Political-Economic Landscape Study on Advancing the Indonesia-China Energy Transition Agenda

March 18, 2025

Indonesia’s commitment to achieving net-zero emissions by 2060 requires navigating complex political and economic dynamics, particularly in securing the investment and technology needed for a just energy transition. While Western-backed initiatives such as the Just Energy Transition Partnership (JETP) have faced delays in disbursement, China has rapidly expanded its role as a key partner, financing renewable energy projects, electric vehicles (EVs), and nickel downstream industries through the Belt and Road Initiative and other channels.

The findings highlight both opportunities and risks: China remains a dominant player in coal-fired power investments while simultaneously leading in renewable energy and EV sectors; Indonesia’s dependence on coal and the structural dominance of state utility PLN hinder faster transition; and Chinese-backed nickel processing projects raise serious environmental and social concerns. To address these challenges, the study recommends aligning energy transition with long-term electricity targets, boosting domestic demand for renewables, strengthening EV adoption, leveraging bilateral and multilateral channels with China for technology transfer and sustainable financing, and establishing a clear institutional focal point for managing Chinese investments. These measures are crucial for ensuring that Indonesia’s energy transition advances economic, social, and environmental goals while avoiding new dependencies.