By 2023, Indonesia only achieved 13.1% of renewable energy share, a long way to go to achieve the national target of 23% renewables by 2025. The flow of investment on renewables is also lagging behind, with only a total of USD 1.5 billion in 2023. As a developing nation, it is inevitable that Indonesia should look towards foreign investment or aid to accelerate the deployment of renewables in the country.
In the last 2 years, landmark cooperations between Indonesia and its partner countries are established to wean off the country from the fossil fuel dependency. Take for example the Just Energy Transition Partnership (JETP) launched during Indonesia’s G20 presidency, with the pledges of USD 21.6 billion from IPG countries. In 2023, PT PLN signed nine MoUs valued at USD 54 billion with several Chinese companies and financiers for renewable energy development, including for transmission and smart grid infrastructure. The most recent bilateral assistance came from Australia in the form of KINETIK (Australia-Indonesia Climate and Infrastructure Partnership), with AUD 200 million commitment to promote three pillars for Indonesia’s energy transition: policy reform, climate finance for small and medium enterprises, and just energy transition for marginalized groups.
These examples offered us a glimpse into Indonesia’s climate diplomacy approach: to secure large investment for RE development. This also goes to show that Indonesia is trying to hit two targets with one arrow, which is to attain economic growth, while simultaneously achieving its climate goals through the support of the international community.
Navigating the geopolitical tension on global climate leadership
The China-U.S competition to be the global leader for climate governance is most apparent in the realm of climate finance. Both countries have been racing to mobilize capitals in developing countries for climate related projects, albeit still far from the USD 100 billion annual climate finance pledge. In the realm of infrastructure development, the U.S has initiated the Build Back Better World (B3W) program to contend with China’s infamous Belt and Road Initiative (BRI). The good news is that both of these large-scale infrastructure schemes are increasingly leaning toward green and low-carbon development. This rivalry could actually have potential benefit for developing nations such as Indonesia, who relies on international assistance to realize its climate objectives.
Nevertheless, now it’s a good time to recall Indonesia’s ‘free and active’ foreign policy principle. As developing countries become the hotspot for great power rivalry and influence, Indonesia must carefully navigate its climate diplomacy approach in order to maintain favorable standings between these two great powers. Balancing the relationship between Indonesia-U.S and Indonesia-China could be key to unlocking more investment opportunities for national clean energy development. This act of balancing is also important to ensure that energy transition can be delivered according to Indonesia’s context, by utilizing the resources potential indigenous to Indonesian landscape and does not incur additional burden to the citizens.
Proceed with caution on deals involving unproven technologies
Aside from geopolitical considerations, Indonesia should also be more selective towards any international agreement that includes the development of CCS/CCUS, nuclear, and hydrogen. IRENA estimated that Indonesia has a total of 3,692 GW of renewable energy potentials, with solar bearing the largest potential of 2,898 GW, followed by offshore wind and hydropower, at 589 GW and 94.6 GW, respectively. In this case, any negotiations or agreements concerning the development of renewable energy in Indonesia should be directed towards harnessing these potentials, rather than to procure technologies that will not bring any significant emission reductions for Indonesia’s energy sector.
Indonesia’s budding economic growth and market potential are surely enticing for countries looking to expand their overseas market for clean energy technology. However, the Indonesian government must have a list of priorities in their strategic national project planning on which clean energy technologies they want to deploy during the energy transition. Accepting any kinds of imported technologies without considering the efficiency and scientifically-backed results of such technologies can be counterproductive to Indonesia’s energy transition agenda. In this case, Indonesia should balance their domestic needs and potential with cost-efficient and proven technologies available in the global market.
A measured, conscientious, and evidence-based climate and energy diplomacy approach is necessary for Indonesia in order to achieve its climate objectives in the midst of turbulent geopolitical landscape and the barrages of unproven technologies.
