Indonesia faces a pivotal moment. With a national goal to grow the economy by 8% annually by 2029, decision-makers are seeking solutions that maintain this ambitious trajectory while also meeting net zero emission commitments through a rapid energy transition. However, rapid growth risks driving up energy demand, deepening fossil fuel dependence, and delaying climate commitments. This analysis aims to show that early and decisive investment in clean energy is not just compatible with growth but essential for securing it. Simulations model the expected socioeconomic effects of Indonesia’s Comprehensive Investment and Policy Plan (CIPP) for its Just Energy Transition Partnership (JETP) to show that this shift can support, rather than detract from development ambitions. At present, Indonesia remains heavily reliant on coal, and its clean energy targets are offtrack. This paper addresses the need to reconcile these competing priorities.

Key Findings

Our model envisions that the CIPP enables a just energy transition that can support rather than detract from development ambitions. By accounting for the 8% growth goal, we project the socioeconomic implications of attempting to achieve both climate and development ambitions simultaneously and in the early stages of Indonesia’s clean energy transition.

The model projects that substantial emissions cuts are made amid rapidly increasing growth but only following sufficient energy efficiency and renewable energy adoption rates. Under the CIPP-aligned JETP scenario:

  • Real GDP growth reaches 8 percent by 2029, driven by low-carbon energy infrastructure investment, energy efficiency, and renewable energy deployment.
  • Renewable energy investments deliver a projected return of $1.41 billion for every $1 billion invested.
  • The power sector’s contribution to national GDP rises to 3.41–8.03 percent by 2050, thanks to expanded green generation.
  • Greenhouse gas emissions peak at 324 million tonnes of carbon dioxide equivalent (MtCO2e) in 2033, dropping to 13.2 MtCO2e by 2050 — a dramatic cut from the 1.86 gigatonnes of carbon dioxide equivalent (GtCO2e) projected under business-as-usual.
  • Over 1 million jobs will be created in renewable energy construction alone, with 1.8 million employed in power generation by 2050.
  • Oil imports drop significantly — saving 1.23 million barrels/day — improving energy security and reducing fiscal burdens from fuel subsidies.
  • Air pollution–related illnesses and deaths decline, reducing the economic burden of health care and increasing productivity