Indonesia

The CAT rates Indonesia’s policies and actions “Highly insufficient” when compared to their fair share contribution to climate change mitigation.

The “Highly Insufficient” rating indicates that Indonesia’s climate policies and action are not consistent with the Paris Agreement’s 1.5°C temperature limit and lead to rising, rather than falling, emissions. If all countries were to follow Indonesia’s approach, warming could reach over 3°C and up to 4°C.

In our 2023 assessment, current policy projections were rated “Critically Insufficient”, driven by a sharp increase following the quantification of emissions from Indonesia’s off-grid coal power pipeline. While this figure remains unchanged, the rating improves slightly in this update due to revisions to our fair share ranges and equity literature.

Under current policies, Indonesia’s emissions are projected to range between 1,521-1,610 MtCO₂e by 2030 (excl. LULUCF), far above levels compatible with a 1.5°C pathway. To contribute its fair share to limiting warming to 1.5°C, Indonesia must drastically reduce emissions, while international support will be essential for deeper reductions beyond this level.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

Nearly a year in office, the Prabowo-Gibran administration has pushed for self-sufficiency in food and energy alongside ambitious economic growth targets, often at the expense of environmental integrity. While headline commitments such as net zero by 2060 remain, recent developments point to weakening domestic ambition. Civil society has flagged early setbacks, including continued coal expansion, promotion of fossil gas and industrial down streaming, and the prioritisation of nuclear and biomass over wind and solar (CELIOS, 2025; Dunia Energi, 2025).

Indonesia’s 2025 National Energy Policy (KEN) sets the primary energy mix targets at 19–23% new and renewable energy by 2030, 36–40% by 2040, 45–53% by 2050, and 70–72% by 2060. Coal remains dominant, projected at around 40% in 2030, 20% in 2050, and still 10% in 2060, while gas is expected to account for 14% in 2030, rising to 17% in 2050 and 15% in 2060. The policy also highlights bioenergy (biomass, biogas, and biofuels) as key components of the future energy mix, while promoting unproven, high-risk technologies such as nuclear power and carbon capture and storage.

The power sector remains dominated by fossil fuels. The new RUPTL 2025–2034 backloads most renewable additions until after 2030 while expanding coal and gas capacity in the next five years, raising risks of oversupply, stranded assets, and long-term lock-in. Carbon pricing remains limited: the ETS covers only a narrow set of large power plants and the carbon tax is delayed and set too low to incentivise the shift from fossil fuels to renewables.

Industrial policy reinforces this trajectory. The down streaming agenda has accelerated emissions-intensive production in nickel and steel, exposing exporters to competitiveness risks due to high carbon intensity. Captive coal capacity for industry is set to expand sharply over the next decade, undermining JETP’s power sector emissions cap and delaying a shift toward electrification, energy efficiency, and renewable heat.

The forestry sector, historically contributing nearly half of national emissions, is central to Indonesia’s net zero strategy through the FOLU Net Sink 2030 target. However, this target is now being questioned amid calls for a “more realistic” approach that accommodates bioenergy and agricultural expansion. In parallel, food-estate projects continue to drive land-use change in forest and peat areas with little evidence of improved food security outcomes.

The transport sector sends mixed signals. EV incentives have been introduced, and uptake has shown promising trends in recent years, but barriers such as high upfront costs and limited charging infrastructure remain. At the same time, incentives for small internal-combustion vehicles have been extended to 2031, weakening the decarbonisation policy signal. Public transport remains underdeveloped beyond Jakarta, and national strategies to shift freight and passenger transport modes have yet to materialise.

Buildings policy advances on paper faster than in practice. Frameworks for energy efficiency and green construction exist, but enforcement is weak and compliance is low, particularly in the residential sector. Financing constraints and low awareness continue to impede implementation.

Waste remains a rapidly growing source of emissions and local pollution. Despite national targets and pilot projects, source separation is limited, open dumping and burning persist, and extended producer responsibility rules have not yet shifted practice at scale. Subnational capacity and funding gaps remain a primary bottleneck.

Methane remains a cross-sectoral gap. Although the country has joined the Global Methane Pledge, it lacks a coherent strategy with clear sectoral targets, robust MRV systems, and enforcement mechanisms. Major sources, including agricultural methane, landfill gas, and coalmine methane, remain largely unaddressed, despite being recognised as low-cost, high-impact mitigation opportunities.

Indonesia’s carbon pricing framework remains weak, with limited coverage and mechanisms that offer little incentive for real emission reductions. The government recently formalised the voluntary carbon market and introduced carbon economic value governance for ocean-based sequestration (blue carbon), though both raise integrity and additionality concerns.

Taken together, sectoral developments suggest that Indonesia is not on track to align with a 1.5°C pathway. The upcoming NDC revision provides a critical opportunity to recalibrate ambition, address implementation gaps, and improve credibility to Indonesia’s climate action.

Launched in 2022, Indonesia’s JETP is a USD 20bn initiative backed by international partners to accelerate the power sector’s transition. The plan targets peaking on-grid emissions by 2030, reaching net zero by 2050, and achieving 44% on-grid renewables by 2030. The 2023 Comprehensive Investment and Policy Plan (CIPP) outlines key Investment Focus Areas (IFAs), including early coal retirement, renewable deployment, and transmission development.

