Countries today face a fundamental challenge: how to grow their economies and meet development goals without repeating the planet-warming patterns of the past.
Historically, rapid economic growth has come at the cost of high greenhouse gas emissions. As the world works to secure a stable climate and safe future, decoupling the two is essential — particularly for emerging economies in places like southeast Asia, where energy demand and emissions are rising fast.
This challenge comes into sharp focus in Indonesia, which stands at a defining moment. Southeast Asia’s largest economy and the world’s fourth-most-populous country has two ambitious goals: to grow its GDP 8% per year by 2029 and reach net-zero emissions by 2060.
These objectives may seem to be at odds — and if the country continues on its current fossil-powered trajectory, they are. But this isn’t the only way.
New WRI research shows that Indonesia can achieve both climate and economic goals if it doubles down on clean energy and energy efficiency in the coming years. While the upfront investment is significant, the payoff is even greater: not just lower emissions, but also millions of new jobs, stronger energy security, cleaner air and better health.
These findings align with a growing body of research that shows climate action can grow economies while improving lives globally. Indonesia now has the opportunity to demonstrate that, with the right policies and decisive action, clean energy can be key to a more prosperous future.
Modeling a Path to Green Growth
At present, Indonesia’s energy needs are largely met by fossil fuels: 36% of its power came from coal and 26% from oil in 2023. Raising GDP 8% per year by 2029 would massively ramp up demand, particularly as the government prioritizes energy-intensive industries such as nickel, iron and steel. Meeting this growing demand with the country’s current carbon-intensive power mix risks rapidly driving up emissions.
In parallel to its economic goals, Indonesia has set out plans to shift away from fossil energy and toward clean power. Its latest Electricity Supply Business Plan (Rencana Usaha Penyediaan Tenaga Listrik, or RUPTL) aims to expand renewable power to 34.3% of the total power mix by 2034. The country is also part of a Just Energy Transition Partnership (JETP), which aims to mobilize $20 billion in international finance to support this transition. However, Indonesia is not on track to meet its clean energy goals and has even revised its renewable energy targets downward in recent years.
Our research sought to answer a key question: What if the country pursued its economic goals and an ambitious energy transition in tandem?
Building on earlier modeling that informed Indonesia’s net-zero goal, we looked at what would happen if the country increased clean energy and energy efficiency as outlined under its JETP agreement. Laid out in the 2023 Comprehensive Investment and Policy Plan (CIPP), this pathway includes retiring two fossil fuel power plants by 2035; achieving 34% renewable energy by 2030; and implementing energy efficiency measures. (These could include measures like introducing minimum energy performance standards and labeling programs that promote energy-saving appliances, and improving motor-driven factory equipment and industrial machinery to reduce power consumption.)
Under this “JETP scenario,” new clean energy and improved energy efficiency would still deliver enough power to drive 8% GDP growth per year — while also reducing emissions and avoiding the environmental, health and fiscal costs that come with fossil fuel dependence.
With continued green energy investment, power sector emissions would peak in 2034 at about 324 million tonnes of carbon dioxide equivalent (MtCO2e) and drop to just 13.2 MtCO2e by 2050 — consistent with Indonesia’s goal of reaching net zero emissions by 2060. By contrast, under a business-as-usual scenario, power sector emissions would rise to 1.86 billion tonnes by 2050 — nearly six times what the sector emitted in 2022.
About the Data
Our analysis used an adaptation of the Indonesia Vision to 2045 (IV2045) model — developed under the country’s Low Carbon Development Initiative — to simulate high economic growth pathways either under existing energy systems or more efficient, low-carbon ones. The IV2045 model captures dynamic feedback loops between economic, environmental and social variables, helping decision-makers see both the full consequences of delaying clean energy investment and the long-term benefits of getting it right early.
Green Investments Can Power Jobs, Health and Energy Security
Curbing emissions is critical, but it’s far from the only benefit of shifting to clean energy. Our study finds that scaling up renewables in Indonesia can help the country achieve a bevy of economic and development goals.
Clean energy investments can drive big economic returns.
Scaling up renewable energy will require significant upfront investments in new infrastructure, such as wind turbines, solar farms and battery storage systems. However, the anticipated returns make this spend worthwhile. Our research shows that renewable energy investments in Indonesia can deliver a projected return of $1.41 billion for every $1 billion invested.
The more Indonesia invests in renewables, the more it will generate demand — and thereby additional investment — for them. This can create new value chains for the installation and maintenance of renewable energy systems, spurring significant job creation and contributing to GDP gains.
In addition, upfront deployment costs would be offset in the long term by the much lower operation and maintenance costs of renewable facilities compared to fossil fuel plants. And a greater supply of renewables can generate additional economic returns by keeping workers healthier and more productive through cleaner air.
International partners under Indonesia’s JETP will help provide early financial support for this infrastructure. But the total investment required to meet the country’s targets far exceeds the $20 billion committed under the partnership, meaning the country will need to secure significant additional funding in the near-term from the government, private sector and international sources.
