Indonesia is the eighth-largest contributor to global greenhouse gas (GHG) emissions. Therefore, its role in global decarbonization is increasingly critical. With historical trends indicating a potential doubling of its emissions by 2060 (versus a 2019 baseline), Indonesia’s commitment to reversing this trend is crucial (Exhibit 2). By identifying and acting on the opportunities on the road to net zero, Indonesia could—with ten strategic initiatives—help ensure a secure, green, and sustainable future for itself and the world.
The country has (already) prioritized green growth, and its decarbonization efforts are starting to gain momentum. Expected to become the fourth-largest economy in the world by 2045, and boldly aiming to become a high-income economy within a similar time frame, Indonesia shows strong economic fundamentals with a 5 percent annual growth rate, stable inflation, and stable exchange rates.5 The government has also implemented various regulatory and fiscal incentives to encourage green growth, focusing on electric mobility, carbon markets, and renewable energy.
The country’s endowment of critical minerals such as nickel—vital for electric vehicle (EV) batteries—along with its potential for carbon storage and nature-based solutions (NBS) positions it as a key supply side player in the decarbonization market.9 These natural resources and an enabling ecosystem could help to create substantial opportunities for businesses in renewable energy, EV production, and sustainable practices.
Here are the ten bold moves to Indonesia becoming a global beacon for decarbonization:
Bold move 1: Greening the power sector
Bold move 2: Delivering clean energy by strengthening and expanding the grid
Bold move 3: Accelerating electric mobility
Bold move 4: Building the battery value chain
Bold move 5: Creating a carbon market with Indonesia’s abundant nature-based solutions
Bold move 6: Developing green fuels for transportation
Bold move 7: Converting mature oil and gas fields into carbon stores
Bold move 8: Developing green industrial estates
Bold move 9: Funding the energy transition with green capital
Bold move 10: Enabling a green economy
Read the whole article by Vishal Agarwal, Ashwin Balasubramanian, Fadhila Discha, and Khoon Tee Tan at McKinsey here:
