Indonesia’s clean energy future is at the center of a supply struggle between the US and China

The race to replace coal in Indonesia, the world’s largest coal exporter, has become a contest between the U.S. and China. At stake is not only Indonesia’s climate future, but also which superpower sets the terms for the next generation of energy in the developing world.

Like much of the developing world, Indonesia faces a choice between two stark energy futures.

Chinese companies signed more than $54 billion in agreements in 2023 with Indonesian state utility PLN, while Indonesian President Prabowo Subianto’s 2024 Beijing visit added $10 billion in commitments. Chinese firms are now rapidly embedding themselves in Indonesia’s clean-energy supply chain, from solar and critical mineral mining to electric vehicles, also known as EVs.

These investments dwarf the $20 billion Just Energy Transition Partnership, or JETP, signed in 2022 between Indonesia and a group of wealthy nations to help the country shift away from coal, which contributes 3.6% of the country’s GDP.

The program was faltering even before U.S. President Donald Trump’s administration formally withdrew in March. Only $1.2 billion, or about 6%, of JETP finances have been disbursed while Indonesia believes it needs over $97 billion for the transition.

The U.S. is the world’s top oil producer and has pushed liquefied natural gas, or LNG, as part of talks meant to head off tariffs for Indonesia. It touts “energy dominance” as a way to cut dependence on rivals like China. Beijing is betting on big renewables to cement its role as the biggest supplier of clean energy technology.

The U.S. path risks deeper fossil fuel dependence, while China’s promises jobs and cleaner power with fewer safeguards.

“These two countries … they’re shaping two different visions of the future,” Putra Adhiguna of the Energy Shift Institute said.

The U.S. withdrawal in March didn’t derail the JETP, but impacted political leadership, analysts said.

When the deal was signed, U.S. climate envoy John Kerry said America had laid the groundwork. But after Trump dismantled Biden-era climate policies and pushed fossil fuel development, Indonesian officials questioned why they should transition if America isn’t, Adhiguna said.

Early JETP conversations “set expectations unrealistically high,” raising goals that were hard to achieve regardless of U.S. policy changes, he added.

The U.S. pledged $2 billion, with roughly half still accessible via loan guarantees, said Jordan Lee of the Tony Blair Institute for…