The Energy Sector

As it stands, energy is a crucial contributor to Indonesia’s economic prowess, and the sustainable and equitable development of the sector is key to the economic and infrastructural growth of the country. Indonesia is rich in natural commodities, in particular, coal, natural gas, metals, and other mining and agricultural products. In 2019 alone, the country produced 616 million tons of coal, 2.8 million cubic feet of natural gas and 272 million barrels of oil. Indonesia is a net energy exporter, and the energy sector and overall economy has been built on the extraction and exportation of natural resources, with coal being Indonesia’s principal export.

Despite its importance to economic growth, the circulation of unreliable data and conflicting national policies greatly limit sector growth. Although nationwide electricity access has increased, infrastructure may not be able to keep up with future regional demand given the difficult archipelago layout of the country. Therefore a focus will be placed in the expansion of energy related infrastructure.

The government’s overall strategy for the development and progression of its energy sector revolves around diversification, environmental sustainability, and efficient use of domestic energy resources. The 2014 National Energy Policy targets a primary energy mix of 23% renewable energy, 22% gas, 55% coal, and 0.4% oil by 2025. Additionally, the National Electricity Plan aims at a long-term goal of 28% new and renewable energy, 25% gas, 47% coal, and 0.1% oil for electricity usage. Finally, energy efficiency measures target the reduction of energy consumption by 1% per year.