US – Indonesia Energy Cooperation: Challenges and Opportunities

The Indonesian government through the Ministry of Energy and Mineral Resources has re-established relations with the United States in the field of energy transition. The working group or working group between the two countries is illustrated in the Indonesia-United States Clean Energy Working Group Memorandum of Understanding (MOU). The aim of this MoU is to jointly carry out the development of clean energy in Indonesia. This MoU was signed by the Ministry of Energy and Mineral Resources of the Republic of Indonesia and the US Department of Commerce in Jakarta on March 16, 2023.

Then, what about challenges and opportunities for Indonesia through this collaboration with the US? In this opinion article, the author tries to simply describe the challenges and opportunities for Indonesia in achieving clean energy through investment cooperation with developed countries such as the United States. As we know, after the G20 chairmanship, Indonesia firmly adheres to the joint commitment of G20 member countries to create a renewable energy transition ecosystem. In its goal, Indonesia and all post-G20 countries need synergy to support each other to achieve net zero emissions by 2060.

A Mirage in Net Zero Emissions Investment Framework

Indonesia, with its wealth of natural resources, has the biggest challenge in developing clean energy. Regulations, fiscal policies to a well-thought-out planning system in order to attract investors are the task of the Government of Indonesia in achieving net zero emissions. The signing of the MoU between Indonesia and the United States in terms of energy cooperation is a concrete form of how Indonesia is serious about inviting investors to achieve its goals as a country with a clean, renewable energy system.

Quoting the statement of the Minister of Energy and Mineral Resources of the Republic of Indonesia, Arifin Tasrif in his presentation at the Mandiri Investment Forum in 2022, stated that the biggest challenge for Indonesia in creating a clean energy environment to achieve net zero emissions is in large capital schemes. This is in the sense of being able to include infrastructure improvements, transmissions that connect directly to renewable energy sources. Another thing, according to him, is that the energy transition map scheme that Indonesia has drawn up in stages from 2021 to 2060 requires support from all parties and investors in achieving the goal of net zero emissions 2060.

According to Tasrif, Indonesia has the potential for renewable energy resources of 587 gigawatts to be installed by 2060 according to the year of achieving net zero emissions. However, along the way, Indonesia requires a very large investment of 29 billion US dollars per year (CNBC, 2022).

The potential of Indonesia’s natural resources, according to the author’s analogy, becomes a kind of mirage or shadow in a large field if not accompanied by large investments. Simply put, if investors come to Indonesia with regulations and policies that benefit both parties. Thus, the mirage of Indonesia’s natural resource wealth will become bright, not in the form of shadows.

US – Indonesia Working Group in Energy Sector: An Opportunities for Indonesia

The President of the United States, Joe Biden, during his G20 visit, stated that he would help Indonesia through an investment in the clean renewable energy sector with $20 Billion by stopping the use of carbon/coal energy in Steam Power Plants. The United States’ commitment shows that Indonesia has great opportunities, if it is able to be consistent in using clean, renewable energy.

Furthermore, the cooperation between Indonesia and the United States through the Clean Energy Working Group MoU in March 2023, is another great opportunity for Indonesia to welcome investors in order to achieve goal of net zero emissions. Government of Indonesia through Ministry of Energy and Mineral Resources said that the Working Group with the United States aims to electrify and develop Indonesia’s electricity, with an initial focus on helping Indonesia achieve 23% of the energy mix from Renewable Clean Energy in 2025 and achieve Net Zero Emissions in 2060 or faster (ESDM, 2023).

The cooperation in the energy sector between Indonesia and the United States through Clean Energy Working Group MoU is an update on the Indonesia-United States MoU regarding the Power Working Group for Indonesia which was signed in 2015. At that time, electricity issues were the main focus. Through the signing of an energy working group between Indonesia and the United States, it can become an initial focus for the US Department of Commerce to help Indonesia achieve the goal of 23% contribution to the renewable energy network and net zero emissions in 2060 or sooner (ESDM, 2023).

US – Indonesia the latest MoU in 2023, for the author is a continuation of the United States’ commitment to provide assistance and assistance to Indonesia in order to achieve net zero emissions by 2060. The use of carbon energy such as coal has become a serious problem for the environment. Therefore, the use renewable energy in Indonesia deserves support from developed countries such as the United States, either in the form of funding or assistance in the energy transition process. Indonesia’s wealth of natural resources, which also contains the potential for clean energy, such as geothermal is like a mirage that should be accompanied by large investments and ‘mature’ regulations in order to achieve real goals, not just mirage shadows.

I Gusti Ngurah Krisna Dana
I Gusti Ngurah Krisna Dana
Master Student at Department of Politics and Government, Faculty of Social and Political Science. Gadjah Mada University, Yogyakarta, Indonesia.