Energy Transition in Indonesia: An Economic Study, Public Policy, and Renewable Energy Potential

Septia Citra Cahyani (), Emy Martina and Jenny Priscilla
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Septia Citra Cahyani: Universitas Bangka Belitung, Faculty of Economics and Business
Emy Martina: Universitas Bangka Belitung, Faculty of Economics and Business
Jenny Priscilla: Universitas Bangka Belitung, Faculty of Economics and Business

A chapter in Proceedings of the 2nd International Conference of Economics, Management, Accounting, and Business Digital (ICEMAB 2025), 2025, pp 179-186 from Springer

Abstract: Abstract This article examines Indonesia’s energy transition by highlighting the dominance of fossil fuels, the country’s vast renewable energy potential, and the structural obstacles hindering its development. Despite the national target of achieving a 23% renewable energy mix by 2025, Indonesia remains heavily reliant on oil, coal, and natural gas. The study analyzes the causes of this dependence, identifies key challenges in renewable energy adoption, evaluates existing policies, and proposes strategies to accelerate the transition. Using a descriptive qualitative approach through literature study, the research draws on secondary data from government reports, academic journals, and research institutions. Findings show that although Indonesia possesses over 400 GW of renewable energy potential, its utilization remains low due to inadequate infrastructure, regulatory uncertainty, fossil fuel subsidies, and investment risks. The analysis demonstrates that externalities, opportunity cost, sustainable development, and endogenous growth theories are essential for understanding these challenges. The article concludes that policy reform, stronger economic instruments, and increased green investment are urgently needed to advance clean energy development.

Keywords: renewable energy; energy transition; public policy; sustainable development; energy economics (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-974-2_26

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DOI: 10.2991/978-94-6463-974-2_26

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