The G in G20 now stands for Green

This year’s G20 saw Indonesia welcome the leaders of the world’s largest economies as well as an array of global opinion shapers and decision makers to discuss the hot issues of the day. 

Many dignitaries were surprised that the Island archipelago, whose developing and fast growing economy still relies heavily on coal, placed its flagship decarbonization program directly in the international spotlight. Indeed, Indonesia’s ambitious goal for the G20 summit, as determined by President Joko Widodo (popularly known as Jokowi), was to establish its unique place in the world, in part by showing how an industrialized fossil-fuel exporter in the Global South can successfully manage the transition to a green economy. 

And while this stated goal was indeed lofty, the results did not disappoint. The G20 was crowned with the signing of the Indonesia Just Energy Transition Partnership (JETP), a $20 billion agreement between Indonesia and the G7 nations, European Union, Denmark and Norway, buttressing the southeast Asian nation’s decarbonization initiatives and goals. It serves not only as a blueprint for a green transition, but as a roadmap for how the future economy should look for Indonesia and nations facing the same predicament.

President Widodo, at the event, emphasized his country’s commitment to using its energy transition to achieve a green economy and drive sustainable development noting, “this partnership will generate valuable lessons for the global community and can be replicated in other countries to help meet our shared climate goals through concrete collaborative actions.” 

Indonesia under Widodo’s leadership has internalized that to have a viable future of sustainable prosperity, green solutions must be allied with economic development. With the exception of the pandemic years, Indonesia under his presidency has experienced a continued growth rate of around five per cent. It would be neither feasible nor desirable for the Indonesian government to sacrifice economic prosperity at the altar of climate change initiatives, a logic that applies equally to all the major world economies. 

But while many see governments facing a choice between these two paths, in reality this is a false dichotomy. The green transition – too often seen as a burden – can provide real opportunities, with estimates of a potential 40 million extra jobs in the field being created worldwide by 2030.

As the President Director of Indika Energy, a diversifying and decarbonizing Indonesian energy and investment company, and the Chairman of the Indonesian Chamber of Commerce, I witness the incredible strides being taken by the Indonesian private sector to embrace this new world.  Working hand in hand with a political leadership that both understands the crisis and embraces the challenge, we strive to improve the situation at home while setting a positive example to the rest of the world. Because if a country like our own, in which 60 per cent of national electricity capacity is still reliant on coal power – some 130 million tons annually – can transition and succeed, so can anyone. 

We are not naïve. Growth and development require power. But the climate crisis demands big decisions. And Indonesia’s plan to phase out coal dependence by 2060, including a halt to commissioning new coal-fired power plants is a brave step. This JETP, mirroring a similar partnership struck last year with South Africa, will further assist Indonesia in reaching its ambitious long-term zero-emissions targets without sacrificing energy security and development.

The G20 summit in Bali was therefore a true milestone for Indonesia, giving it the opportunity to present an effective, multi-pronged approach to tackling climate change. Jokowi’s arguments were persuasive: In his opening remarks he pointed to the rehabilitation of three million hectares of tropical forest as part of Indonesia’s efforts to reverse deforestation; the development of the Green Industrial Park in the North Kalimantan region and management of carbon pricing in line with the Paris Climate Change Agreement.  

At the G20, and the B20 business forum which we hosted in the build-up, Indonesia also demonstrated that with its huge nickel and cobalt resources, and access to geothermal, tidal, hydro and solar power – the nation can be a true global leader on climate change, while making sure that no one is left behind.  

This landmark summit was an opportunity to show the world that Indonesia is an attractive prospect for investment as an economically exciting and politically stable country.  But in Bali, the hosts crucially also made sure that the G of G20 stood for ‘Green’ – and set a pathway to progress and energy transition that other nations can follow.

Arsjad Rasjid
Arsjad Rasjid
Arsjad Rasjid is the Chairman of the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) and President Director of Indika Energy.