Characteristics of Indonesia’s Energy Transition Policy: The Role of Foreign Business in Decarbonization

The article delves into Indonesia’s energy transition policy, specifically examining the involvement of foreign companies through collaborative projects. Indonesia grapples with the dual challenges of ensuring energy security and attaining carbon neutrality, aligning with its climate commitments from COP 26 of the United Nations Framework Convention on Climate Change. The article demonstrates how Indonesia, despite its aspirations for carbon neutrality and associated political ambitions, encounters a significant hurdle due to limited domestic resources for realizing its goals. The formation of partnerships with foreign entities, with each of them pursuing their own political and economic objectives, is a possible way to circumvent it. Indonesia’s insufficient readiness for a comprehensive industrial transformation, necessary for implementing a cohesive decarbonization policy with available renewable resources, creates distinct opportunities for foreign entities to enhance their influence and contribute to Indonesia’s long-term green economy planning. In this context, the involvement of foreign entities could be pivotal in determining the success of the energy transition, the realization of decarbonization targets and the assurance of energy security for Indonesia. Drawing on practical examples from France and Germany, the author views this collaboration between Indonesia and foreign entities as a natural and essential part in technological and economic development. Within the ongoing phase of the nation’s long-term strategy, the engagement of diverse foreign entities aligns with Indonesia’s objectives and establishes the necessary groundwork for the energy transition and the attainment of previously outlined decarbonization goals. The article employs a comprehensive approach, utilizing various official documents and roadmaps related to Indonesia’s energy policy, the Ministry of Energy and Mineral Resources, and several documents from international development institutions to explore the issue thoroughly.