Despite its ambition, JETP faces several structural challenges. Its emission targets are not aligned with a 1.5°C pathway, as off-grid captive coal plants powering industrial zones remains unaccounted for. Most funding is in loans, with limited grant support, and the social dimension of a “just” transition remains underdeveloped. PLN’s limited renewable energy procurement due to historical oversupply has further slowed progress (Eco-Business, 2025b). The U.S. has also withdrawn from the JETP, while Germany and Japan have stepped up to co-lead the partnership (IEEFA, 2025a). The focus is now shifting toward improving project viability, with growing attention on captive renewables.

The upcoming JETP CIPP update includes strategies to decarbonise captive coal power along with new Investment Focus Areas (IFAs) such as energy efficiency and electrification, carbon pricing instruments, and mainstreaming just transition. However, the new draft also reflects a shift in the IFAs prioritisation. In the 2023 CIPP version, early coal retirement and managed coal phase-out were positioned as the second priority, but in the new draft, these have been moved to fifth place, citing technical, legal, and financing difficulties. As this deprioritisation contradicts the central mission of the JETP, greater clarity is needed on the barriers and plans to overcome them.

For a more detailed analysis of this initiative, please refer to our 2024 assessment.

Indonesia’s power sector remains dominated by coal and gas, with limited progress toward a renewable transition. Despite vast untapped potential, renewable deployment has been slow, and its share in electricity generation remains low. The latest power plan (RUPTL 2025-2034) sets ambitious targets for renewables and storage but postpones most additions until after 2030.

At the same time, continued coal and fossil gas expansion risks locking in emissions, exacerbating oversupply, and straining public finances. While the government has announced early coal retirements and new policies to boost renewables, mixed signals and a weak carbon pricing framework undermine credibility. Nuclear power is also being considered, despite cost and safety concerns. Overall, the sector is not on track to align with a 1.5°C pathway, which demands a faster clean energy transition.

Coal

Coal remains the backbone of Indonesia’s power system, making up 62% of electricity generation in 2023 (Ember, 2025c). As of mid-2025, Indonesia has at least 57.7 GW of operating coal-fired power plants and a further 6.8 GW under construction (Global Energy Monitor, 2025). The Electricity Supply Business Plan (RUPTL) 2025-2034 projects that coal will still contribute 57% of electricity generation by 2030, indicating minimal change from the current state. In contrast, CAT benchmarks for a 1.5°C-aligned power sector require Indonesia to reduce coal’s share to 16% or less by 2030 and fully phase it out by 2040. Indonesia needs to peak coal generation by 2030 to align with the Paris Agreement, but current projections indicate coal generation may only peak in 2037 (Ember, 2025a).

Despite Presidential Regulation No. 112/2022 placing a moratorium on new coal plants (with certain exceptions) and setting 2050 as a phase-out deadline for unabated coal power, the RUPTL 2025-2034 includes frontloading 3.4 GW of new grid-connected coal by 2029 with an additional 2.8 GW capacity planned by 2034. The new plan risks repeating past mistakes of overestimating demand growth and locking PLN into costly take-or-pay coal contracts, which could once again burden government finances and delay renewables deployment. The plan assumes an 8% annual GDP growth rate, yet historical trends suggest a more modest 5%, raising the risk of another oversupply crisis (The Jakarta Post, 2025d).

Indonesia’s National Electricity Master Plan (RUKN) 2024-2060, which sets the direction for the RUPTL 2025–2034, includes plans to add over 20 GW of captive coal for industrial users, particularly smelters (Ember, 2025a). This expansion lacks requirements for emissions reporting and is excluded from the power sector emissions trading scheme (ETS), and could increase captive coal capacity by 180% over the next seven years. Captive plants also fall outside the government’s capped coal price, making them more expensive and increasingly uncompetitive compared to renewables (Energy Tracker Asia, 2025).

Indonesia signed on to part of the Coal Exit at COP26, committing to Clause 2 (phasing out coal by 2030/2040) but not Clause 3 (no new plants). In 2024, the President made ambitious announcements at various high-level international forums about the country's energy transition, pledging to retire all fossil fuel and coal-powered plants within 15 years (Reuters, 2024a).

In early 2025, the government announced that the 660 MW Cirebon-1 plant in West Java would retire in 2035, seven years ahead of schedule, and be fully replaced by renewables. The shift is expected to avoid over 6,000 deaths and USD 4.4 billion in economic burden between 2036 and 2042. However, such gains will only materialise if early retirement is paired with a real shift to renewables, not substituted with fossil gas or offset by ongoing coal expansion under the new RUPTL (CREA, 2025).

While Presidential Regulation No. 112/2022 provides the legal foundation for an early coal retirement roadmap, its implementation remains uncertain. The official list of coal-fired power plants eligible for early retirement has not yet been published. The most advanced pilot is the planned early retirement of PLTU Cirebon-1 (660 MW) under the ADB’s Energy Transition Mechanism (ETM), expected to retire in 2035, seven years ahead of schedule. However, developments in December 2025 indicate that this plan is now unlikely to proceed, with authorities signalling a shift toward reviewing older, less efficient units instead (Reuters, 2025). Another priority pilot, PLTU Pelabuhan Ratu (1,050 MW), has also been discussed under the JETP framework for potential retirement in 2037, eight years ahead of schedule (CREA, 2024).

These limited progressions are overshadowed by recent backtracking. In mid-2025, the Energy Minister indicated that coal should not be viewed as an illicit commodity and could still be used if deemed necessary (The Straits Times, 2025). The Minister also suggested that permission for early retirement of coal plants would be contingent on the availability of donor funding with low interest rates, implying that Indonesia’s coal phase-out plans remain conditional and lack firm political commitments.Click or tap here to enter text.Click or tap here to enter text.

