Indonesia is on the brink of a transformative journey towards achieving net zero emissions by 2060. This ambitious target, outlined in the IEA’s Energy Sector Roadmap to Net Zero Emissions in Indonesia, promises significant benefits for its citizens, including more secure and affordable energy supplies. Developed in collaboration with the Indonesian Ministry of Energy and Mineral Resources (MEMR), the roadmap was launched at the G20 Energy Transitions Ministerial Meeting in Bali during Indonesia’s G20 Presidency.
The Economic Evolution of Indonesia
From Fossil Fuels to Clean Energy
Indonesia’s remarkable economic development over the past fifty years has been characterized by lifting millions out of poverty and providing electricity across its 17,000 islands. Central to this success has been access to affordable energy supplies and revenues from fossil fuel exports. Today, the country stands poised to embark on a new chapter of growth, driven by a clean energy transition. The report positions this transition as a crucial opportunity for Indonesia to diversify its economy, making its energy supplies more secure and affordable. Innovation, knowledge, technology, and economic diversification are critical elements needed both for reaching net zero emissions and attaining advanced economy status by 2045.
A key point made in the Roadmap is that Indonesia’s export revenues from critical minerals, essential for many clean energy technologies, are projected to exceed those from coal by 2030. The potential for greater economic gains is even higher if Indonesia can capture more of the clean energy value chain. However, the clean energy transition will notably impact coal-producing regions, necessitating careful policy deliberations to ensure a fair and people-centered transition. The roadmap underscores the significance of managing this transition thoughtfully to protect jobs and livelihoods in these regions. Encouragingly, it highlights the potential for new industries and employment opportunities in the burgeoning clean energy sector.
Economic Implications of the Transition
Household and National Economic Benefits
The IEA report highlights significant economic implications. Achieving net zero by 2060 would reduce total household energy bills as a share of income from today’s level. For the broader economy, the pathway to net zero would decrease oil import bills by one-third in 2030 compared to a business-as-usual scenario, essentially making the transition self-financing. A quicker transition, aligned with the IEA’s global Net Zero Emissions by 2050 Scenario, could generate even greater savings. This optimistic scenario portrays that even a nation heavily dependent on fossil fuel exports can find a feasible and profitable route to net zero emissions.
The roadmap identifies existing technologies such as energy efficiency solutions, solar, wind, and electric vehicles as commercially viable and cost-effective for the initial steps toward net zero, contingent on the right policies. Enforcing energy performance standards (especially for air conditioners) and supporting electrification of transport and cooking are highlighted as critical steps. With Indonesian homes projected to add 20 million air conditioners by 2030, adopting the best available technologies could prevent substantial increases in electricity demand, comparable to the output of around ten coal power plants. These measures will not only help manage energy demand but also enhance the overall quality of life by promoting cleaner and more efficient technologies.
Expanding Renewable Energy
The Urgency of Solar Energy
The report stresses the urgent need for a robust and consistent policy push to expand renewables, particularly solar energy. Currently, solar projects in Indonesia incur more than double the costs of similar projects in emerging markets. These costs can be reduced by instituting transparent, competitive tariffs, and creating a predictable project pipeline. Allowing coal plants to operate more flexibly and compensating them accordingly could also lower power system costs by over 5%, freeing up capacity for renewable energy. This strategic shift will pave the way for a more resilient and sustainable energy infrastructure.
Achieving net zero emissions by 2060 will necessitate almost tripling energy investment by 2030. This translates to an additional USD 8 billion in annual investments by the end of this decade, compared to a business-as-usual pathway. Procuring this funding will rely on policy reforms and international financial support, with frameworks like Just Energy Transition Partnerships (JET-P) endorsed by G7 leaders playing a crucial role. Furthermore, international cooperation will be vital for introducing and scaling technologies such as nuclear power, hydrogen, and carbon capture in Indonesia. This collaborative approach will ensure that the transition remains inclusive and equitable for all stakeholders.
The Role of the International Community
Mobilizing Clean Energy Finance
Indonesia is poised for a significant transformation aimed at achieving net zero emissions by 2060. This ambitious goal, detailed in the IEA’s Energy Sector Roadmap to Net Zero Emissions in Indonesia, is set to bring substantial advantages to its population, such as more reliable and affordable energy sources. This comprehensive roadmap was developed in collaboration with Indonesia’s Ministry of Energy and Mineral Resources (MEMR) and marked its official launch at the G20 Energy Transitions Ministerial Meeting in Bali, held during Indonesia’s tenure of the G20 Presidency. The roadmap outlines critical steps and strategies to decarbonize various sectors, enhance energy efficiency, and integrate renewable energy sources. By following this path, Indonesia aims to drastically reduce greenhouse gas emissions and build a more sustainable and resilient economy. This transformation is not only crucial for environmental protection but also for ensuring energy security and economic stability, ultimately benefiting all Indonesian citizens.
