What is Indonesia's pathway to limit global warming to 1.5°C?

Under the Highest Possible Ambition (HPA) scenario, industrial emissions would peak around 2030 and decline thereafter, approaching full decarbonisation by 2050, while accommodating continued growth in energy demand driven by expansion of industrial production. In this scenario, energy demand from industrial heat and feedstock use would increase by nearly 90% above 2023 levels by 2035 and almost triple by 2050. Despite this growth, emissions from such energy demand would decline a modest 0.3% by 2035 compared to 2023 levels (after peaking around 2030) before falling sharply. This decoupling of emissions from demand growth reflects a substantial reduction in emissions intensity – halving by 2035 and falling almost 90% by 2050 – primarily due to rapid electrification and the phase-down of fossil fuels. This reflects the significantly higher efficiency of electrified technologies, which are typically two to four times more energy-efficient than fossil-based alternatives.

Electricity supply to meet industrial energy demand would need to grow rapidly, leading to electricity making up 25% of the industrial energy mix in 2023, rising to 56% in 2035, and 72% in 2050. This shift would enable the near phase-out of coal by 2035 and gas by 2050, and reduce reliance on bioenergy.

Hydrogen and synthetic fuels are expected to play an increasing role in the later stages of the transition in areas less well suited to electrification, such as in iron, steelmaking, cement, and chemical industries. Hydrogen would emerge around 2035, supplying about 2% of the energy mix, and expand to 14% by 2060. Synthetic fuels would begin to contribute around 2060, reaching 15% of the energy mix and rising further to 25% by 2070. Together with an already highly electrified system, these fuels would support the near phase-out of oil in industry by 2060.

The Ministry of Industry’s Industrial Decarbonisation Roadmap estimates that total mitigation potential across nine priority sectors between 2025 and 2050 amounts to 316.1 MtCO₂e, with around 72% concentrated in cement, iron and steel, and fertiliser production.²2 Realising this potential would require accelerated electrification, strengthened energy efficiency standards, and improved policy implementation and substituting emissions intensive raw materials (in the case of cement) .³3

As the world’s largest nickel producer – supplying nearly 60% of global output in 2025, and projected to reach around 74% by 2035– Indonesia faces an emerging challenge in decarbonising its nickel supply chain.⁴4 In 2023, nickel-related activities alone emitted 170 MtCO₂, equivalent to around 22% of its emissions from energy and industrial process and product use sectors.⁵5 These emissions are largely driven by high energy demand met through off-grid captive coal-fired power.⁶6 In 2024, the nickel industry accounted for the largest share of captive generation capacity, at just under 14 GW, compared to around 1 GW in the aluminium sector.⁷7 As a key supplier to global electric vehicle supply chains, Indonesia’s coal-based industrial model effectively exports emissions and risks undermining the climate credibility of downstream “clean” technologies. Addressing this challenge requires strengthened international cooperation and investment to decarbonise its energy-intensive nickel processing and phase out captive coal generation., This would help Indonesia to avoid long-term carbon lock-in, rising transition costs, and broader environmental and social impacts.