Released at COP29, a new report by Landscape Indonesia and the Center for Global Sustainability (CGS) shows that by advancing the adoption of renewables, Indonesia can grow its economy and meet long-term climate targets. But that transformation requires major policy reforms, investments, and tech advancements to reduce the country’s reliance on coal.
Sari, A., Ramdani, D., Agustina, P., Lou, J. (2024). Growing Strong, Growing Green, Growing Renewables: Tripling Renewables and Doubling the Pace of Efficiency Improvement by 2030 in Indonesia. Landscape Indonesia. Center for Global Sustainability, University of Maryland. 44 pp.
- Climate change is worsening and decarbonizing the world’s economy has become an imperative. Since COP28 in Dubai, 133 countries have pledged to triple the capacity of renewables to 11,000 GW and to double the pace of efficiency improvements by 2030. Indonesia, however, is not a signatory to this pledge.
- For Indonesia, tripling the capacity of renewables by 2030 is already a baseline. As such, Indonesia may not need to be concerned about whether it can achieve that goal. However, the growth of coal-fired and other fossil fuel-fired power plants continues to grow due to rapidly increasing energy demand. As a result, the energy mix in the electricity sector remains relatively unchanged.
- Doubling the pace of energy efficiency improvements is a different story. As coal-fired power plants proliferate, the economy and electricity system become more carbon-intensive. Efficiency improvements can be made on the demand side, particularly in energy-intensive industries, or on the supply side by optimizing energy production.
- The actual challenge for Indonesia is not to triple the capacity of renewables but to limit the proliferation of coal-fired power plants. The challenge in limiting the growth of coal-fired power plants are as follows:
- Halt the construction of new coal-fired power plants in Indonesia immediately.
- Accelerate the retirement of existing coal plants, especially older, subcritical ones. However, retiring plants early creates financial challenges due to lost income, as many coal plants in Indonesia are relatively young (10-15 years old). Closing the financial gap through alternative income opportunities is essential for making early retirement feasible.
- Peaking emissions of carbon dioxide and other greenhouse gas emissions at lower levels by 2030 or earlier.
- The macroeconomic implications of transitioning Indonesia’s electricity sector from fossil fuels to renewables are potentially positive.
- Increased investment: The transition could unlock $91.2 billion by 2030,
compared to $83.5 billion in the business-as-usual scenario, rising to $1.1–1.2 trillion by 2060, versus $482–572 billion. - Job creation: The transition will create 1.2 million green jobs by 2030, growing to 23.5–28 million by 2060, compared to 630,000 and 12–15 million in the business-as-usual scenario.
- Poverty reduction: Poverty rates will decrease slightly to 7.52–7.70% by 2030, improving further to 3.70–3.79% by 2060, compared to slower progress in the business-as-usual scenario.
- Increased investment: The transition could unlock $91.2 billion by 2030,
- Transition from fossil fuels to renewables will reduce emissions not only through reduced levels of peak emissions but may accelerate the peak year. Further, a successful transition will bring the electricity sector to utilize 100 percent renewables by 2060 and reduce emissions to zero, hence achieving Indonesia’s commitment to reach net zero by 2060 or earlier.
As the world seeks to address the challenges of climate change, Indonesia has a unique opportunity to advance its transition away from fossil fuels while also fostering significant economic growth. The Just Energy Transition Partnership offers critical financial resources for that transition, but reducing the country’s reliance on coal-fired power plants will remain a challenge.
According to a new report from Landscape Indonesia and the Center for Global Sustainability, Indonesia has the potential to meet the renewable transition targets, like those agreed upon by other countries under the COP28 pledge. Indonesia can do that by tripling renewable energy capacity and doubling energy efficiency by 2030. For example, the report notes that emissions from Indonesia’s electricity sector could drop by 30% by 2030 and reach net-zero emissions by 2060 if the country adopts more ambitious climate targets aligned with the 1.5°C goal. However, this ambitious goal will require significant policy changes, investments, and technological innovation to reduce coal reliance.