Which pathways should Indonesia follow to achieve its energy development goals into the future?

The Indonesian Energy Trilemma: Sovereignty, Sustainability, and the SDGs

Indonesia stands at a critical crossroads. While the nation’s current energy roadmap seeks to secure domestic growth, it is increasingly colliding with the gravitational pull of international climate agreements. The UN’s recommendations for achieving SDG 7 (Affordable and Clean Energy) present a radical departure from Jakarta’s traditional playbook. To succeed, Indonesia must navigate a transition that is not just “clean,” but economically “just.”

1. The Electrification Pivot: Beyond the City Gas Network

The UN Report proposes a disruptive shift: abandoning the expansion of city gas networks in favor of mass-market electric cooking stoves.

• The Global Argument: Electric cooking reduces reliance on imported LPG and leverages a decarbonizing grid.
• The Indonesian Challenge: This transition is not merely technical; it is infrastructural and cultural. A sudden pivot ignores the massive “sunk costs” already invested in gas pipelines.
• The Strategic Compromise: Indonesia should view electric cooking as a secondary tier of the transition, focusing first on areas where the grid is already “green” or oversupplied, rather than a nationwide forced mandate that could alienate lower-income households.

2. Decarbonization vs. Growth: Raising the NDC Stakes

The UN suggests that Indonesia’s current Greenhouse Gas (GHG) reduction targets are insufficient, calling for an acceleration beyond the government’s original commitments.

• The Pressure: International “Green Financing” is increasingly tied to aggressive Nationally Determined Contributions (NDCs).
• The Reality Check: Rapid decarbonization in a developing economy risks a “green squeeze”—where energy prices spike before renewable infrastructure is fully mature.
• The Pathway: Indonesia must demand technology transfer as a prerequisite for higher targets. If the world wants a faster Indonesian transition, the global community must subsidize the “Green Premium” through favorable financing.

3. The Coal Conundrum: Dismantling the Fossil Fuel Bedrock

The most contentious recommendation is the immediate cessation of new coal-fired power plants and the total removal of fossil fuel subsidies.

• The Economic Collision: Coal is not just an energy source for Indonesia; it is a pillar of the GDP and a source of millions of jobs.
• The Managed Exit: A “cold turkey” approach to coal could trigger economic instability. Instead, Indonesia must pioneer Carbon Capture and Storage (CCS) and Co-firing technologies to bridge the gap while phasing out the oldest, least efficient plants first.
• Subsidy Reform: Removing subsidies is politically volatile. The funds recovered must be transparently redirected into a Universal Green Basic Income or direct solar subsidies for the poor to ensure social buy-in.

4. The Financing Gap: From Subsidies to Green Bonds

To replace the vacuum left by fossil fuel subsidies, Indonesia must revolutionize its financial architecture.

• Aggressive Green Financing: Transitioning from “dirty” subsidies to “green” incentives is the only way to attract ESG-focused (Environmental, Social, and Governance) global investors.
• Risk Mitigation: The government must provide sovereign guarantees to de-risk renewable energy projects for private developers.

A “Third Way” for Indonesia

Indonesia should not choose between the UN’s idealism and its own industrial legacy. Instead, it must forge a Third Way:

1. Conditional Acceleration: Increase emission targets only in lockstep with international funding.
2. Hybrid Infrastructure: Balance city gas in industrial hubs with electric stoves in urban residential centers.
3. Just Transition: Prioritize the retraining of coal-sector workers to ensure the “Green Revolution” does not leave the “Brown Economy” workers behind.

The UN roadmap is a necessary compass, but Indonesia must remain the pilot. The goal is an energy transition that powers a developed nation, not one that de-industrializes a developing one.

source:

https://journal.pusbindiklatren.bappenas.go.id/lib/jisdep/article/view/118