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Home Local news Indonesia’s Clean Energy Ambitions Spark a US-China Supply Rivalry
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Indonesia’s Clean Energy Ambitions Spark a US-China Supply Rivalry

    Indonesia's clean energy future is at the center of a supply struggle between the US and China
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    Published on 23 September 2025
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    The competition to replace coal power in Indonesia, the leading coal exporter globally, is now a rivalry between the U.S. and China. This contest will decide not only Indonesia’s climate future but also which superpower will dictate energy standards for the developing world’s next generation.

    Like much of the developing world, Indonesia faces a choice between two stark energy futures.

    According to agreements made in 2023, Chinese companies secured over $54 billion in contracts with Indonesia’s state utility PLN, while Indonesian President Prabowo Subianto’s 2024 visit to Beijing garnered an additional $10 billion in deals. Chinese corporations are quickly integrating themselves into Indonesia’s clean energy supply chain, ranging from solar energy and essential mineral mining to electric vehicles (EVs).

    These Chinese investments overshadow the $20 billion Just Energy Transition Partnership (JETP) established in 2022 between Indonesia and several wealthy nations to assist the country in shifting from coal, which accounts for 3.6% of its GDP.

    Even before the U.S. administration under Trump formally withdrew in March, the program was already experiencing difficulties. To date, only $1.2 billion, roughly 6% of JETP funds, have been allocated, while Indonesia estimates needing over $97 billion for the energy transition.

    The U.S., being the world’s leading oil producer, has been promoting liquefied natural gas (LNG) during negotiations to prevent tariffs on Indonesia. It promotes “energy dominance” as a strategy to reduce reliance on competitors like China. Meanwhile, Beijing is investing heavily in renewable energy to solidify its position as the foremost provider of clean energy technology.

    The U.S. path risks deeper fossil fuel dependence, while China’s promises jobs and cleaner power with fewer safeguards.

    “These two countries … they’re shaping two different visions of the future,” Putra Adhiguna of the Energy Shift Institute said.

    U.S. exit impacts politics but not investment

    The U.S. withdrawal in March didn’t derail the JETP, but impacted political leadership, analysts said.

    When the JETP agreement was initiated, U.S. climate envoy John Kerry claimed that America had set the foundation. However, Trump’s rollback of climate initiatives established during Biden’s term and his promotion of fossil fuels led Indonesian officials to question the rationale for transitioning when the U.S. was not doing so, according to Adhiguna.

    Early JETP conversations “set expectations unrealistically high,” raising goals that were hard to achieve regardless of U.S. policy changes, he added.

    The U.S. pledged $2 billion, with roughly half still accessible via loan guarantees, said Jordan Lee of the Tony Blair Institute for Global Change in Jakarta. The JETP always was meant to cover only a portion of the roughly $97 billion needed. Foreign investment was critical given Indonesia’s tiny solar and wind sector, accounting for 0.24% of total energy compared with 3.8% in the Philippines and 13% in Vietnam.

    Lee said the JETP also provided a unifying platform for stakeholders and helped Indonesia partner with new countries like the UAE and Saudi Arabia.

    Indonesia’s JETP secretariat didn’t respond to a request for comment from The Associated Press.

    China offers a new model

    China offers a “different version of energy security,” replacing imported fossil fuels with solar panels that generate electricity for decades, Adhiguna said.

    Major Chinese projects in Indonesia include a $6 billion supply-chain venture by battery giant CATL with local partners in 2022 and BYD’s $1 billion EV plant announced in 2024 will produce 150,000 cars annually and employ 18,000 workers.

    China’s BTR New Material Group launched a $478 million factory in 2024 that will make anode materials for EV batteries and create around 8,000 jobs, while a solar panel factory unveiled in 2025 by LONGi has an annual capacity of 1.6 gigawatts.

    “It’s a whole-systems change,” said Dinita Setyawati, an energy analyst focused on Southeast Asia at the think tank Ember. She noted this meant a country could buy solar panels from China and charge their Chinese-built electric cars with clean electricity.

    These projects are deployed 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 just seven months in 2024.

    “If a U.S. company takes four years to do a feasibility study, Chinese companies will already have invested by then,” Adhiguna said.

    But Chinese investments often have come with high environmental costs.

    Most of Indonesia’s nickel mines, for instance, are Chinese-owned. The country has the biggest reserves of the mineral needed to build EV batteries and the mines rely on captive coal-fired power plants, built on-site to supply electricity.

    A 2024 study by the Centre for Research on Energy and Clean Air on the impact of nickel mining in three Indonesian provinces found pollution from smelters and the coal-fired power plants would cost the economy $2.6 billion in 2025, rising to $3.4 billion by 2030, while resulting in more than 3,800 deaths in 2025 and nearly 5,000 by 2030.

    US gas could lock Indonesia into fossil fuels

    Indonesia’s energy minister, Bahlil Lahadalia, said in April it would boost LNG imports from the U.S. by around $10 billion as part of tariff negotiations. LNG is natural gas cooled to liquid for storage and transport, burning cleaner than coal but still emitting greenhouse gases.

    The risk is that the gas deals could further entrench Indonesia’s reliance on fossil fuels. Committing to long-term deals risks leaving countries stuck with outdated infrastructure, even as the world moves quickly toward cheaper, faster-to-deploy solar and wind power, analysts said.

    Indonesia could risk falling behind in the clean energy transition and miss out on investment opportunities, such as data centers seeking renewable energy in Southeast Asia, Setyawati said.

    “And once they realize it, it might be too late,” she said.

    Meanwhile, 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 for 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.

    ___

    The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. The AP is solely responsible for all content. Find the AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

    Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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