Indonesia’s ambitious push toward a greener energy future is increasingly powered by Chinese investment, as Western-backed initiatives like the Just Energy Transition Partnership (JETP) struggle to deliver on their promises. With billions in funding and rapid project timelines, Chinese companies are reshaping the country’s renewable energy landscape and electric vehicle (EV) ambitions, though experts warn of potential environmental and oversight risks.
A Shift in Energy Dynamics
Launched in 2022, the JETP was heralded as a landmark initiative to help Indonesia transition from coal to cleaner energy sources. Backed by Western nations and Japan, the partnership pledged USD 20 billion in grants, soft loans, and private finance to support this shift. The goal was clear: peak power-sector emissions and raise renewable energy to 34% of electricity generation by 2030. Yet, only USD 1.2 billion has been mobilized to date, hampered by bureaucratic delays, shifting political priorities, and complex financing structures.
The United States, an early champion of JETP, withdrew from coordination efforts in March 2025, redirecting focus to domestic energy policies under an America First stance. Germany and Japan have since stepped in to lead, but the initiative continues to falter. Indonesian officials and experts point to internal hesitations and a lack of ready-to-finance projects as key barriers. Paul Butarbutar, head of Indonesia’s JETP Secretariat, noted that while nearly USD 1.25 billion in grants and concessional financing has been secured for solar, geothermal, and transmission projects, the pipeline of viable initiatives remains limited. 
Criticism of JETP has been sharp within Indonesia. Hashim Djojohadikusumo, special presidential envoy for climate and energy and brother to President Prabowo Subianto, has called it a failed program, pointing out that no direct funds from the US government have been disbursed. Meanwhile, academics and policy advisors like Agus Puji Prasetyono of Indonesia’s National Energy Council acknowledge the initiative’s importance for net-zero targets but lament the slow implementation due to regulatory and funding bottlenecks.
China Steps into the Void
As Western commitments waver, Chinese companies have moved swiftly to fill the gap, becoming a dominant force in Indonesia’s green energy and technology sectors. A recent report by the Lowy Institute highlights that China’s development financing in Southeast Asia grew by USD 1.6 billion between 2022 and 2023, reaching USD 4.9 billion, with a significant portion directed toward infrastructure and energy projects in Indonesia. Chinese infrastructure commitments in the region nearly quadrupled to USD 10 billion in 2023, making China the largest single-country provider of development financing to Indonesia during that period.
In 2023 alone, Chinese firms, including the State Grid Corporation of China and Trina Solar, signed memoranda of understanding with Indonesia’s state-owned power company PLN, valued at an estimated USD 54 billion. These agreements span renewable energy projects and smart grid development. During President Prabowo’s visit to China in 2024, additional investment deals worth USD 10 billion were secured, further cementing bilateral ties.
Indonesia’s energy minister, Bahlil Lahadalia, has openly embraced this partnership, highlighting vast opportunities for collaboration. In September 2024, he outlined plans for major hydropower projects, including 13,000 megawatts (MW) in Borneo and 24,000 MW in Papua, inviting Chinese involvement with the candid admission, We cannot do this alone.
Beyond renewables, China is pivotal to Indonesia’s goal of becoming Southeast Asia’s EV manufacturing hub, targeting annual production of 600,000 EVs by 2030. Automakers like BYD are investing heavily, with a USD 1 billion factory under construction in West Java set to produce 150,000 EVs annually starting in January 2026. Similarly, SGMW, a joint venture involving China’s SAIC Motor, has expanded its Cikarang plant to include EV production since 2022. These developments align with Indonesia’s broader industrial ambitions, leveraging its rich nickel reserves—crucial for EV batteries—where Chinese firms hold significant stakes.
Speed Versus Safeguards
The contrast between Chinese and Western approaches to energy investment in Indonesia is stark. While JETP emphasizes governance reforms and transparency, often leading to prolonged feasibility studies, Chinese projects operate on a commercial basis with accelerated timelines. Putra Adhiguna of the Energy Shift Institute, a Jakarta-based energy finance non-profit, observed that a Chinese investor might be halfway through construction while Western institutions are still assessing viability.
However, this rapid pace raises concerns. Bhima Yudhistira of the Center of Economic and Law Studies notes that many Chinese deals lack transparency, often negotiated behind closed doors. While this expedites progress, it risks weakening oversight. Adhiguna adds that China’s overseas investments typically adhere to host country regulations, which in developing economies like Indonesia may not be stringent enough to ensure environmental protection or labor standards.
The nickel industry exemplifies these tensions. Indonesia, the world’s largest producer of nickel—a key component in EV batteries—has seen about 80% of its processing investments tied to Chinese ownership. Yet, nickel smelters often rely on coal-fired power plants, contributing to significant air pollution. A study by the Centre for Research on Energy and Clean Air, alongside Celios, projected that air pollution from these operations could lead to over 3,800 premature deaths in 2025, rising to nearly 5,000 by 2030. Mining activities, particularly near the Indonesia Morowali Industrial Park, where Chinese company Tsingshan holds a major stake, have been linked to health issues in local communities and environmental violations.
Recent expansions in EV battery production, such as Chinese firm CATL’s USD 5.9 billion nickel battery plant in West Java, have also drawn scrutiny for potential ecological impacts. Despite these concerns, officials like Prasetyono of the National Energy Council defend the partnerships, asserting that Chinese investments are subject to national oversight and that efforts are underway to improve transparency and enforce regulations.
Strategic Interests and Global Dynamics
China’s growing footprint in Indonesia is not merely economic but strategic. As Butarbutar of the JETP Secretariat pointed out, Indonesia serves as a critical manufacturing base for Chinese firms to bypass trade restrictions, such as those limiting direct solar module exports to the US. Producing in Indonesia opens access to global markets, reinforcing the country’s role in China’s broader Belt and Road Initiative.
Under President Prabowo, Indonesia has pivoted toward deeper South-South cooperation, reflecting a non-aligned stance that prioritizes pragmatic partnerships over ideological alignments. This shift is evident in the administration’s preference for retrofitting coal plants with biomass or nuclear options rather than fully phasing them out—a strategy that diverges from JETP’s core objectives and aligns more closely with China’s project-driven approach.
Experts like Fabby Tumiwa of the Institute for Essential Services Reform warn that the Indonesian government’s waning commitment to JETP, coupled with bureaucratic fragmentation, risks undermining long-term climate goals. The complex structure of JETP, involving multiple donor approvals and working groups, has fueled frustration within key institutions like the Ministry of Energy and Mineral Resources. Some officials question why they should accept JETP’s concessional loans, which add to national debt, when direct funding from institutions like the World Bank or Asian Development Bank might be more straightforward.
Balancing Growth and Responsibility
Indonesia stands at a crossroads in its energy transition. Chinese investments offer a lifeline to achieve industrial and renewable energy targets, delivering tangible results where Western promises have stalled. Yet, the environmental and social costs of this rapid development cannot be ignored. Adhiguna of the Energy Shift Institute urges China to elevate its role as a global development actor by adopting stronger governance standards for overseas projects, even if they differ from Western models.
As Indonesia navigates these partnerships, the challenge lies in balancing economic growth with sustainable practices. With gigawatts of renewable potential still untapped, the door remains open for investors—Chinese or otherwise—to shape the nation’s energy future. How Jakarta enforces oversight and prioritizes environmental safeguards will determine whether this surge of investment becomes a model for green industrialization or a cautionary tale of unchecked growth.
