With Western-backed climate financing stalling, China has rapidly expanded its footprint in Indonesia’s energy sector, from solar and hydropower projects to electric vehicle (EV) manufacturing. Experts say Beijing’s speed and scale are reshaping the country’s green transition, though concerns remain over environmental safeguards.
The Just Energy Transition Partnership (JETP), launched in 2022 with a $20 billion pledge from Western nations and Japan, has mobilized only $1.2 billion to date. The U.S. quietly withdrew in March 2025, leaving Germany and Japan to coordinate. Indonesian officials have criticized the scheme as “empty talk,” citing bureaucratic delays and debt concerns.
China’s Rapid Rise
In contrast, Chinese firms have surged ahead:
- $54 billion in MoUs signed in 2023 with Indonesia’s PLN for renewables and smart grid projects.
- $10 billion in investment agreements sealed during President Prabowo Subianto’s 2024 visit to China.
- BYD’s $1 billion EV factory in West Java (production to begin in Jan 2026).
- LONGi’s new solar panel plant near Jakarta has a 1.4 GW capacity.
- CATL’s $5.9 billion nickel battery complex launched in West Java.
Indonesia, the world’s largest nickel producer, has also seen Chinese dominance in smelters, which are critical for EV batteries.
Chinese involvement aligns with Jakarta’s ambition to become Southeast Asia’s EV hub. Officials have also offered Beijing collaboration on massive hydropower projects in Borneo (13,000 MW) and Papua (24,000 MW).
Analysts note that while Western financing emphasizes governance and transparency, China’s commercial approach delivers projects faster. “Western institutions spend years on feasibility studies. Chinese investors could already be halfway through construction,” said Putra Adhiguna of the Energy Shift Institute.
Risks and Costs
The speed of Chinese-backed projects raises concerns:
Nickel smelters, often powered by coal, have been linked to air pollution and health risks. A 2024 study projected 3,800 premature deaths in 2025 from pollution near smelter zones.
Local communities report environmental violations around nickel mines, particularly near the Indonesia Morowali Industrial Park (IMIP), a Tsingshan-led hub.
While Indonesia insists Chinese projects are subject to national oversight, experts warn that weak standards could undermine climate goals.
With JETP losing momentum and Western financing in retreat, China has become Indonesia’s key development partner, providing capital, technology, and market access. But the challenge ahead lies in ensuring these investments are sustainable and socially responsible.
“China doesn’t need to copy Western frameworks,” Adhiguna said. “But as its role grows, it must raise the bar on governance and environmental safeguards.”
