Indonesia's Captive Power Plants Risk Emission Surge Amidst Industrial Electricity Demand Growth
Indonesia's industrial sector increasingly relies on captive power plants, with capacity rising from 14 GW in 2019 to a projected 33 GW by 2024. This surge, primarily from fossil fuels, poses risks of significant greenhouse gas emissions and may hinder the transition to cleaner energy. By 2024, emissions from these plants could reach 131 MtCO2, constituting 37% of the electricity sector's total emissions. The EU's Carbon Border Adjustment Mechanism, starting in 2026, may further threaten Indonesia's export competitiveness unless a transition to renewables occurs.
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The capacity of captive power plants in Indonesia is set to grow from 14 GW in 2019 to 33 GW by 2024, primarily driven by fossil fuel sources. This increase poses a risk of heightened greenhouse gas emissions, with projections indicating emissions could reach 131 MtCO2 by 2024, making up 37% of the electricity sector's emissions.
The EU will implement the Carbon Border Adjustment Mechanism in 2026, potentially impacting Indonesia's export competitiveness. Without a transition to cleaner energy, particularly in industries like nickel and aluminum, Indonesia risks long-term economic consequences.
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