Renewables

Indonesia possesses some of the world’s largest untapped renewable energy resources, with MEMR estimating a technical potential of 3,294 GW for solar, 95 GW for hydro, 155 GW for wind (on- and offshore), 57 GW for bioenergy, 24 GW for geothermal, and 63 GW for wave power (MEMR, 2023a, 2024b). Despite this vast potential, deployment remains sluggish, with renewables accounting for only around 14% of total electricity generation in 2025, according to the latest RUPTL.

The RUPTL 2025-2034 sets a headline target of 42.6 GW of new renewable capacity and 10.3 GW of energy storage by 2034, with a strong focus on solar (17.2 GW) and hydro (11.7 GW). However, even if fully implemented, renewables would only make up about 20% of electricity generation by 2030 and slightly over 30% by 2035. This pace falls far short of what’s needed to align with CAT benchmarks for a 1.5°C-aligned power sector, which requires renewables to reach around 55-82% of electricity generation by 2030, 95% by 2035, and 100% by 2050. The targets also fall behind Indonesia’s JETP goals, which aim for 44% renewable on-grid power by 2030 and 92% by 2050, alongside a net zero power system by mid-century.

A critical issue with the new RUPTL is that renewable energy development is heavily backloaded, with over 70% of planned projects scheduled for the second half of the plan’s period (2030–2034). This approach, combined with the PLN's poor track record of meeting past renewable targets, raises concerns among investors about execution risks and regulatory inconsistency (IEEFA, 2025b). If projected electricity demand and GDP growth (assumed at 8% annually) fail to materialise, PLN risks yet another oversupply crisis, which would crowd out renewables from accessing an already saturated grid (The Jakarta Post, 2025d).

Transmission bottlenecks further hinder deployment. Sumatra, for instance, has surplus capacity and vast untapped renewables potential but lacks sufficient interconnection between regions. Sulawesi presents a similar case: while North Sulawesi has an excess renewable supply, major energy demand comes from industrial zones in Central Sulawesi, which remain poorly connected. The New and Renewable Energy (NRE) Director General has remarked that Indonesia’s slow renewable energy development is not due to a lack of resources, but rather the country’s inability to distribute them effectively (The Jakarta Post, 2025c). Unlocking this potential will require not just increased capacity, but major investment in transmission infrastructure and system-wide planning.

Indonesia’s renewable energy landscape is also being shaped by several key policy revisions and introductions in recent years:

• MEMR Regulation 10/2025: Sets a roadmap for Indonesia’s just energy transition by outlining nine strategic actions for cleaner electricity, including retiring coal early, scaling up renewables, and introducing clean fuels like green hydrogen and ammonia.
• MEMR Regulation 5/2025: Provides greater legal clarity and investment certainty for renewable Power Purchase Agreements between PLN and IPPs, aligning with recent market practice while introducing fixed pricing, clearer risk-sharing, carbon credit integration, and 30-year terms.
• New and Renewable Energy (NRE) Bill: This long-delayed legislation, intended to provide incentives for renewables, remains stalled due to disagreements over controversial provisions like power wheeling and the inclusion of coal derivatives.
• Local Content Requirements (LCR): New MEMR and MOI regulations in 2024 reduced the minimum local content threshold for solar PV from 40–60% to 20%, with conditional relaxations. These adjustments aim to address project delays and cost barriers while supporting domestic supply chain development in line with JETP recommendations.
• Net Metering Scheme: MEMR officially eliminated the net metering scheme for rooftop solar, replacing it with a quota-based system. While framed as a response to PLN’s electricity oversupply and financial constraints, the move has been widely criticised for reducing incentives for both residential and industrial solar adoption.

For a more detailed analysis of these policies, please refer to last year’s assessment.

Nuclear

The National Long-Term Development Plan (RPJPN) 2025-2045, RUKN 2024-2060, and RUPTL 2025-2034 include plans to integrate nuclear power into Indonesia’s energy mix as a baseload source, as part of the country’s efforts to achieve net zero emissions by 2060. Indonesia aims to operate its first nuclear power plants by 2033, with two proposed sites in Sumatra and Kalimantan, each with a planned capacity of 250 MW (Kumparan, 2025).

Although nuclear electricity generation does not emit CO₂, the CAT doesn’t consider nuclear as a viable climate solution. This is due to a range of risks and limitations, including the potential for accidents and proliferation, escalating costs compared to increasingly competitive renewables, long construction timelines, increased vulnerability due to the intensifying impacts of climate disasters, and its incompatibility with the flexible electricity supply needed to balance variable sources like wind and solar. These challenges are compounded by Indonesia’s location on the seismically active Pacific “Ring of Fire”, which raises serious safety concerns.

Nuclear projects also carry substantial financial risks. High upfront capital and decommissioning costs imply that plants would likely require large government subsidies, diverting resources away from renewables. Costs are further exposed to currency fluctuations, as most equipment and services will be priced in foreign currencies, adding to fiscal risks.

In 2022, industry accounted for 42% of Indonesia’s total energy demand, generating an estimated 430 MtCO₂e in emissions (MEMR, 2023b). Emissions and energy use continued to rise in 2023, driven largely by the government’s down streaming agenda. While this strategy is central to Indonesia’s ambitious economic growth target, it has reinforced the sector’s heavy reliance on coal and fossil fuels, presenting serious challenges for decarbonisation.

