Indonesia and the Dilemma of a Crisis Amid Abundant Energy

Indonesia is often described as an energy-rich country. We have large coal reserves, abundant natural gas, the world’s largest geothermal potential, year-round stable sunshine, bioenergy from the agricultural sector, and opportunities for hydro and wind power in various regions.

If energy wealth is the main condition for national resilience, then Indonesia should be in a safe position. But that paradox keeps recurring. Every rise in world oil prices makes Indonesia anxious. Every geopolitical tension re-emerges energy as a threat. Every weakening exchange rate makes energy imports burden the balance of trade and the fiscal.

The question is simple but fundamental: if Indonesia is truly energy-rich, why are we still afraid of a crisis?

The problem is not the absence of resources. The problem lies in how we manage those resources. Indonesia is geologically energy-rich, but not yet truly energy-rich in a strategic sense. We have huge potential, but not real energy sovereignty.

Energy crisis is not always about supply; it’s about dependence. Indonesia still relies on imported crude oil and refined petroleum products, while energy consumption for transport continues to grow with economic growth and mobility.

This dependence makes us vulnerable to global price volatility. When oil prices rise, subsidies swell, inflation rises, and purchasing power is squeezed. This pattern repeats and makes energy a source of economic uncertainty.

Moreover, import dependence means geopolitical dependence. In a world full of conflict, energy can be a tool of pressure. A country reliant on external supply has less room to manoeuvre in economic policy and diplomacy. Therefore, energy resilience is not just a technical issue; it is part of national security.

The second paradox is in the domestic energy structure. Indonesia does have large coal reserves, but most of its production is directed for export. When export prices are high, the orientation to global markets becomes dominant.

But when prices fall or when the world constrains coal usage, revenue becomes uncertain. This shows that we still view coal as a commodity, not as a strategic asset to support industrialisation.

Affordable and stable energy is the foundation of industrialisation. A country that becomes an industrial power understands that energy determines productivity. Without affordable energy, production costs rise, manufacturing investment falters, and competitiveness falls. If Indonesia wants to escape the middle-income trap, energy must be part of an industrial strategy, not just a source of short-term revenue.

The third paradox concerns renewable energy. Indonesia has enormous potential for new and renewable energy, but its realisation is not yet optimal. The main obstacles are often not technological but governance-related. Changing regulations, lengthy permitting, uncertain pricing, and limited grid readiness slow development relative to the available potential.

Even more ironical is that when renewable energy projects proceed, many of their main components are still imported. Solar panels, inverters, turbines, control systems, and even batteries frequently originate from abroad. This creates a new dependence. We build green power plants, but the added value and control of technology remain outside. The energy transition does not automatically strengthen economic self-reliance.

In fact, the global energy transition is an opportunity for industrialisation. Advanced economies are promoting clean energy not only for climate reasons but to build new industries and master future technologies. If Indonesia merely becomes a market for green technology, we risk losing a strategic moment. We remain a wealthy-resource country but poor in terms of industrial base.

The fourth paradox lies in energy infrastructure. Resilience is not determined solely by resources but also by the grid, distribution, strategic stockpiles, and the system’s readiness to face disruption.

As an archipelagic nation, Indonesia faces major challenges in building integrated infrastructure. Transmission and interconnection limitations mean supply is not always stable. When one region runs a surplus, another may run a deficit. System flexibility is seldom sufficient to dampen shocks.

An energy-sovereign country not only has resources but also adequate strategic reserves. Therefore, building strategic energy stocks, including stocks of oil, gas and fuels, becomes crucial. Without these cushions, Indonesia will continue to react each time global volatility hits.

The fifth paradox relates to policy direction. Energy policy is often trapped in short-term solutions. We are busy patching subsidies and damping price volatility, but we are less disciplined in building a long-term, cross-government strategy. After all, the energy sector requires decades of certainty.

Without policy coherence, investors hesitate. Without investment, infrastructure projects are delayed. Without infrastructure, energy resilience remains weak. And when resilience is weak, the country panics again at every global crisis. This cycle must be broken.

What should be done?

First, redefine energy wealth. Energy wealth should not be measured by the size of reserves or production, but by the state’s ability to control supply, manage prices, and ensure universal access. True wealth is sovereignty.

Second, accelerate energy import substitution, especially in the transport sector. Bioenergy can be a realistic solution. Biodiesel and bioethanol can reduce oil imports more quickly than current trends.