What is Indonesia's pathway to limit global warming to 1.5°C?
Power
Decarbonising the power sector
Indonesia's power sector is Southeast Asia's most carbon intensive.1 Regulations like the Domestic Market Obligation, first implemented in 2009 then revised in 2019, mandate coal producers to sell part of their output domestically at fixed low prices, distorting the market in favour of fossil fuels; coal accounted for 61% of electricity generation in 2021.2
The government has a target of incorporating 23% of “new and renewable energy” into the generation mix by 2025, from 14% in 2021.3,4 Power sector emissions rose from 170 MtCO2e in 2015 to 240 MtCO2e in 2021, driven by growth in power demand and the rising share of coal in the power mix, as well as by mining-related, off-grid demand. 5,6 7,8
Indonesia's power mix
terawatt-hour per year
-
Graph description
Power energy mix composition in generation (TWh) and capacities (GW) for the years 2030, 2040 and 2050 based on selected IPCC AR6 global least costs pathways. Selected countries include the Stated Policies Scenario from the IEA's World Energy Outlook 2023.
Methodology
Data References
-
The Just Energy Transition Partnership’s (JETP) Comprehensive Investment and Policy Plan aims to peak power sector emissions at 290 MtCO2e by 2030 by raising the share of renewables to at least 34% by the end of the decade.9 However, significantly increased renewables would be needed in order to be 1.5°C-aligned. Such pathways would see renewables deployment picking up immediately and rapidly, to reach at least 75% of the generation mix by 2030.
For example, under the Net Zero Commitments pathway, which assumes some of the net zero commitments announced by major economies are met, the contribution of non-biomass renewables to the power mix would need to increase to 79% by 2030.
In the Net Zero Commitments pathway, coal’s share of the power mix would drop precipitously to 3% in 2030. Under the assessed 1.5°C pathways, coal power is phased out around 2035, and fossil gas by 2040.
The government’s COP29 announcement that Indonesia would phase out coal from its power system by 2040 is a major step forwards.10 While it has yet to be supported by the adequate policy framework and should avoid reliance on false solutions, if realised, it would almost align Indonesia’s coal trajectory with 1.5°C pathways and go down in history as a major achievement of the energy transition.
Indonesia's power sector emissions and carbon intensity
MtCO₂/yr
-
Graph description
Emissions and carbon intensity of the power sector in selected 1.5°C compatible pathways.
Methodology
Data References
-
Power capacity investments
Investing in clean energy sources would allow Indonesia to meet its rising power demand and make the deep cuts in emissions required to set Indonesia on a 1.5°C compatible pathway.
Under the Net Zero Commitments pathway, 94 GW of solar power and 51 GW of wind power are expected to be deployed by 2030, up from 0.3 and 0.2 GW in 2021, which would entail average annual investments of USD 24 bn from 2026–2030. This would reduce power sector emissions by close to 80% compared to 2021. These figures far exceed the upper bound assumed by the JETP Comprehensive Investment and Policy Plan of 32 GW of solar and 8 GW of wind power by 2030, and represent a significant increase from the USD 1.5 bn in investment that Indonesia attracted in 2023.11 By 2050, the total renewables capacity reaches 703 GW, corresponding to cumulative investments of USD 409 bn from 2026 to 2050. Such rollout could be unlocked by addressing the barriers hindering clean energy sources deployment, such as the impact of the local content requirement on input costs and the artificial inflation of coal’s competitiveness due to the domestic obligation.12
In the Deep Electrification pathway, which assumes extensive economy-wide electrification, total renewable capacity reaches 1517 GW by 2050, backed by investments of USD 836 bn from 2026 to 2050. Solar power accounts for more than three-quarters of this renewable capacity by the middle of the century, in a pathway where non-biomass renewables generate 96% of Indonesia’s electricity.
Indonesia will also need further modernisation and development of its grid infrastructure, the costs of which go beyond the investment figures presented in the assessed pathways. Both capacity additions and grid upgrades may require significant levels of international support.13
Enhancing incentives and implementing targeted policies aimed at removing the barriers hindering foreign direct investments, such as the restrictions on the transfer of ownership risks, can contribute to unlocking the investments needed to align with 1.5°C compatible pathways.14
Indonesia's renewable electricity investments and capacities
Billion USD / yr
-
Graph description
Average annual investments in power sector renewable electricity capacity and cumulative installed power capacities across time under 1.5°C compatible pathways downscaled at country levels.
Methodology
-
1.5°C compatible power sector benchmarks
Carbon intensity, renewable generation share, and fossil fuel generation share from illustrative 1.5°C pathways for Indonesia
| Indicator |
2021
|
2030
|
2035
|
2040
|
2050
|
Decarbonised power sector by
|
|---|---|---|---|---|---|---|
|
Carbon intensity of power
gCO₂/kWh
|
778
|
57 to
114
|
10 to
22
|
2 to
2
|
-1 to
0
|
2038 to
2040
|
|
Relative to reference year in %
|
-93 to
-85%
|
-99 to
-97%
|
-100 to
-100%
|
-100 to
-100%
|
| Indicator |
2021
|
2030
|
2035
|
2040
|
2050
|
|---|---|---|---|---|---|
|
Share of unabated coal
per cent
|
61
|
2 to
3
|
0 to
0
|
0 to
0
|
0 to
0
|
|
Share of unabated gas
per cent
|
17
|
9 to
21
|
2 to
5
|
0 to
1
|
0 to
0
|
|
Share of renewable energy
per cent
|
19
|
75 to
88
|
93 to
97
|
98 to
99
|
98 to
100
|
BECCS are the only Carbon Dioxide Removal (CDR) technologies considered in these benchmarks
All values are rounded
-
Methodology
Data References
-