With the third highest reserves of natural gas in Asia Pacific after China, the third highest coal production in the world and oil production that averaged 692,000 barrels per day (B/D) in 2020, Indonesia relies heavily on its domestic fossil fuel reserves for its energy. Its LNG export market share is the second largest in Asia Pacific.
Coal, oil and gas accounted for more than 89% of its primary energy in 2021 with renewable energy production remaining low despite enormous potential for solar, wind, hydropower and geo-thermal power.
Given Indonesia’s current status as the world’s fourth-most populous nation and projections that it will be the world’s fourth-biggest economy by 2050, its ability to transition to a lower carbon economy is crucial in Asia achieving its region-wide climate targets.
The country has committed to achieve net zero carbon emissions by 2060 but says it will need USD200 billion per annum in investment in the next decade and over USD1 trillion annually after that to get there. In this regard, Indonesia’s ambitions received a boost with the announcement at the November 2022 G20 of a Just Energy Transition Partnership (JETP) that will provide $US20 billion over the next three to five years to accelerate the country’s move towards renewable energy.
A total of $10 billion of public money for the JETP will be mobilised by an International Partner Group – comprising France, Germany, the United Kingdom, the United States of America, and the European Union – and at least $10bn of private finance will be mobilised and facilitated by the Glasgow Financial Alliance for Net Zero Working Group.
The JETP funding will help support the Indonesian government’s long-term National Energy Plan (RUEN), which prioritises the expansion of renewable energy, mainly for power generation, as part of the country’s climate change commitments under the Paris Agreement. Coal will maintain a significant portion of the national energy mix for power generation, despite government plans to slowly reduce its relative usage through to 2050.
The share of natural gas in the primary energy mix is expected to increase from 17.8% in 2013 to 22.4% in 2025 and 24% in 2050. The Indonesian government says by 2050 all production will be used domestically.