The transition can create millions of new jobs.
In 2024, Indonesia had 15.1 gigawatts of renewable energy installed. According to our model, JETP investments are projected to lead to an additional 52.2 GW of on-grid renewable power and transmission infrastructure by 2030. This massive build-out would create 383,000 new jobs in the energy sector this decade, including roles such as solar panel installers and wind turbine technicians.
Looking further ahead, the country could add almost 1 million total jobs in renewable energy construction and another 1.8 million in power generation by 2050. These would come from the scale up of not just wind and solar, but also hydropower, geothermal and nuclear power plants by 2034, as well as the introduction of green hydrogen in 2040.
While the net job gains are huge, this transition would also see 51,300 workers displaced from fossil fuel plants. Reskilling programs will be critical to help these workers transition into new, green job opportunities.
Shifting away from fossil fuels can bolster energy security.
Indonesia’s domestic oil production has been in decline since 1997, increasing the country’s reliance on imported oil to meet national energy demand. This is at odds with the country’s goal of becoming more energy independent, as imported fossil fuels are vulnerable to global price shocks and supply disruptions. It’s also expensive: In 2024 alone, Indonesia spent over US$36 billion on imported crude oil and natural gas.
Shifting to renewable energy would help lower this import dependence. In our JETP scenario, oil imports drop significantly as renewables scale up, saving 1.23 million barrels per day by 2050. In addition to limiting exposure to international market risks, this shift would free up public resources previously spent on oil imports and fossil fuel subsidies — funds that could be redirected to domestic energy infrastructure and other development priorities.
Moreover, increased reliance on clean electricity as opposed to fossil fuels could expedite the shift to electric transportation; a transition already well underway, with ambitions to electrify 90% of urban mass public transport by 2030 under the country’s National E-Mobility Plan. This would further reduce the need for imported oil.
Cleaner power means better health.
Fossil fuel power plants emit harmful pollutants, including fine particulate matter and nitrogen oxides. These contribute to air pollution-related illnesses, such as asthma, pneumonia, lung cancer and tuberculosis, often with fatal results. Air pollution accounted for close to 10% of all deaths in Indonesia in 2021, claiming over 222,000 lives. This places it among the five countries (alongside China, India, Pakistan and Nigeria) that together account for 60% of air pollution-related deaths globally. The problem is so severe in Jakarta that, in 2021, residents sued then-President Joko Widodo and other top officials over harmful air quality — and won.
Air pollution also takes a financial toll. Each case of acute respiratory illness in Indonesia carries an economic cost of roughly IDR 570,000 (about US$34), according to the national health insurance system. Between 2016 and 2021, this cost the country more than IDR 341 billion (about US$21 million) in total. Meanwhile, lost workdays from illnesses reduce overall productivity.
Renewable energy deployment would significantly reduce dangerous air pollution, lowering healthcare costs and increasing workforce productivity. Our model shows that meeting Indonesia’s clean energy goals could save an estimated 62,000 lives per year, compared with business as usual.
Turning Projections into Reality
Taken together, these wide-ranging benefits show that decisive climate action is not just about avoiding risks — it is about seizing opportunities to grow sustainably and improve people’s lives. But urgency is paramount. Indonesia and other countries need to move swiftly to scale up clean energy and energy efficiency and avoid locking in costly, polluting fossil fuel infrastructure for decades to come.
The first step is raising ambition. Our analysis, based on interventions outlined in the 2023 CIPP, shows that Indonesia needs 63.5 gigawatts of renewable capacity by 2030 and 200 gigawatts by 2040 to meet its GDP targets via clean power. By contrast, the government’s Electricity Supply Business Plan aims for only 18.6 gigawatts by 2030 and 75 by 2040. To turn its growth and climate ambitions into reality, the government must more than double its clean energy targets.
Investing early in energy efficiency can immediately address short-term energy demand and emissions while the country works toward longer-term decarbonization. Near-term measures can include building new energy distribution infrastructure, like transmission lines or microgrids connecting Indonesia’s main islands. It can also include updating existing systems; for example, by switching to more efficient LED-based lighting systems and retrofitting windows to reduce air conditioning demand.
The biggest thrust, however, must come from rapidly expanding renewable energy and slashing reliance on fossil fuels. This will require mobilizing unprecedented clean energy investment from both the public and private sectors on top of JETP financing. It will also take significant policy change, such as cutting fossil fuel subsidies; implementing cross-sector efficiency standards to reduce energy intensity in manufacturing, transport and buildings; and upgrading grid infrastructure to integrate variable renewable energy sources.
Lighting the Way Ahead
While our study focuses on Indonesia, the implications are global. Many developing and emerging economies are at a similar crossroads, working to expand energy access and grow rapidly without exacerbating climate risks — and to ensure that the transition leaves no one behind.
This research offers compelling evidence that a clean energy transition is not an obstacle to growth, but a catalyst for it. By aligning ambitious growth targets with decisive clean energy strategies, countries can take the first step toward unlocking sustainable prosperity.
