Last November, at the G20 conference in Rio de Janeiro, Indonesia’s new president, Prabowo Subianto, vowed to bring forward by a decade the date at which Southeast Asia’s biggest economy would remove as much carbon from the atmosphere as it emits.

Indonesia would do this, Prabowo said, by shutting nearly all its coal-fired power plants — including the so-called captive plants that power mines and smelters far from the main power grid —  over the next 15 years.

In its place would sprout roughly 75 gigawatts of cleaner forms of energy, much of it renewable, during the same time span. Indonesia would achieve net-zero carbon emissions by 2050, 10 years earlier than the 2060 deadline declared just three years prior by Prabowo’s predecessor, Joko Widodo.

Trouble is, the plan doesn’t add up, falling far short of forecasted electricity demand and even Indonesia’s internationally agreed renewable energy targets, experts say.

For Edwin Widjonarko, co-founder of Xurya Daya Indonesia, which installs rooftop solar panels for commercial clients, November’s announcement is another example of policy flip-flopping.

In Xurya’s own industry, the rules governing rooftop solar have been changed five times since they were first introduced in 2018. The latest version, published in January 2024, bans the sale of excess power to the grid after nominally allowing it in March 2021.

Those sorts of reversals and policymaking seemingly on the fly spook investors, casting doubt on the long-term business case for renewables, Edwin said.

“We’ve seen a lot of changes, sometimes in a positive way, sometimes in a negative way that can happen a few times within the span of one or two years,” he told Mongabay.

“That’s unhealthy for the [country’s] energy transition in the long run.”

Private investment

Indonesian policymakers say they want more of the country’s electricity to come from renewable sources and have said it needs private investment to help.

State-owned electricity utility PLN’s 10-year supply plan, due this month, is expected to call for 71 GW of renewable power-generating capacity, not far off Prabowo’s November pledge. The previous 2021 plan aimed for nearly 21 GW coming from renewables; the 2019 blueprint, 16.7 GW.

Yet by the end of 2024, hydropower, solar and other sources of renewable electricity accounted for just over 13 GW of installed capacity, less than a fifth of the 75 GW goal.

Still, there’s been some progress. Indonesia’s carbon exchange, IDXCarbon, opened to foreign investors last week for the first time since it began trading in September 2023. This year, the bourse has doubled to six the number of carbon-trading projects, including cleaner, more efficient power stations.

Prabowo’s target alone, which includes spending on some 28 GW of new coal and gas-fueled power stations by 2040, will require $235 billion in investment. By comparison, all government spending last year totaled $210 billion.

Indonesia will need to welcome some $146 billion in private sector funding if it wants to meet its commitment under the Paris Agreement to cut greenhouse gas emissions by nearly a third by the end of the decade, according to a July report from the Institute for Energy Economics and Financial Analysis.

But glacial bureaucratic decision-making and seemingly endless hurdles are perennial headaches.

In July, Indonesia’s energy ministry capped new solar energy generating capacity at a little more than 1.5 GW by the end of 2028. While that’s double what’s thought to be available now, it amounts to less than 2% of Indonesia’s current installed capacity.

By comparison, solar energy alone accounted for 10.5% of the electricity generated in neighboring Vietnam in 2023.

Indonesia’s cap, which is intended to protect the grid from the intermittency of sources like solar as well as wind, will turn off investors hoping to scale up their business, said Eka Himawan, Edwin’s co-founder at Xurya.

Since its founding in 2018, Xurya has raised nearly $90 million in venture capital. More than half of that amount, a combined $55 million, came from the Norwegian Climate Investment Fund and Singapore-based Clime Capital, which focuses on energy investment. Jakarta-based venture capital outfit AC Ventures was also an investor.

“I imagine funding will be very scarce for this sector until this quota is fixed,” Eka said.

“If the government wants to have FDI in this sector, they better rethink the numbers,” Eka added, referring to foreign direct investment.

Red tape

Then there’s the bureaucracy that can stymie its own government’s clean-energy initiatives.

Last May, at an International Energy Agency conference in Nairobi, the administration of then-President Joko Widodo said it had earmarked $455 million to pay for subsidies that would support sales of some 800,000 electric motorcycles and the expense of converting some 200,000 gasoline-powered motorcycles to electric.

The program, which had been in the works since early in Widodo’s second term, would eventually pay 10 million rupiah ($611) per motorcycle. Under the program, family-owned garages would carry out the conversions, passing on new skills related to the maintenance of electric vehicles, all the while weaning some Indonesian motorists off the nearly 270 trillion rupiah ($16.5 billion) in subsidies that the government spends each year to keep on fuel, gas and electricity prices artificially low for consumers and businesses.

The initial target for the EV subsidy in 2024 was to convert 50,000 conventional motorcycles. Instead, only 1,500 motorcycles saw new life as an EV under the program last year, owing to long wait times for safety checks and paperwork.

Putu Kurniawan, who set up his electric vehicle conversion workshop, Volto Mechanix, outside Sanur, Bali, in 2021, said he had high hopes of converting 1,000 or so motorcycles through the subsidy as recently as 2023.

Last year, however, he managed to convert just 40 motorcycles through the subsidy program. He blamed bottlenecks caused by wait times for government inspectors to fly from Jakarta to ensure each converted EV was roadworthy.

Even so, Kurniawan said he’s optimistic the government will cut through the red tape and speed up the process this year.

Kurniawan said he’s regularly called on to advise in an unofficial capacity on EVs, including testing models for use by hotels and local governments, inviting reporters on ride-alongs intended to test new imports. He said the government should jettison publishing hoped-for conversion targets entirely while boosting the per-vehicle subsidy.

“The process is getting a lot better,” Kurniawan said of the subsidy application. “Things are moving in the right direction.”

‘Setting itself up for criticism’

Making big pronouncements only to backtrack later risks making Indonesia’s climate ambitions seem unserious, experts say. Closing all coal-fired power stations by 2040 is unlikely to ever happen, said Katherine Hasan, a Jakarta-based analyst with the Centre for Research on Energy and Clean Air (CREA).

Indonesia has already had to walk back its 2030 renewable energy target, cutting it to as low as 19% from an original plan of 26%.

In 2022, under its Just Energy Transition Partnership (JETP) inked with Norway, Denmark, the EU and members of the G7 group of rich industrialized countries, Indonesia had still expected to get a third of its electricity from coal-fired plants. Under that plan, Indonesia would shut down greenhouse gas-emitting power plants over the course of decades with help from the rich world.

But nearly zeroing out coal in 15 years will leave the country so short of electricity that it would need to top up the JETP plan for renewables by a quarter, pushing generating capacity from renewables to 273 GW, not 75 GW, according to a CREA report in November that Katherine co-authored.

“That’s not going to happen,” she said of shutting most coal-fired power plants by 2040.

“The administration is just setting itself up for criticism.”

Instead investors would prefer to see alternatives to multilateral commitments like the JETP, which promised $20 billion to cushion the expense of shuttering coal-fired plants.

While the JETP seems all but dead under the incoming Trump administration, Indonesia should consider bilateral agreements with the remaining signatories of the pact, known as the international partners group (IPG).

“Why is there no discussion with the IPGs about what comes next?” Katherine asked.

“It would be better than starting over. Right now it’s so uncertain.”

Banner image: Solar panels installed in Bali. Image by Selamat Made via Flickr (CC BY 2.0).

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