- Indonesia’s plan to nearly double the electricity it generates from natural gas by 2040 risks locking the country into fossil fuel dependency, undermining its net-zero emissions targets, a new report says.
- Building out gas infrastructure could cost the state up to $57 billion in losses by 2040 and threaten 6.7 million jobs, while investing in community-managed renewables could generate up to $159 billion and 96 million jobs, it says.
- Gas plants pose significant health risks from air pollution and could cost the national health insurance system up to $103 billion, while threatening biodiversity in coastal areas and sensitive ecosystems.
- The report also warns that Indonesia risks becoming dependent on Japan for gas technology, locking it into a long-term fossil fuel trap that benefits Japan economically while shifting the environmental burden to Indonesia.
JAKARTA — Experts have lambasted Indonesia’s heavy push toward natural gas, saying it risks locking the country into fossil fuel dependency under the guise of clean energy, dealing immense damage to the economy, public health and the environment.
In a new report, Jakarta-based think tank the Center of Economic and Law Studies (CELIOS) and Greenpeace Indonesia identified significant downsides to this reliance, which has already seen a quarter of the national grid, or 26 gigawatts, powered by gas. The government recently unveiled a plan to build another 22 GW of gas power capacity by 2040.
But even if only the announced projects from that new fleet, amounting to 2.6 GW, come online, that will still translate into additional annual emissions of 5.97 million metric tons of carbon dioxide and 5,332 metric tons of methane, according to the report.
The full 22 GW gas expansion would raise this to 49 million metric tons of CO₂ and nearly 44,000 metric tons of methane annually, it says, making the embrace of gas incompatible with Indonesia’s climate goals.
“Compared to renewable energy, which can contribute to reducing carbon emissions by 30-40%, fossil gas power plants can instead hinder progress toward achieving net zero emissions,” the report says. It adds that classifying gas as a “transition fuel” is “highly misleading, as it distracts from the immediate focus on adopting renewable energy that aligns with the Paris climate commitments.”
The government has touted gas as a clean energy source that can bridge the transition from coal, which accounts for most of Indonesia’s energy mix, and renewable energy. In 2023, the energy minister called it “the fastest way to reduce emissions and costs, from diesel fuel-fired to gas-fired.”
Report editor Leonard Simanjuntak, the country director for Greenpeace Indonesia, said this is a cop-out for the government’s failure to invest sufficiently in renewables.
“Since it’s now almost certain we won’t hit the 23% renewables target this year, the government is switching the story to say gas should be our main transition energy,” he said at the launch of the report in Jakarta.
Cost concerns
A key problem identified in the report is the cost of building out gas infrastructure. It estimated that building the fleet of new gas plants could lead to losses to the state of up to 941 trillion rupiah ($57 billion) by 2040. By contrast, developing community-managed renewable energy could lead to economic benefits of up to 2,630 trillion rupiah ($159 billion) over the same period, the report said.
Expansion of gas power also risks the loss of up to 6.7 million jobs, it added, largely from fisheries and coastal industries, where the impacts of new gas plants — from shipping, pollution and land acquisition — are expected to be felt most keenly.
Renewables, though, could create up to 96 million jobs over 25 years, thanks to their labor-intensive nature, said Bhima Yudhistira, the executive director of CELIOS.
“We’ve seen community repair shops for micro-hydro turbines or solar generators springing up in [rural areas], locals running them themselves,” he said at the report’s launch. “The multiplier effects are large.”
Developing decentralized, community-scale renewables has another key benefit over adding to an already overcapacity grid, he said.
“A small business might only operate until 6 p.m. with electricity from the [grid],” he said, “but with solar or micro-hydro, they can work longer hours. Productivity rises.”
Then there’s the need to subsidize the gas to make it cost-effective with other sources of energy. Coal, gasoline and diesel are already heavily subsidized, as is gas for household and commercial use. Adding gas for power generation onto this tab will mean less funding available for renewable energy development and for public spending programs, and an increased government debt, the report said.
It added that government plans to fit the new gas plants with unproven carbon capture and storage (CCS) facilities will only make gas even more expensive than renewables.
Biodiversity and health risks
Another environmental risk posed by gas plants is to biodiversity and the coastal communities that it supports, Bhima said.
In Karawang district in West Java, home to Southeast Asia’s largest gas-fired power plant, fishing communities have complained of their fishing routes being disrupted by the traffic of liquefied natural gas carrier ships to and from the plant, he said.
“Many also feel that coral reef ecosystems are being damaged,” Bhima said. “In other sites under development, like the gas power plant in North Sumatra, many are near mangrove and coral reef conservation areas. So the impacts extend to biodiversity.”
Then there’s the public health cost arising from emissions of nitrogen oxides (NOx), particulate matter (PM) and volatile organic compounds (VOCs), which can cause respiratory diseases, cardiovascular problems and other chronic health conditions in communities living near gas plants.
The overall health burden from gas-fired power could cost the state up to 250 trillion rupiah ($15 billion) over 15 years, the report estimated.