At the heart of this expansion is the nickel industry, which underpins Indonesia’s ambitions to build a domestic battery supply chain. Captive coal capacity for nickel smelters skyrocketed from 1.4 GW in 2013 to 10.8 GW in 2023 (KADIN Indonesia, 2024). The figure in the new JETP CIPP draft is even higher, reporting 19.7 GW of operating captive coal capacity in 2024, with a pipeline of captive coal power projects under development totalling nearly 9 GW by 2030.

As a result, domestically-produced nickel has an emissions intensity of 58.6 tCO₂e per tonne, which is 22–40% higher than the global average and far above the <20 tCO₂e/tonne benchmark for low-carbon nickel (IESR, 2024). ESG concerns around deforestation, water pollution, and social conflict further threaten the global competitiveness of Indonesian nickel, and recent foreign investment withdrawals should serve as a wake-up call (The Diplomat, 2024; Mongabay, 2025a; The Jakarta Post, 2025e).

The iron and steel industry faces similar challenges. Current emissions average 3.07 tCO₂e per tonne of steel (more than double the global average) due to the dominance of outdated blast oxygen furnace (BOF) technology. BOFs still make up 64% of production capacity, while the lower-emissions electric arc furnaces (EAF) represent only 36% (IESR, 2022b, 2023a). Scaling up EAFs, especially those powered by renewable electricity, is essential to reduce the sector’s carbon footprint

In contrast, the cement industry has shown signs of progress. Between 2010 and 2022, it cut emissions intensity by nearly 13% by improving energy efficiency and increasing the use of alternative fuels such as biomass, refuse-derived fuel (RDF), and industrial waste. The Thermal Substitution Rate reached almost 8% in 2022 and aims to exceed 19% by 2030 (IESR, 2022b, 2023a).

The ammonia sector also holds promise. Indonesia produces around 7.2 Mt of ammonia annually, primarily using fossil gas-based “grey” hydrogen. Although green ammonia remains costly (USD 730/t compared to USD 470/t for conventional), at least 22 low-carbon projects powered by geothermal and hydropower are in development. Pupuk Indonesia, responsible for over 85% of national output, has set targets to cut emissions by 4.8 MtCO₂e by 2030 and 20 MtCO₂e by 2050 (IESR, 2022b, 2023a).

As coal dependency remains the sector’s core challenge, the government has promoted fossil gas as a “transition fuel”, but this approach is questionable. Reliance on fossil gas presents significant risks, including long-term carbon lock-in, methane leakage, and potential stranded assets. Fossil gas dependency also raises energy security concerns, given price volatility and supply risks in international markets, especially as LNG investments become less economically viable (IESR, 2024).

Energy efficiency as a critical pillar of industrial decarbonisation remains underutilised. In 2023, the average year-on-year improvement across industrial sub-sectors was just 0.07% (IESR, 2024), far below the 4% annual rate recommended by the IEA (IEA, 2023b).

Indonesia introduced an investment-focused Carbon Capture and Storage (CCS) regulation in 2024, which was welcomed by fossil fuel interests as a way to justify continued use under “hard-to-abate” narratives (Climate Analytics, 2025). CCS technology refers to engineered methods to capture CO₂ from a source and store it geologically. However, these technologies are neither commercially viable nor proven at scale. Their use should be limited to industrial applications where there are fewer options to reduce process emissions, not to prolong the use of fossil fuels in the power sector, where cost-effective renewable alternatives exist.

Indonesia’s transport sector is the second-largest contributor to energy-related CO₂ emissions, accounting for 23% of national emissions (ATO, 2024). Private vehicles dominate the landscape, with cars and motorcycles responsible for 55% of transport emissions. Car ownership rates remain relatively low compared to motorcycles, yet transport emissions continue to grow due to slow adoption of lower-emissions vehicles, limited progress in modal shift, and inefficient logistics (IESR, 2024).

Biofuels

Indonesia has one of the world’s most ambitious biodiesel blending programmes. The mandatory blending rate has increased from 15% (B15) in 2015 to 35% (B35) in 2023, with targets for 40% (B40) by 2025 and 50% (B50) by 2029 (Coordinating Ministry for Economic Affairs, 2023; BioEnergy Times, 2024; S&P Global, 2024).

In 2023, biodiesel distribution reached 12.2 million kilolitres, supported by palm oil export levies, with total incentives reaching approximately USD 9.3 bn between 2015 and early 2023 (APROBI, 2023; IEA, 2023c; Jakarta Globe, 2024). However, declining crude palm oil (CPO) export volumes and rising domestic consumption are putting pressure on levy revenue, and there are concerns over whether B50 targets are fiscally viable without new support mechanisms (The Jakarta Post, 2025f).

Trial results for B40 have been largely positive across sectors, including state rail operator KAI’s successful implementation on the Yogyakarta-Jakarta line (MEMR, 2024a; S&P Global, 2024). In the aviation sector, Pertamina and the Bandung Institute of Technology (ITB) introduced a bioavtur blend of 2.4%, which was successfully tested in a commercial flight in 2023 (MEMR, 2024a). These developments suggest growing technical feasibility, although scale and infrastructure remain barriers.

In contrast, bioethanol uptake has been slow. Although MEMR Regulation No. 12/2015 outlined a 5% blending target (E5) by 2020 and a 20% blending target (E20) by 2025, blending was essentially zero between 2018 and 2022 (ERIA, 2024). In 2023, Pertamina introduced Pertamax Green 95 (E5), now available at select refuelling stations in Jakarta and Surabaya (MEMR, 2023c, 2024a). However, Indonesia’s domestic production capacity remains limited at 40,000 kL per year, far below the 3 million kL needed for nationwide E5 implementation. Scaling to E10 by 2029 would require around 7.3 million kL and 1.37 million hectares of sugarcane plantations (IESR, 2024).

