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Indonesia rebalances energy policy as Iran war spurs new projects
As oil prices surge, Indonesia aims to reduce its reliance on fossil fuels and intensify the use of crude palm oil for diesel blending
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Indonesia is accelerating the transition to clean and renewable energy while pushing for more investments in oil and gas projects, critical minerals and rare earth mining, amid the global energy crisis triggered by the Middle East conflict.
In the past week, Jakarta signed a raft of deals with international partners to develop renewable and fossil fuel projects, aimed at achieving energy security as an insurance against the impact of heightened geopolitical tensions.
Green energy could also reduce the burden on the state budget, as the Iran war has pushed Brent crude oil prices past US$100 per barrel, beyond the US$70 per barrel Indonesia used for this year’s budget assumption.
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“In the next three years, we want to [have] 100 gigawatts of solar energy. For us, this is more urgent because of the situation we are seeing now,” President Prabowo Subianto told the Indonesia–Japan Business Forum in Tokyo on Monday.
During a meeting with Japanese Prime Minister Sanae Takaichi on Tuesday, Prabowo invited Japan to develop Indonesia’s nuclear and renewable energy, as well as to support its downstreaming policy, which bans raw critical mineral exports such as nickel and bauxite in favour of domestic processing.
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Both leaders said the collaboration on critical minerals would accelerate the realisation of the Asia Zero Emission Community Initiative, proposed by Japan in 2022 to support climate policy development in Southeast Asia.
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