Indonesia: The highest risk of climate impacts but also the most promising opportunities

Indonesia is one of the countries, both with the highest risk of climate impacts but also the most promising opportunities connected to the green transition. Recently, the government has announced an increase in emission reduction target for 2030, raising it from 29 percent to 31.89 percent through the country's own resources and capabilities, or from 41 percent to 43.20 percent if international support is provided.[1]

Joko Widodo’s administration is seeking to ride the wave of developing and manufacturing low-emission products. He has a plan to build the world’s largest green industrial park harnessing hydroelectric power in the province of North Kalimantan. The budget for the project is 3,042 trillion rupiah (over $1.5B).[2]

The country has become the key producer of EV batteries in the global supply chain. Electric vehicle manufacturers from Asian and European countries, as well as the United States have been pouring in investment. This is thanks to rich natural resources: Indonesia has the world’s largest nickel reserves, besides rich deposits of other key metals.

Just to give you an idea of the scale of FDI related to the battery supply chain, the two latest investment deals committed are: $1.1 billion by South Korea's LG Energy Solution, and $5 billion by next year and US$15 billion or more until 2028 by China's Contemporary Amperex Technology (CATL).[3]

[1] https://unfccc.int/sites/default/files/NDC/2022-09/23.09.2022_Enhanced%20NDC%20Indonesia.pdf

[2] https://www.straitstimes.com/asia/se-asia/widodo-tells-parliament-that-north-kalimantan-will-be-worlds-biggest-green-industrial-park

[3] https://www.straitstimes.com/asia/se-asia/widodo-tells-parliament-that-north-kalimantan-will-be-worlds-biggest-green-industrial-park