 2025.

Global perspectives, such as those from Saudi Aramco’s CEO Amin H. Nasser, echo these challenges, suggesting that reducing gas emissions remains a ‘fantasy’ for countries like Indonesia. Nasser predicts that demand will likely increase rather than decrease in the forthcoming years, indicating a broader lack of commitment to energy transition.

Furthermore, the financing structure for the JETP remains ambiguous. Predominantly dependent on debt financing provided by the IPG, concerns persist that this could lead to fiscal burdens or a potential debt trap for Indonesia. According to 2023 data from Katadata, about 60% of this financing will be concessional loans, with additional funding from guarantees by the U.S. and UK through the International Bank of Reconstruction and Development (IBRD), non-concessional loans, equity investments, and grants. Yet, the GFANZ still needs to finalize financing details, a situation fraught with financial risks if not managed carefully.

The impact of policies such as the Energy Transition Mechanism (ETM), launched with the Asian Development Bank (ADB) on November 14, 2023, is also under scrutiny. The ETM outlines early retirement plans for the Cirebon-1 and Pelabuhan Ratu power plants by 2035 and 2037, respectively. However, despite being designated for early retirement in the JETP document, these initiatives have been criticized for their minimal environmental impact and lack of transparency. Wahyudi Iwang, Executive Director of WALHI West Java, points out that the early retirement plans do not reflect principles of justice and transparency, noting that co-firing techniques proposed to reduce emissions are only modestly effective and still contribute to air pollution.

Additionally, the capacity for energy transition varies significantly across regions in Indonesia, highlighting inequalities in green energy distribution. A study by Media Wahyudi Askar and Achmad Hanif Imaduddin reveals stark contrasts, with regions like DKI Jakarta scoring high while others, such as Papua and West Papua, remain significantly disadvantaged, hindered by poor infrastructure and inadequate human resources.

While Indonesia maintains a public facade of commitment to a green energy transition, the reality is characterized by unmet targets, financial uncertainties, and stark regional disparities. These issues underline the need for more robust and transparent strategies to truly advance Indonesia towards its net zero emissions goals.

M Habib Pashya is a Master's student at Universitas Gadjah Mada majoring in International Relations. His academic research primarily focuses on Indonesia-China relations, Indonesia's foreign policy, and the U.S.-China-Taiwan relations.