Indonesia and the Geopolitics of the Energy Transition
Ranging from discussions about Ramadan to dynamics of geopolitics.
Energy transition is often understood as a technocratic agenda: reducing emissions, building solar power plants, and accelerating electric vehicles. Yet behind the green narrative, the world is witnessing a new phase of global geopolitics. If the 20th century was defined by oil, the 21st century will be determined by who controls critical minerals, battery technology, and the supply chains of clean energy.
Rivalry between the United States and China sits at the epicentre of this dynamic. Washington is pushing green reindustrialisation through massive subsidies, tariff policy dynamics, and strengthening supply-chain alliances. Beijing, by contrast, has already mastered the manufacture of solar panels, lithium-ion batteries, and the processing of various strategic minerals. The energy transition thus becomes an arena of economic, technological contest and global influence. In the midst of this swirl, Indonesia is not standing on the sidelines; we should be at the heart of the game.
CRITICAL MINERALS AND DOWNSTREAMING POLITICS
Indonesia has the world’s largest nickel reserves, a key component of electric vehicle batteries. Our country holds nickel ore reserves of about 5.3 to 5.9 billion tonnes, accounting for around 40% of global reserves. In the context of the geopolitics of the energy transition, this position is not merely a comparative advantage but a tangible strategic asset, though there is a responsibility to address environmental damage risks by optimising technological innovation and compliance with safety and sustainability standards.
However, geopolitics is always dynamic. Large Chinese investments in the nickel processing industry have accelerated the development of smelters and the battery ecosystem. At the same time, the United States is seeking to build alternative supply chains. Environmental and labour standards are increasingly becoming instruments of economic diplomacy.
Indonesia faces a classic dilemma: how to attract investment and technology without becoming trapped in dependence on a single power bloc? If tilted too much to one side, the risks of strategic vulnerability rise. Yet if too cautious, momentum opportunities could be lost.
Here, strategic prudence becomes crucial. Indonesia needs to apply strategic hedging: maintaining balanced relations, opening space for a range of partners, from East Asia to Europe and North America, while asserting national interests. Diversifying partners is not merely an economic option but a geopolitical necessity. In this context, the cooperation under the Agreement on Reciprocal Trade (ART) between Indonesia and the United States should be revisited with an understanding of these dynamics.
JUST TRANSITION FOR THE GLOBAL SOUTH
As part of the Global South, Indonesia has a special perspective on the energy transition. Developing countries face a double challenge: reducing emissions while sustaining economic growth and job creation. Our emissions profile is relatively small compared with developed industrial nations, but the push for decarbonisation is growing stronger.
The principle of common but differentiated responsibilities must remain the foundation of Indonesia’s climate diplomacy. The energy transition must not become green protectionism, where carbon standards are used to restrict access of developing countries’ products to global markets.
Financing schemes such as the Just Energy Transition Partnership (JETP) are a concrete test. Moreover, JETP commitments have become highly dynamic in recent years since the G20 Bali agreement. Funding commitments must be genuinely supplementary, transparent, and support the transformation of the electricity system without burdening the national fiscal. An accelerated transition without adequate support risks deepening inequalities.
Domestically, the energy transition confronts structural realities. Coal still dominates the national electricity mix. Millions of workers and regions rely on the extractive industry. Changes too rapid without social mitigation could trigger economic and political upheaval. This reality also requires careful consideration, weighing the risks of pressure to reduce or even close coal-fired generation.
Therefore, the transition must be designed as a gradual but definite transformation. Investments in renewable energy, solar, geothermal, wind, and other schemes must be accelerated, alongside programmes for reskilling workers and diversification of coal-producing regional economies. Energy resilience must not be sacrificed for short-term ambitions.
Furthermore, the development of the battery and electric vehicle industries must be integrated with the domestic decarbonisation agenda. It would be odd if Indonesia becomes a world-leading battery producer, yet the electricity powering that industry remains dominated by fossil energy. In this space, global credibility demands consistency between industrial policy and climate policy.
PUBLIC LEGITIMATION
Energy transition, ultimately, is not only about technology and investment, but about collective behavioural change. In Indonesia, social legitimacy plays a decisive role. Here, religious community organisations take on a crucial role.
Nahdlatul Ulama, with its network of pesantren and broad base, has the capacity to embed environmental ethics within an Islamic framework. The concept of fiqh al-bi’ah (environmental jurisprudence) could form the moral basis that caring for the Earth is part of a religious trust. The important ideas from Kiai Sahal Mahfudh, Kiai Ali Yafie, and several other kiai who see environmental concern and welfare, need to be presented as strategic programmes. NUCARE-Lazisnu and other bodies within Nahdlatul Ulama’s circle have already promoted green pesantren and green-zakat to optimise a more structured environmental movement. There needs to be substantial support and consolidation so that this movement becomes broader and more impactful.
Muhammadiyah, through its network …