Indonesia's clean-energy future at center of US-China energy contest
Beijing's investments in Indonesia's renewables and EV supply chain challenge Washington's push for a cleaner transition, raising questions about energy security, financing, and safeguards.
Indonesia's clean-energy future has become a hinge in a contest between the United States and China over who writes the terms of the next generation of energy in the developing world. The choice is not only about climate outcomes for Indonesia but also about which power sets the tempo for clean-energy technology and financing in the region.
China has moved quickly to embed itself in Indonesia's energy transition. In 2023, Chinese companies signed more than $54 billion in agreements with PLN, Indonesia's state utility, and a further $10 billion in commitments tied to President Prabowo Subianto's 2024 visit to Beijing. Chinese firms are building out Indonesia's clean-energy supply chain—from solar and critical-mineral mining to electric-vehicle manufacturing.
The scale dwarfs the $20 billion Just Energy Transition Partnership (JETP) signed in 2022 between Indonesia and a group of wealthy nations to help shift away from coal, which contributes a meaningful share to the economy. The program has faltered, with only $1.2 billion, about 6%, disbursed, while Indonesia says it needs more than $97 billion to complete the transition. The United States has framed its approach around energy security and LNG development as a way to reduce dependence on rivals like China, while also promoting cleaner power sources.
The withdrawal of the United States from the policy in March did not derail the JETP, but analysts said it affected political leadership and momentum. When the deal was signed, U.S. climate envoy John Kerry said America had laid the groundwork; but after Donald Trump dismantled Biden-era climate policies and pushed fossil-fuel development, Indonesian officials questioned why they should transition if America isn’t committed, according to observers.
The United States pledged $2 billion under JETP, with roughly half accessible via loan guarantees, a level seen as the program’s floor given the broader funding need. The JETP was designed to cover only a portion of the roughly $97 billion required, and officials say the disparity underscores the scale of Indonesia’s energy transition challenges.
China’s approach to energy security offers a different model, one that emphasizes a “different version of energy security”—replacing imported fossil fuels with solar panels that generate electricity for decades. Dinita Setyawati, an energy analyst focused on Southeast Asia at Ember, described the dynamic as a race to embed a complete energy stack in Indonesia. Major Chinese projects illustrate the breadth of the push: a $6 billion CATL supply-chain venture with local partners in 2022, and BYD’s $1 billion EV plant announced in 2024 that will produce 150,000 cars annually and employ 18,000 workers.
Other Chinese initiatives include a $478 million factory launched in 2024 by BTR New Material Group to produce anode materials for batteries, and a LONGi solar panel factory unveiled in 2025 with an annual capacity of 1.6 gigawatts. “It’s a whole-systems change,” Setyawati said, noting that a country could buy solar panels from China and charge its Chinese-built electric cars with clean electricity. These projects deploy quickly, which is crucial for Indonesia’s five-year political cycles, even if Western investors offer more safeguards. POWERCHINA built a 100-megawatt solar park in seven months in 2024.
But Chinese investments often come with environmental costs. Most of Indonesia’s nickel mines are Chinese-owned, and a 2024 study by the Centre for Research on Energy and Clean Air found pollution from smelters and on-site coal-fired power plants would cost the economy billions and cause thousands of deaths in the near term and into the 2030s. Indonesia’s energy minister, Bahlil Lahadalia, said in April that the country would boost LNG imports from the United States by around $10 billion as part of tariff negotiations. LNG is natural gas cooled for storage and transport; while it burns cleaner than coal, it still emits greenhouse gases. The risk is that the gas deals could entrench Indonesia’s reliance on fossil fuels at a time when solar and wind energy scale up globally, potentially locking in infrastructure that becomes outdated as the energy landscape evolves.
Indonesia remains deeply tied to coal. It was the only country to propose building new coal plants and had the third-highest amount of coal capacity globally in 2024. About 80% of the 1.9 gigawatts of coal capacity Indonesia built was for the captive coal plants serving smelters processing minerals like nickel and cobalt for electric vehicles, according to a report by U.S.-based nonprofit Global Energy Monitor. “The Indonesian government needs to realize that this is where the world is heading, like it or not,” Setyawati said.