GIZ supports Indonesia’s green economic transformation and industrial decarbonization through the integrated application of renewable energy (RE) and energy efficiency (EE).

Indonesia is the largest economy in ASEAN and the 16th largest economy in the world. With its Vision 2045, Indonesia is aiming to become a fully industrialised nation and shift towards a green economy by 2045. Expanding the industry and manufacturing sectors in a carbon-friendly way, decoupling economic growth from energy demand rise and greenhouse gas (GHG) emissions is pivotal to enable such a transformation. By today, Industry plays an important role in Indonesia’s economy. It contributes 16.77% to the national GDP, 28.3% to overall tax revenue, 71.04% to exports and 41.14% to the country’s investment in Q1 2023 (Ministry of Industry, 2023). In turn, these significant shares are reflected in the industry’s contribution to overall emissions, where industry accounted for one quarter of total emissions in 2022 (IEA). The top four industrial sectors that produce the highest emission levels are: cement, steel or fabricated metal, textile and apparel, food and beverages. A key source of emissions in industry is high-energy consumption.

Recognizing the need to reduce industrial emissions to realise the vision of a green economy, Indonesia’s NDC calls for 9 Mton CO2eq emission reductions for the Industrial Processes and Product Use (IPPU) sector. However, existing options to increase the efficiency of industrial energy-related processes and adopting lower carbon technologies are widely un-utilized. Emerging as first movers for green transformation are industry players and private sector stakeholders who show signs of becoming champions for a move towards net zero industry decarbonization, aligned with internationally driven obligations to green supply chains in light of Carbon Border Adjustment Mechanisms (CBAM).