Industrial Decarbonization: Indonesia’s Strategy to Reduce Emissions in 5 Key Sectors

Jakarta, February 15, 2024 – Indonesia, as the largest economic power in Southeast Asia and one of the most populous countries in the world, has a major challenge in reducing greenhouse gas (GHG) emissions from the industrial sector. With a rapidly growing economy, mainly driven by a young workforce, abundant natural resources, and rapid technological advancements, measures to decarbonize industry are crucial in maintaining environmental balance and sustainable economic growth.

Deon Arinaldo, Program Manager of Energy Transformation, Institute for Essential Services Reform (IESR) explained, based on the Climate Action Tracker (CAT) report, Indonesia’s current ranking is critically insufficient to limit the earth’s temperature below 1.5°Celsius. This position is down compared to 2022, which placed Indonesia in the highly insufficient ranking.

“In fact, Indonesia has set an Enhanced-Nationally Determined Contribution (ENDC) containing an increase in carbon emission reduction targets from 29% or 835 million tons of CO2 to 32% or 912 million tons of CO2 by 2030. Reflecting on the ENDC target and CAT status, Indonesia needs to push to strengthen its commitment to achieve net-zero emission (NZE) by 2060 or sooner,” said Deon during the launch of an IESR study in collaboration with Lawrence Berkeley National Laboratory (LBNL), titled “Industry Decarbonization Roadmap for Indonesia: Opportunities and Challenges to Net-Zero Emissions”. 

Farid Wijaya, Senior Analyst, IESR, explained that the total contribution of GHG emissions from the industrial sector is expected to double from 2011 to 2022, reaching more than 400 million tons of CO2e. Around 60-70% of these emissions come from energy use in the industrial sector (both heat and electricity), mainly due to fossil fuel consumption.

“Based on the IETO 2024 study, GHG emissions from the industrial sector are expected to reach 430 MtCO2e in 2022, a 30% increase from the previous year. This increase in the share of energy combustion indicates the growth of industrial processes that require high heat energy. Unfortunately, the need for these processes causes an increase in coal consumption which contributes to emissions of 174 MtCO2e,” said Farid.

Farid said that industry contributes to economic growth, therefore, decarbonization efforts need to be made to accommodate this growth. This study takes five major industrial sectors that need to be focused on decarbonization on social, economic, and emission parameters, namely cement, iron and steel, textiles, pulp and paper, and ammonia.

“Industrial decarbonization efforts can actually be encouraged in Indonesia based on the existing regulatory framework. However, the government needs to be encouraged to include stronger and more binding regulations in the future, including support and incentives for industry and ensuring that producers, consumers and markets are protected by product controls that support industrial decarbonization,” Farid said. 

According to Farid, for industrial decarbonization to be achieved in Indonesia, many stakeholders need to work together, especially to build a green industrial ecosystem that supports the NZE concept. In addition, several general strategies need to be implemented to achieve industrial decarbonization. First, implementing an ISO 50001:2018 energy management system. Second, the utilization of alternative fuels, such as biomass and hydrogen. Third, the utilization of renewable energy such as solar power and hydropower.

“Fourth, maximize energy efficiency, materials, and process optimization and use highly efficient equipment. Fifth, regular monitoring and measurement of emission process control. Sixth, utilizing carbon emission capture and storage technology (CCS/CCUS) for the cement, iron & steel, and ammonia industries,” Farid said. 

Not only general strategies, Indonesia also needs to implement specific strategies based on the five major industries. For example, for the cement industry, it needs to replace clinker and use alternative raw materials, promote hydraulic cement standards with lower clinker factors, and distribute cement using trains as an alternative to trucks.


“Based on our survey results, the five major industries in the cement, iron and steel, textile, pulp and paper, and ammonia sectors have high motivation to decarbonize.  However, costs, competitive value, and regulatory obligations for businesses and consumers still face challenges and obstacles that must be resolved together,” Farid explained.