The programme also raises sustainability concerns. Palm oil plantations remain a major driver of deforestation (see Forestry section), and achieving B50 could require at least 2.8 million hectares of oil palm cultivation, or up to 5.4 million hectares by early 2040 under an aggressive scenario (IESR, 2024; Satya Bumi et al., 2024). Although ISPO certification is mandatory under Presidential Regulation No. 44/2020, its credibility is weakened by poor enforcement and lack of transparency (EIA, 2022; Indonesia Information Portal, 2022). International scrutiny is increasing, especially with the EU’s Deforestation-Free Regulation (EUDR), which could impact future biofuel exports (European Commission, 2023). First-generation biofuels also compete with food sources, potentially passing oil price volatility to food prices and affecting food security (IESR, 2021).

Electric vehicles

EV uptake has accelerated over the past five years: as of 2024, there are approximately 232,000 EVs on the road, including 161,000 two-wheelers (E2Ws) and 71,000 four-wheelers (E4Ws) (IESR, 2025). Click or tap here to enter text.However, this remains far below Indonesia’s 2030 targets of 1.8 million E2Ws and 400,000 E4Ws by 2025, and 13 million E2Ws and 2 million E4Ws by 2030 (Republic of Indonesia, 2022). To align with the CAT Paris-aligned sectoral benchmarks, Indonesia would need to phase out internal combustion vehicle sales before 2035 and ensure that EVs account for at least 95% of new vehicle sales by 2030, with EVs comprising 10-45% of the total vehicle stock by that year.

To address cost barriers and support domestic industry, the government has introduced a combination of fiscal incentives and industrial policies. Regulations provide VAT reductions and import duty exemptions for E4Ws, while subsidies of IDR 7 million are available for E2W purchases, and IDR 10 million for converting conventional motorcycles to electric (IISD, 2025; The Jakarta Post, 2025a). A key industrial policy is the Local Content Requirement (LCR), which mandates that EVs must contain a gradually increasing share of domestically sourced components, set to reach 60% by 2027. Recognising that this could deter initial investment, the government has temporarily relaxed these thresholds to attract foreign manufacturers and build the ecosystem.

Despite these efforts, significant barriers hinder widespread adoption. High upfront costs remain a key deterrent for consumers, compounded by limited charging infrastructure, which fuels “range anxiety” (IESR, 2022b, 2023a). Although the network is expanding, with approximately 1,600 public charging stations (SPKLU) and 2,200 battery swap stations (SPBKLU) operational as of mid-2024, it remains insufficient to support mass-market adoption (IESR, 2024). A recent government decision to extend the small ICE vehicle incentive program through 2031 has been seen as contradictory to electrification goals, sending mixed signals to the market (The Jakarta Post, 2025b).

Public transit and freight transport

Due to constrained fiscal capacity of many subnational governments, public transport remains underdeveloped outside of Jakarta, with a national modal share of just 2–5% (WRI Indonesia, 2024; IESR, 2025). In Greater Jakarta, it reaches 10% due to investments in four major systems: TransJakarta (BRT), KRL commuter rail, MRT, and LRT, which together serve around three million daily passengers (Almaputri, 2019). Extension to public transport network in Jakarta is underway, and Bali is considering a new LRT system (PwC, 2024).

TransJakarta leads in bus fleet electrification, with 52 e-buses currently in operation and a target to fully electrify its 10,000-bus fleet by 2030 (Ditjen Hubdat, 2022; Semarang Department of Transportation, 2022; Faqih Rohman and Kairini, 2023). However, high costs and limited subsidy mechanisms are slowing progress (IESR, 2023a). A Swiss-backed programme is piloting BRT expansion and upgrades in six additional cities (GIZ, 2023). Long-haul intercity bus systems, however, remain overlooked due to limited range, insufficient charging infrastructure, and higher upfront costs (IESR, 2023a).

Freight transport contributes to over a quarter of the sector’s emissions, with little diversification away from diesel-powered trucks. Biodiesel blending is the main mitigation strategy, while electrification and hydrogen-based alternatives are still in early stages (IESR, 2024). A modal shift to rail offers a high-impact mitigation pathway by reducing air pollution, accidents, and congestion. However, high transport costs, long transit times, and poor service quality—driven by inadequate infrastructure, limited market competition, and weak policy support—remain significant constraints (GIZ, 2021).

Indonesia’s land-use, land-use change and forestry (LULUCF) sector has historically been a major contributor to national emissions, accounting for nearly half of the total on average over the past 20 years (Gütschow et al., 2024; Republic of Indonesia, 2024). As the world’s largest palm oil exporter, it comes as no surprise that the biggest driver for deforestation is agricultural and commodity-driven land conversion (Global Forest Watch, 2025). This pressure is likely to intensify with the current government’s biofuel expansion plans (see Biofuels section).

While deforestation rates declined from 2016 to 2021, recent years show signs of reversal. Tree cover loss increased from 0.89 Mha in 2022 to 1.12 Mha in 2024 (Global Forest Watch, 2025), following the end of the moratorium on new palm oil plantations. Slash and burn remain a common and cheap method for land clearing, significantly contributing to LULUCF emissions.

These recent increases jeopardise the FOLU Net Sink by 2030 set in 2021. The government targets for the LULUCF sector are net negative emissions of 140 MtCO₂e by 2030 and to further reduce the sector to 340 MtCO₂e by 2050, to be achieved through the prevention of deforestation, conservation of natural forests, sustainable forest management, and enhancing carbon sinks from peatlands and mangroves. Indonesia’s net zero 2060 strategy largely hinges on FOLU becoming a sustained net sink in the following decades.

