Beyond the Energy Trilemma: Building Indonesia's Green Economy

Note: This article reflects the author’s personal opinion and does not represent the views of the CNBC Indonesia editorial team.

For more than two decades, the global energy policy debate has almost always started from the framework of the Energy Trilemma. The concept, introduced by the World Energy Council, posits three goals to be achieved simultaneously: energy security, energy affordability, and environmental sustainability.

These three have become the compass for governments, international institutions, industry players and academics in assessing the success of an energy system. Indonesia has adopted a similar spirit through its national energy mix targets, the acceleration of new and renewable energy, improved electrification ratios, and Electricity Supply Business Plans (RUPTL) that are increasingly oriented towards the energy transition.

The Energy Trilemma has provided an important foundation. However, economic and geopolitical changes in recent years show that these three dimensions are no longer sufficient to answer the challenges of the 21st century.

Energy is now not merely a commodity or a public service. It has become an instrument for building competitiveness, mastering the technologies of the future, attracting investment, and strengthening a country’s position in global value chains.

The COVID-19 pandemic exposed the fragility of energy and industrial supply chains. The Russia-Ukraine conflict drove surging prices of oil, gas and coal, forcing many countries to change their energy strategies within a short period. Tensions in the Middle East continue to create uncertainty over global oil supplies.

At the same time, the technological rivalry between the United States and China has shifted global attention from mere energy production towards mastery of clean energy technology, critical minerals, batteries, electric vehicles, green hydrogen, and the artificial intelligence underpinning modern power systems.

In this new landscape, countries able to link energy policy with industrialisation strategy will reap far greater benefits than those that focus only on energy provision. Energy has become an instrument of economic development as well as a source of national competitive advantage.

Therefore, a paradigm that merely pursues secure supply, affordable prices and low emissions is no longer adequate if energy policy fails to create sustainable economic added value.

Indonesia is in fact in a strategic position. We hold very large nickel reserves as raw material for the electric vehicle battery industry. Indonesia is also endowed with solar energy potential by virtue of its tropical location, vast geothermal resources, wind resources across coastal regions, biomass from the agricultural and forestry sectors, and as yet suboptimally exploited ocean energy.

These assets are complemented by a large domestic market, a demographic bonus, and a geographic position connecting international trade routes. All of these should be used not only to meet national energy needs, but also to build the industries of the future, boost exports, create quality jobs, and strengthen the economic structure.

The problem is that the Energy Trilemma has not explicitly positioned economic competitiveness as a primary goal of energy policy. As a result, many projects are still assessed on generating capacity, cost of electricity production, or emissions reductions, without adequately measuring their impact on national industrial development and long-term economic transformation.

This is where Indonesia needs to broaden its perspective from the Energy Trilemma to an Energy Quadrilemma. This framework retains the three original pillars but adds a fourth dimension: economic competitiveness. This addition is not merely a new term; it changes how we view every energy investment as an economic investment.

The construction of power plants, transmission networks, storage facilities and other energy infrastructure must be designed to generate multiplier effects for industry, technological innovation, investment, exports and job creation. The success of a project cannot be measured solely by megawatts installed or emissions avoided. We must also count its contribution to national productivity and Indonesia’s position in global competition.

The seeds of this approach are already visible. Mineral downstreaming, particularly nickel, shows how natural resources are beginning to be positioned as drivers of industrialisation. The electric vehicle ecosystem, the battery industry, green industrial estates and smelter development demonstrate efforts to transform raw materials into higher value-added products.

The same logic must be applied to renewable energy. Solar plant development must not stop at panel installation. It must become a moment to build a domestic industry for panels, inverters, cables, steel structures, digital devices, and clean energy technology research centres.

Wind farms should likewise drive turbine manufacturing, maritime logistics, offshore construction, and the development of a highly skilled workforce. In this way, every rupiah invested in the energy sector yields benefits far broader than electricity alone.

The Energy Quadrilemma also offers a new perspective for evaluating national policy. Energy security is maintained through source diversification, strategic reserves, grid strengthening, and resilience to geopolitical disruption. Affordability remains important so that people can access energy at fair prices and industry stays competitive.

Environmental sustainability continues to be reinforced through the renewable energy mix, efficiency, emissions reductions, and progress towards net zero emission targets. Yet all three must run alongside improvements in competitiveness through domestic industrial development, technological mastery, local content, research, innovation, and the creation of quality jobs.

These four dimensions are not mutually exclusive goals. Well-designed projects can simultaneously strengthen supply, keep prices stable, suppress emissions, and give birth to new industries.

Changing the yardstick of success matters because energy investment decisions always carry long-term consequences. Power plants, networks, storage facilities and industrial estates will operate for decades. If projects are designed from the outset only to chase the cheapest capacity, Indonesia may lose the opportunity to build its own manufacturing capability, technology and human resources.

Conversely, if every project is structured as part of an industrialisation strategy, energy spending can become a means of expanding the national production base.

The competitiveness dimension also helps the government see trade-offs more clearly.

Local content policy, for example, cannot be judged solely on the percentage of domestic components. The measure must include the quality of technology mastered, costs that remain competitive, the ability of national suppliers to meet international standards, and the opportunity for their products to enter export markets. In this way, industrial protection does not stop at being an administrative obligation but becomes a pathway to capacity building.

The same applies to foreign investment. Global capital and technology are still needed to accelerate the transition. However, investment must be designed to deliver knowledge transfer, domestic supplier development, research centres and improved workforce skills.

Indonesia must not be content with being merely a project site or supplier of raw materials. The goal must be to move up the ladder to become a producer of energy technology, components and services capable of competing in regional and global markets.

This approach will determine Indonesia’s success in capitalising on the global energy transition. The world is racing to build green economies. The winners will not simply be countries with the largest renewable energy resources, but those able to master technology, build industrial capacity, attract quality investment, and occupy key positions in global supply chains.

Indonesia has the prerequisites to be in the front rank. What is needed now is the courage to transform energy policy from a sectoral approach into an integrated national development agenda. Energy policy can no longer proceed separately from industrial, trade, investment, education, and research and innovation policy. All must move in one direction: making energy an engine of growth.

The Golden Indonesia 2045 vision places economic transformation at the top of the agenda. In that context, energy is the foundation of all economic activity. But that foundation only delivers maximum benefit if it creates broad added value for society.

Therefore, the success of the energy transition must not be measured only by installed renewable capacity or emissions avoided. The indicators must include new industries born, investment attracted, high-technology exports, skilled workers absorbed, rising local content, and Indonesia’s position in global value chains.

It is time for Indonesia to move beyond the Energy Trilemma. Adding economic competitiveness does not diminish the meaning of security, affordability or sustainability. On the contrary, the fourth dimension ensures that the other three deliver real economic benefits to the nation.

The government has the opportunity to make the Energy Quadrilemma the new foundation of national energy planning. By aligning energy, industrial, investment, trade, education and research policies, Indonesia can build an energy system that is not only secure, affordable and sustainable, but also productive, innovative and competitive.

That step will strengthen industrialisation, open up quality employment, increase exports, and establish Indonesia as a green economic power that the world takes seriously.