The cost for treating these illnesses could cost the national health insurance system, the BPJS, and additional 1,705 trillion rupiah ($103 billion) if the proposed 22 GW of new plants are built, according to the report. And even if those don’t pan out, the system still faces a potential additional burden of 250 trillion rupiah ($15 billion) compared to the baseline scenario of no new gas plants, thanks to the 26 GW of plants currently operating.
That last figure is more than Ministry of Health’s entire budget, and nearly as much as the government has allocated in infrastructure spending this year.
The report flags these as “hidden costs” that are rarely considered in state energy policymaking.
Geopolitical gas trap
Beyond the health, economic and environmental implications, the report also highlights the geopolitical dimensions of Indonesia’s gas trajectory.
In particular, it warns Indonesia risks falling into dependence on Japan, which has been heavily supporting the plan. Japan is one of the world’s biggest importers of LNG, and has much of the leading gas technology, but not the resources. That’s where Indonesia comes in, Bhima said.
“Japan is pushing gas hard because it owns the technology and wants gas fields for export. This dynamic benefits Japan as Indonesia supplies the gas, purchases its technology and risks long-term dependence [on Japan],” he said.
Japan is a key proponent of the Asia Zero Emission Community, a multilateral initiative it launched in 2022 to help countries in the Indo-Pacific region reduce their greenhouse gas emissions.
But unlike the Just Energy Transition Partnership (JETP) promoted by rich countries in the West, which excludes gas from its funding priorities, AZEC supports a looser definition of clean energy that includes LNG and carbon capture.
This has allowed for the policy incoherence within Indonesia’s energy strategy, the report said. Through AZEC, Japan has been aggressively marketing LNG and gas-fired power plants as low-carbon options for Southeast Asia, framing them as necessary stepping stones rather than something to phase out.
That’s why Indonesia needs to be cautious to avoid being trapped in gas for the benefit of Japan, the report noted. By sourcing its gas from countries like Indonesia, which holds the largest reserves in the region, Japan benefits from the energy but outsources the environmental costs where the extraction, processing and liquefaction occur, all of which are immensely costly in terms of energy and emissions, the report said.
Indonesia currently has five agreements with Japan under AZEC to develop gas-fired power plants.
Leonard said Japan has not been a climate champion.
“[Instead] Japan often obstructs climate deals at COP,” the series of annual U.N. climate summits, he said. “Their gas push is strategic, they want Indonesia to develop gas not for domestic use, but for export back to Japan, along with technology purchases. In this dynamic, Japan always wins.”
Recommendations
Given this range of risks, the report called on the government to cancel new gas projects and redirect subsidies and investments to renewables.
“Currently three major [gas] reserves [in Indonesia] are slated for development. Exploiting them will lock us in even further and derail net-zero goals,” Leonard said.
Indonesia’s untapped potential for renewables stand at 432 GW, the report said, multiples higher than the 22 GW of gas that the government plans to build out. Even a moderate renewables rollout through solar and wind could reduce emissions by 9.2 million metric tons by 2030, the report said.
It added the government should prioritize community-based renewables, rather than corporate-driven projects, as the former generate higher GDP, employment, health benefits and fiscal returns, with lower volatility.
Government on the defensive
Officials involved in Indonesia’s energy transition have defended the inclusion of gas as a key part of the country’s energy mix.
Putu Indy Gardian, a technical specialist at the JETP secretariat, a multistakeholder body coordinating Indonesia’s just energy transition roadmap, expressed skepticism of community-based renewables, citing past failures in micro-hydro and biomass projects.
He questioned the reliability of decentralized systems and emphasized the financial strain that expanding transmission and distribution infrastructure would place on the state-owned electricity utility, PLN, especially in the absence of external funding.
On the other hand, gas offers the kind of grid reliability and dispatchable power that intermittent renewables like solar and wind can’t yet fully provide without costly battery storage, Putu said.
Bhima and Leonard disputed this, saying there’s a risk Indonesia could run out of gas sooner rather than later if it proceeds with the gas expansion plan. Growing domestic gas demand could deplete Indonesia’s reserves, turning the country into a net gas importer by 2040, they said. By 2050, imports could account for more than 30% of the nation’s gas demand.
“If we become net gas importers, what will happen to the rupiah? Oil and gas import deficits pressure the currency. When energy firms need to buy massive amounts of U.S. dollars for imports, the rupiah weakens,” Bhima said.
There’s also the risk that only a handful of large conglomerates will benefit from the gas drive, at the expense of communities. This risk can be mitigated by prioritizing community-based renewables, Leonard said.
“We don’t want this transition dominated again by conglomerates, leaving little room for genuine grassroots initiatives. Our energy history is riddled with rent-seeking and corruption. That risk must not carry over into the energy transition,” he said.
Leonard said true energy justice means moving decisively away from all fossil fuels, including gas, and scaling up people-centered renewable systems that distribute both power and opportunity.
“This must be an ambitious transition focused on renewables,” he said, “no distractions from gas or other fossil-based false choices.”
Banner image: Aerial view of the Java-1 Steam Gas Power Plant or PLTGU in Karawang, the largest integrated power plant in Southeast Asia. Image courtesy of Pertamina.
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