However, recent research warns that forest mitigation potential may be overestimated if climate and disturbance risks are not fully accounted for, as climate change and land-use history can reduce or even reverse carbon sinks into sources (Anderegg et al., 2020; Albrich et al., 2023), highlighting the risks of over-reliance on FOLU in climate mitigation plans. To reach a FOLU net sink by 2030 and net zero by 2060, Indonesia needs stronger policies to halt deforestation and expand reforestation. Current policies are not compatible with these goals; the government will likely need to explore alternative development pathways that align with lower emissions and reduced land-use change, such as electrifying transport demand and limiting CPO use for biofuels.

Recent political developments further cast doubt on this ambition. The new Minister of Forestry publicly called for a review of the FOLU Net Sink target in the draft 2035 NDC, arguing it must be more “realistic” and accommodate national development priorities like food security and bioenergy (Bisnis.com, 2025). This signals a potential weakening of climate ambition in favour of agricultural expansion. Compounding these concerns are controversies surrounding political appointments within the FOLU program's management office, where party members with little to no experience in environmental policy have been hired, raising questions over governance and accountability (Mongabay, 2025b).

The government’s permanent moratorium on new permits for primary forest and peatland clearance, formalised by Presidential Instruction No. 5/2019, remains one of the few major safeguards in place. However, the moratorium only covers 41% of Indonesia’s forested area, and its effectiveness is debated. Estimates suggest it accounts for just 3–4% of the 29% emissions reduction target in the 2021 NDC (Groom et al., 2022), and some studies show deforestation continued within its boundaries (Greenpeace Southeast Asia, 2019). Elevating this moratorium to a legally binding law or Presidential Regulation could strengthen enforcement and ensure a longer-term impact.

International partners continue to play a vital role through results-based financing mechanisms like the Reduce Emissions from Deforestation and Forest Degradation (REDD+). Indonesia has received substantial support: USD 56 million from Norway for verified reductions in 2016/2017, USD 50 million pledged by USAID for 2023–2028, and USD 103.8 million from the Green Climate Fund for reductions in 2014–2016 (Norway’s International Climate and Forestry Initiative, 2022; UNDP, 2023; USAID, 2023). As home to the world’s third-largest tropical rainforest, Indonesia is expected to qualify for payments under the Tropical Forests Forever Facility, a new fund launched at COP30 in Brazil to reward tropical forest countries for conservation.

Nusantara, the new capital

The development of Indonesia’s new capital (Nusantara) in East Kalimantan, intended to shift the nation's political centre from Java, has triggered widespread environmental and social concerns. Between 2018 and 2021, the project led to the loss of over 18,000 hectares of forest (Forest Watch Indonesia, 2024), threatening local biodiversity and displacing Indigenous Dayak communities (Modern Diplomacy, 2024; Tempo, 2024). While the government promotes Nusantara as a “green” and “smart forest city”, ongoing deforestation, land reclassification, and exclusionary planning practices suggest otherwise (CNN Indonesia, 2024; East Asia Forum, 2024; NASA Earth Observatory, 2024).

Under President Prabowo, the project has not been reversed but appears to be deprioritised. Although reaffirmed through Presidential Instruction No. 1/2025, Nusantara is notably absent from the top five priorities of the 2025–2029 National Medium-Term Development Plan (RPJMN). Construction of the presidential palace and civil servant housing has reached around 80% completion, with IDR 48.8 trillion allocated through 2029. However, investment remains below expectations, and growing perceptions of a “neglected” mega-project highlight the disconnect between official sustainability aspirations and on-the-ground realities (Eco-Business, 2025a).

Agriculture remains a backbone of Indonesia’s economy, employing 30% of the workforce (World Bank Group, 2025). In 2022, the sector accounted for 11% of national GHG emissions (excluding LULUCF), primarily from rice cultivation (40%), enteric fermentation (20%), and the rest from livestock manure and synthetic fertilisers (FAO, 2024; Gütschow et al., 2024). The 2021 LTS-LCCR and 2035 NDC outline mitigation measures such as low-emission rice varieties, alternate wetting and drying, organic fertilisers, improved livestock feed, and biogas production from manure. However, an integrated, sector-wide decarbonisation strategy remains missing.

Since 2020, Indonesia has promoted large-scale food estates in provinces like Central Kalimantan and Papua as part of National Strategic Projects for food self-sufficiency (MoEF, 2020). However, many of these estates are located on peatlands and forested areas, risking significant emissions from land-use change (Environmental Paper Network et al., 2021; Tempo, 2021; USDA, 2021). Echoing the failures of the Mega Rice Project and the Merauke Integrated Food and Energy Estate (GRAIN, 2015; Mongabay, 2024a), assessments show food estates contribute to deforestation, peat degradation, and displacement of Indigenous communities, with little evidence of improved food outcomes (Siborutorop, 2023).

Implementation is undermined by weak governance and legal loopholes, including forest conversions under vague classifications like “Convertible Production Forests” (USDA, 2021). Key safeguards, such as environmental impact assessments and free, prior, and informed consent (FPIC), are often bypassed (Green Network, 2024; Mongabay, 2024b). Several sites overlap with key biodiversity areas, threatening orangutans and Sumatran tigers, while violating Indigenous land rights upheld by the 2013 Constitutional Court ruling .(Environmental Paper Network et al., 2021)

These initiatives also neglect structural issues like food distribution inefficiencies and limited access to affordable, nutritious food. Over 20% of children under five are stunted, and nearly 70% of Indonesians cannot afford a balanced diet (CIPS, 2023a). Price disparities in remote regions stem from post-harvest losses, high logistics costs, poor infrastructure, and limited cold chain capacity (WRI Indonesia, 2021). Many food estates are hindered by unsuitable soils, inadequate planning, and disregard for scientific and local knowledge (The Jakarta Post, 2022; Mongabay, 2023).

