A growing contest between the United States and China is shaping Indonesia’s shift from coal to cleaner energy, with both powers vying to dominate the future of energy in the developing world.
As the world’s largest coal exporter, Indonesia stands at a crossroads — between Washington’s push for energy partnerships anchored in natural gas and Beijing’s rapid expansion across solar, battery, and electric vehicle supply chains.
In 2023, Chinese companies struck more than $54 billion worth of deals with Indonesia’s state utility PLN, while President Prabowo Subianto’s visit to Beijing in 2024 brought another $10 billion in commitments. China is now deeply embedded in Indonesia’s clean-energy infrastructure — from critical mineral extraction to EV production.
By contrast, the $20 billion Just Energy Transition Partnership (JETP) launched in 2022 with wealthy nations to help Indonesia move away from coal has struggled to make progress. Coal remains crucial to the national economy, contributing 3.6% of GDP.
Before the formal U.S. withdrawal from the JETP in March under President Donald Trump, only $1.2 billion — around 6% of the pledged funds — had been disbursed. Indonesia estimates it will need over $97 billion to complete its energy transition.
While Washington promotes its liquefied natural gas (LNG) exports as a cleaner alternative to coal, China is betting on renewable technologies to secure its dominance in the global clean energy market.
“The two countries are promoting very different visions of the future,” said Putra Adhiguna of the Energy Shift Institute.
U.S. exit shakes confidence, not investments
Analysts say the U.S. pullout affected political leadership but not the overall momentum of the JETP. U.S. climate envoy John Kerry had initially helped launch the program, but the Trump administration’s rollback of climate policies led Indonesian officials to question Washington’s commitment.
“The early discussions created overly high expectations,” Adhiguna said, noting that the targets were difficult to achieve even without U.S. policy shifts.
According to Jordan Lee of the Tony Blair Institute for Global Change in Jakarta, the U.S. pledged $2 billion to the JETP, about half of which remains available through loan guarantees. The program was only meant to support a fraction of Indonesia’s $97 billion clean-energy needs, given the country’s small solar and wind sectors — just 0.24% of its total power generation, compared to 3.8% in the Philippines and 13% in Vietnam.
Still, Lee said JETP helped attract new partners such as the UAE and Saudi Arabia and created a shared platform for energy reform.
China’s model: fast and far-reaching
Beijing, meanwhile, has presented a different version of energy security — one centered on self-sufficiency through renewables.
Chinese companies have moved quickly: battery giant CATL announced a $6 billion supply chain venture in 2022, while BYD began building a $1 billion EV plant in 2024 that will produce 150,000 cars a year and create 18,000 jobs. BTR New Material Group launched a $478 million battery materials factory in 2024, and LONGi is set to open a 1.6-gigawatt solar panel plant in 2025.
“It’s a system-wide transformation,” said Dinita Setyawati, an energy analyst at Ember. “Countries can now use Chinese solar power to charge Chinese-made electric vehicles.”
Chinese firms also deliver projects rapidly — an advantage in Indonesia’s short political cycles. For instance, POWERCHINA completed a 100-megawatt solar park in just seven months in 2024.
“If a U.S. firm spends four years on feasibility studies, Chinese companies will already have broken ground,” Adhiguna added.
However, environmental concerns shadow China’s investments. Most of Indonesia’s nickel — a key EV battery mineral — is mined by Chinese companies using coal-powered plants. A 2024 study by the Centre for Research on Energy and Clean Air estimated pollution from smelters could cost Indonesia $2.6 billion and cause nearly 3,800 deaths in 2025, rising further by 2030.
U.S. gas deals may deepen fossil fuel dependence
In April, Indonesia’s energy minister Bahlil Lahadalia said the country plans to import an additional $10 billion worth of U.S. LNG as part of trade talks. While LNG emits less carbon than coal, experts warn such deals could lock Indonesia into long-term fossil fuel dependence just as renewables become cheaper and more scalable.
“If Indonesia moves too slowly, it could miss out on renewable investments — like data centers seeking green power,” Setyawati said. “And once that realization hits, it might be too late.”
Coal, however, still dominates Indonesia’s power mix. The country ranked third globally in new coal capacity in 2024, with 80% of the 1.9 gigawatts built that year dedicated to smelters processing nickel and cobalt for EVs, according to Global Energy Monitor.
“The government must recognize where the world is heading — toward renewables, whether they like it or not,” Setyawati said.
