Stalled ambitions in Indonesia’s energy transition - East Asia Forum
Published February 05, 2026
Stalled Ambitions in Indonesia’s Energy Transition
Indonesia is at a critical juncture in its energy transition, facing a series of challenges that have hindered its ambitions for a sustainable and renewable energy future. Despite the country’s commitment to reducing carbon emissions and increasing the share of renewable energy in its energy mix, progress has been slower than anticipated.
As one of the largest carbon emitters in Southeast Asia, Indonesia has set ambitious targets to reduce greenhouse gas emissions by 29% by 2030, with an increase to 41% conditional on international support. The government has also pledged to achieve a renewable energy share of 23% in its energy mix by the same year. However, the reality on the ground presents a stark contrast to these aspirations.
Current Energy Landscape
As of 2023, Indonesia’s energy mix is still heavily reliant on fossil fuels, particularly coal, which accounts for approximately 60% of the country’s electricity generation. The reliance on coal is largely driven by the government’s focus on energy security and economic growth, which has resulted in the continued investment in coal-fired power plants. In fact, according to the Ministry of Energy and Mineral Resources, Indonesia has plans to build 13.5 gigawatts (GW) of new coal power plants by 2025.
In contrast, the share of renewable energy sources, including solar, wind, hydro, and geothermal, remains significantly lower than the government’s targets. As of 2022, renewable energy contributed only around 12% of the total energy mix. This discrepancy highlights the challenges Indonesia faces in transitioning to a more sustainable energy system.
Barriers to Transition
Several barriers are impeding Indonesia’s energy transition. One major challenge is the financial limitations faced by the government and private investors. The initial capital costs associated with renewable energy projects, particularly solar and wind, can be substantial. Furthermore, the lack of a robust regulatory framework and financial incentives for renewable energy development has deterred investment in the sector.
Additionally, Indonesia’s energy infrastructure is primarily designed for fossil fuel-based generation, creating a mismatch between existing capabilities and the requirements for integrating renewable energy sources. The grid remains underdeveloped in many regions, limiting the ability to transport renewable energy from production sites to consumers.
Another significant barrier is the political landscape, where vested interests in the fossil fuel industry continue to exert influence over energy policy. The government’s commitment to coal as a primary energy source is often reinforced by powerful stakeholders who prioritize short-term economic gains over long-term sustainability.
International Support and Cooperation
International cooperation and support play a crucial role in Indonesia’s energy transition. The country has engaged with various international partners, including the United Nations and the World Bank, to secure funding and technical assistance for renewable energy projects. However, the effectiveness of these partnerships has been mixed, with bureaucratic hurdles and lack of alignment between international goals and national policies complicating progress.
In 2021, Indonesia hosted the G20 Summit, where it emphasized the importance of transitioning to a low-carbon economy. As part of this commitment, Indonesia announced its intention to phase out coal-fired power plants and increase its reliance on renewable energy sources. However, translating these commitments into actionable policies remains a significant challenge.
Renewable Energy Potential
Despite the challenges, Indonesia possesses vast renewable energy potential. The country is blessed with abundant natural resources, including geothermal energy, which is the largest in the world, as well as significant solar and wind potential. According to the Ministry of Energy and Mineral Resources, Indonesia has an estimated 28 GW of geothermal potential, 207 GW of solar potential, and 9.3 GW of wind potential.
To harness this potential, the government has initiated various programs to promote renewable energy development. For instance, the 2017 Renewable Energy Law aims to encourage private investment in renewable energy projects by offering a feed-in tariff system. However, the implementation of this law has faced delays, and many investors remain uncertain about the long-term viability of renewable energy projects in Indonesia.
Public Awareness and Engagement
Public awareness and engagement are also critical components of Indonesia’s energy transition. There is a growing recognition among the Indonesian populace of the importance of renewable energy for environmental sustainability and energy security. However, this awareness needs to translate into action, with more community involvement in renewable energy projects and initiatives.
Grassroots movements and local organizations are beginning to play a more prominent role in advocating for renewable energy solutions. These groups are working to educate communities about the benefits of renewable energy and mobilize support for local projects. Increased public engagement can help drive demand for renewable energy and pressure the government to prioritize sustainable energy policies.
Future Outlook
The future of Indonesia’s energy transition remains uncertain. While the government has set ambitious goals and recognizes the need for a shift toward renewable energy, the path forward is fraught with challenges. The reliance on fossil fuels, financial constraints, and political dynamics all contribute to a complex landscape that must be navigated carefully.
To achieve its energy transition goals, Indonesia will need to adopt a multi-faceted approach that includes strengthening regulatory frameworks, enhancing financial incentives for renewable energy projects, and investing in infrastructure improvements. Moreover, fostering international cooperation and promoting public engagement will be essential in building a sustainable energy future.
In conclusion, while Indonesia has made commitments towards a renewable energy future, significant barriers remain. The country’s energy transition will require concerted efforts from all stakeholders, including the government, private sector, and civil society, to overcome these challenges and realize its ambitious energy goals.
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