Indonesia Needs To Triple Energy Investment To Reach 2060 Net-Zero Target

Indonesia, one of ASEAN’s largest economies, will have to nearly triple its energy investment by the end of this decade if it wants to hit its 2060 net-zero target, the International Energy Agency (IEA) said in a country report on 2 September.  

The increased investment would mean an extra $8 billion in investment a year by the end of this decade compared with a business-as-usual pathway.

Historically, Indonesia has invested around $20 billion annually in its energy sector. With growing GDP and energy demand, energy investment is set to increase in any outlook, the IEA said in its report ‘An Energy Sector Roadmap to Net Zero Emissions in Indonesia’.

The scenario of reaching net-zero emissions by 2060, however, would be more capital intensive, and would require domestic policy support as well as international support, the Paris-based energy agency said.

In the Announced Pledges Scenario (APS), investment in renewables generation and grids, estimated at $25 billion by 2030, would be more than the current investment in the entire energy sector. Investment in energy efficiency will have to grow by $10 billion annually by 2030, a fivefold increase compared to today’s levels.

“Mobilising this level of investment will require significant policy reforms as well as international support,” the IEA said.

“Indonesia’s net zero emissions target needs to be seen as part of its necessary transformation on the path to becoming an advanced economy by 2045. This includes: economic diversification from a concentration in natural resources; economic development across the archipelago driven by knowledge, technology and innovation; and leveraging its competitive advantage in many clean energy value chains,” the agency added.

“Indonesia has the opportunity to show the world that even for a country that relies heavily on fossil fuel exports, a pathway to net zero emissions is not only feasible but also beneficial,” IEA Executive Director Fatih Birol said in a statement. “We must be clear-eyed about the challenges, especially in areas that depend on the coal industry, but the economic opportunities more than compensate for the costs,” Birol added.