Political economy of energy policy in Indonesia towards net zero emissions by 2060

Abstract

Indonesia committed to achieving net-zero emissions (NZE) by 2060 as part of its obligations under the Paris Agreement. However, Indonesia still relies heavily on coal and other fossil fuels for its energy needs, presenting obstacles to achieving this target. We explore the factors influencing Indonesia's NZE-related energy policy and the associated challenges by analysing relevant literature, as well as interviews and surveys conducted with the country's energy experts. Using a political economy framework for our analysis, we find that, despite recognising the adverse effects of climate change, Indonesia's energy policy continues to focus on meeting the energy demand for national development from conventional sources rather than shifting decisively towards cleaner energy. This focus is driven not only by the government's commitment to fulfilling energy demands but also by the influence of certain actors who actively promote their agendas. Indonesia's two main challenges to achieving NZE are institutional and technical. Institutional challenges include the lack of a comprehensive policy framework, insufficient funding, and inadequate coordination among government institutions. Technical challenges include reducing energy intensity, lowering emissions from electricity generation, decreasing emissions in key economic areas (transportation, industry, and households), adopting carbon capture technologies, and reducing energy poverty. To achieve net zero by 2060, Indonesia needs a legally binding policy with clear strategies to address these challenges in the energy transition. This policy should include support for private investments in clean energy projects, the reduction of fossil fuel subsidies, promoting renewable energy development, and improving energy efficiency.