To improve food resilience while aligning with climate goals, Indonesia should shift toward sustainable intensification, diversify nutritious crop production, invest in rural infrastructure and cold chains, and strengthen agricultural extension services. Redirecting fertiliser subsidies to direct farmer support and improving social registry data would increase targeting efficiency (CIPS, 2023b). Turning agricultural waste into biochar also offers promise as a soil fertility enhancer, long-term carbon sink, and renewable energy source (Setyawan et al., 2024).

Energy efficiency

Indonesia’s growing urbanisation and rising energy demand in the buildings sector have prompted regulatory efforts to improve energy efficiency. In 2022, MEMR published a roadmap for energy-efficient, low-carbon buildings, with short-term priorities including the enforcement of building codes, appliance efficiency standards, and promotion of net zero energy buildings (MEMR, 2022).

Government Regulation No. 33/2023 mandates that buildings consuming over 500 TOE or with annual energy bills exceeding IDR 500 million must implement energy management. This is operationalised by MEMR Regulation No. 3/2025, which targets public buildings and requires certified energy managers, regular audits, implementation of energy efficiency programs, and annual reporting. However, compliance is extremely low: only 1.45% of eligible buildings meet the regulation’s requirements (IESR, 2024).

Challenges include the lack of enforcement mechanisms, low awareness among building owners and local governments, and limited financing options, especially for smaller buildings, despite potential ROI within 2 to 10 years (MPWH, 2024). Despite accounting for 83% of buildings' energy use, the residential sector is largely excluded from mandates (Climate Policy Initiative, 2024). Progress is further hindered by limited budgets, public awareness, and audit complexity (The Jakarta Post, 2024b). While the government is exploring financial incentives like land/building tax rebates and carbon value mechanisms, current efforts focus on non-financial measures to drive behavioural change (IESR, 2024).

Green building

Indonesia’s green building regulation remains in early stages. MPWH Regulation No. 21/2021 mandates green building certification (BGH) for new and existing large public and commercial buildings. However, uptake remains very low, with <1% of eligible buildings obtaining certification, compared to almost 400 certifications by non-governmental certifications with stronger branding and international recognition, such as EDGE (Excellence in Design for Greater Efficiencies) or LEED (Leadership in Energy and Environmental Design) (IESR, 2024).

Policy fragmentation across ministries remains a key barrier. Requirements for local sourcing, ISO 14001-certified sustainable materials, and recycled content in building components are not well-integrated with the Ministry of Industry’s Green Industry Certificate (SIH) or MEMR’s appliance energy-saving labelling (IESR, 2024). Greater regulatory harmonisation could boost demand for sustainable materials and green procurement.

A key initiative in green building is the Indonesia Green Affordable Housing Programme (IGAHP), launched by the Ministry of Public Works and Housing. The programme aims to build 100,000 green affordable housing units by 2024, build and retrofit one million units by 2030 (with a potential emissions reduction of 19-36 MtCO₂), and achieve 100% net zero housing by 2050 (MPWH, 2023).

Future trend: data centres

Digital economy and the rise of artificial intelligence globally are driving a boom in data centres, positioning Indonesia as ASEAN’s third-largest market with 307 MW of operational capacity as of early 2025, mostly in Greater Jakarta and Batam. The RUPTL 2025–2034 acknowledged the rising electricity demand from data centres, yet noted that this demand will largely be met by coal and fossil gas generation. Without intervention, power consumption is projected to quadruple to 26 TWh by 2030, with emissions surging to 19 MtCO₂e (Ember, 2025b).

To stay competitive and attract sustainable tech investment, Indonesia must scale up its renewables capacity, introduce sustainability frameworks for green data centres, and require companies to meet certain power usage effectiveness (PUE) standards.

The waste sector accounts for around 16% of national emissions (excluding LULUCF) and nearly two-thirds of methane emissions as of 2023 (Gütschow et al., 2024). Rapid urbanisation and continued reliance on open dumping have led to a fifteen-fold increase in emissions since 1990. In response, Indonesia has introduced several mitigation strategies, including the National Waste Management Strategy, which targets a 30% reduction in waste generation and 70% treatment by 2025.

The 2022 Enhanced NDC includes a ~20% reduction below 2030 BAU (more than 200% above the 2010 baseline). The 2035 NDC sets an ambitious “zero waste by 2040” and zero emissions by 2050 target, aiming for landfill mining from 2025, zero open burning by 2030, circular economy implementation, no new landfills after 2030, and complete landfill closure by 2040 through waste-to-energy and recycling measures. However, a severe implementation gap undermines these goals, with on-the-ground capacity lagging behind national ambition. Recent government data show that only 9-10% of waste is processed at landfills, with 34 million tonnes polluting the environment annually (The Jakarta Post, 2025g). In addition, 48% of households are burning their waste despite being prohibited, causing harmful air pollution and releasing black carbon (The Jakarta Post, 2024a).

