Indonesia is at the crossroads of energy transition and environmental challenge, as efforts to shift from coal reliance to cleaner alternatives face significant headwinds. The Southeast Asian nation, renowned for its lush rainforests and biodiversity, has found itself grappling with alarming deforestation rates, alongside ambitious plans to bolster energy independence through nuclear power.
Recently, Hashim Djojohadikusumo, Indonesia's special envoy for climate and energy and advisor to President Prabowo Subianto, announced during a forum in Jakarta the bleak fate of the Just Energy Transition Partnership (JETP) with the United States. He confirmed, "I met with a US special envoy who said the program had failed and was not progressing. Not a single dollar has been disbursed by the US government, it’s all talk." His remarks signal doubts over the international support for Indonesia, which aimed to mobilize approximately $20 billion from wealthy nations to expedite its transition away from coal.
Since its inception, the JETP initiative has struggled to make substantive progress, hindered by bureaucratic obstacles and hesitance from international financial institutions to fund the early retirement of coal plants. Djojohadikusumo's statements followed recently enacted measures by the Trump administration—pulling the U.S. out of the Paris climate accord and proposing cuts to foreign assistance—which bring Indonesia's delicate energy plans back to the drawing board.
Indonesia, the world’s leading exporter of coal, currently relies heavily on this fossil fuel to meet its growing energy demands. The government under President Subianto has expressed intentions to phase out fossil fuels by 2030 and ramp up renewable energy, including solar and geothermal, yet critics from environmental NGOs have voiced skepticism about the actual implementation.
Meanwhile, the environmental crisis deepens as reports unveiled a serious uptick in deforestation rates, with significant impacts on Indonesia’s biodiversity and carbon management. Auriga Nusantara, an environmental NGO, reported the loss of 261,575 hectares of forest cover across Indonesia during 2024—reflecting increased legal deforestation driven chiefly by expansive palm oil plantations and timber extraction.
Timber plantations, mining of minerals, and the growing need for agricultural space continue to threaten vast swathes of rainforest, which serve as fundamental habitats for endangered species and major carbon sinks. The alarming figures come as President Subianto has conveyed ambitions for food and energy self-sufficiency, expressing plans to convert forest areas for agricultural and bio-fuel production. Timer Manurung, chair of Auriga Nusantara, urged for immediate protective measures against the rampant deforestation, particularly around Kalimantan, where the new capital is being constructed.
Though the government asserts the designation of areas for development has been long-planned, the timing raises concerns among environmental activists who warn of potential disasters to the surrounding ecosystem. Ade Tri Ajikusumah, from Indonesia’s environment and forestry ministry, contested the NGO's figures, arguing they failed to account for extensive reforestation efforts, but even he conceded the gross deforestation figures were comparable.
The complex issue extends as the country prepares to chart its course with the potential development of nuclear energy. Currently, Indonesia relies on fossil fuels for over half of its power generation, and it has announced plans to construct nuclear power plants capable of generating around 4 gigawatts. This proposal, chiefly articulated by Djojohadikusumo, positions nuclear power as part of the solution to addressing climate challenges, even as critics contest the safety and environmental impacts of such initiatives.
With Indonesia currently lacking nuclear capacity, the mention of floating small modular reactors offers a glimpse at the government’s ambition for energy diversification. While Hashim assured these clean energy plans will help address climate challenges, he also criticized the JETP’s minimal funding disbursement and indicated the government would not cease operations of existing coal power plants but merely halt new constructions.
The juxtaposition of Indonesia's coal-based energy generation against its ambitious climate targets presents unmistakable tensions. Investors and environmental advocates alike are left questioning whether Indonesia can effectively balance its immediate energy needs against the plight of its rich, yet dwindling, rainforest ecosystems. That will be the forthcoming challenge as it navigates the minefield of international climate commitments against pressing domestic energy demands.
All eyes are now on how President Subianto's government will respond amid criticism of environmental policies and international expectations for greater climate accountability. Whether Indonesia can transform its coal dependency and curb the alarming wave of deforestation remains to be seen, especially as competing interests clash against the backdrop of global climate change commitments.