Recent policies have focused on improving data, mandating corporate responsibility, and accelerating waste-to-energy (WtE) plants. Presidential Regulation No. 35/2018 promotes waste-to-energy (WtE) plants in major cities, but only two facilities by far are operational in Surabaya and Solo. Most projects are stalled due to cost, technical limitations, and low waste calorific value. A new WtE regulation is expected in 2025 to streamline approvals and scale up to 33 cities (ANTARA News, 2025).

The 2019 Extended Producer Responsibility (EPR) regulation requires producers, particularly in the food and beverage as well as retail sectors, to cut packaging waste by 30% by 2029. Nonetheless, implementation has been weak due to limited enforcement and unclear recycling infrastructure. Meanwhile, the 2022 launch of the National Waste Management Information System (SIPSN) marks a step forward in transparency, though uptake by local governments remains partial.

Mitigation efforts span multiple waste streams (Republic of Indonesia, 2024). For solid waste: landfill gas recovery, composting, paper recycling, and the production of refuse derived fuel (RDF) or solid recovered fuel (SRF) for industrial use. Organic waste is increasingly processed using black soldier fly larvae as a low-emission feedstock. In liquid and industrial waste, efforts focus on communal and centralised wastewater treatment (IPAL), biodigesters with methane capture, and sludge utilisation in sectors like palm oil and pulp.

Closing this gap requires a strategic shift from downstream fixes to upstream prevention and systemic reform. EPR enforcement must be matched with targeted investment in waste separation and recycling infrastructure, especially in urban areas. Fiscal transfers and matching grants should support subnational efforts to upgrade landfills and close open dumps. A national wastewater strategy is also needed to scale IPAL coverage and mandate biogas recovery. Finally, integrating informal waste workers into formal systems through cooperatives or waste banks can raise recycling rates and improve livelihoods.

Indonesia is one of the world’s top six methane emitters, with methane contributing around 22% of its national emissions, excluding LULUCF (Gütschow et al., 2024; Global Methane Initiative, 2025). In 2023, two-thirds of methane emissions stemmed from agriculture, a quarter from waste, and the rest from energy (Gütschow et al., 2024). Within the energy sector, coal mine methane (CMM) emissions are the fastest-growing source, driven by Indonesia’s expanding coal production as the third-largest coal producer and the largest thermal coal exporter globally (IEA, 2023a). Independent satellite and mine-level estimates suggest that Indonesia’s coal mine methane emissions could be underreported by a factor of six to seven (Ember, 2024b).

Indonesia joined the Global Methane Pledge at COP26 in 2021, committing to contribute to the global goal of reducing methane emissions by 30% by 2030 from 2020 levels (IEA, 2025). However, Indonesia has yet to develop a comprehensive methane reduction strategy. Its 2022 Enhanced NDC only addresses methane mitigation in the waste sector (with measures like methane capture and utilisation, and methane recovery), while the 2035 NDC appears to incorporate mitigation in the agriculture sector (such as improved rice cultivation and enteric fermentation management), but still lacks concrete action for the energy sector, highlighting a major policy and data gap that risks undermining Indonesia’s progress toward its methane reduction commitment.

To address this, Indonesia must urgently improve its methane monitoring, reporting, and verification (MRV) systems (IESR, 2024). This includes disaggregating data to the mine and regional levels, mandating public methane emissions reporting and mitigation strategies for mining companies, and including underground coal mines in the national inventory (Ember, 2024b, 2024a). Most importantly, it will require limiting further coal mine expansion and heading towards a just energy transition.

Indonesia’s carbon pricing framework remains limited in coverage and ambition. Highlighted in its 2035 NDC, Presidential Regulation No. 110/2025, replacing No. 98/2021, formalises the voluntary carbon market and seeks to monetise Indonesia’s carbon stock, ultimately prioritising credit sales over emission reductions (Media Indonesia, 2025; Tempo, 2025c, 2025a). This risks legitimising low-integrity offsets that offer limited additionality and allow continued high emissions under “net zero” claims, with risks of double counting.

The compliance market under IDX Carbon has shown limited progress (IEEFA, 2025c). Since its 2023 launch, total transactions reached only IDR 78bn (USD 4.9m). Average prices fell from IDR 62,533 (USD 4.1) per tCO₂e in 2023 to IDR55,985 (USD3.9) in 2024, with trading volume dropping to 413,764 tCO₂e (IEEFA, 2025c), reflecting weak demand and sectoral participation.

Indonesia applies a hybrid carbon pricing system combining cap and trade and a fallback carbon tax (ICAP, 2023). The current scheme covers only coal-fired power plants with lenient caps that create little incentive to trade or reduce emissions. The proposed carbon tax of IDR30,000/tCO₂e (USD2/tCO₂e) remains unenforced due to gaps in measurement, reporting, and verification (MRV) and industry resistance (IEEFA, 2025c).

Without stricter caps and a comprehensive implementation of the carbon tax, the system will remain as a signalling mechanism rather than an emissions control instrument. This pricing gap puts Indonesian exporters at risk of rising carbon border taxes like the EU’s Carbon Border Adjustment Mechanism (CBAM).

On a related note, the 2035 NDC introduces marine conservation as a mitigation measure, supported by the Ministry of Marine Affairs and Fisheries Decree No. 52/2024 and Regulation No. 1/2025 on the governance of carbon economic value in the marine sector. To facilitate the integration of this new sector, the government launched the Blue Carbon Ecosystems in Indonesia Roadmap and Action Guide at COP30.

While blue carbon conservation plays an important role in climate resilience, it should not be used to offset emissions in other sectors. Ocean-based sequestration risks diluting mitigation ambition, lacks permanence due to worsening climate impacts, and faces high data uncertainty in measuring carbon flows.