Indonesia has Potential to Lead in Shipping’s Energy Transition

As the shipping industry looks for future sources of alternative fuels and emerging nations look to the opportunities being created by the new fuel industry, a new report suggests that Indonesia has the opportunity to take a leadership role. Published by the P4G-Getting to Zero Coalition Partnership, the report finds that Indonesia has several opportunities to leverage the global transition to zero-emission marine fuels toward key national objectives. However, achieving this will require targeted action to unlock these opportunities.

“The increasing momentum behind international maritime decarbonization holds huge potential for countries like Indonesia,” said Ingrid Sidenvall Jegou, Project Director at Global Maritime Forum. “To better realize this opportunity and signal strong public buy-in, Indonesia should seek to leverage its influence in international negotiations, particularly drawing on its role as the host of the G20 later this year, in addition to COP27 and upcoming IMO negotiations.”

With over 17,000 islands, GMF says that Indonesia is intrinsically tied to the maritime industry, with many small vessels making up the domestic fleet, in addition to a high volume of international traffic passing through Indonesian waters. Maritime activities contribute massively to Indonesian society and the economy, with there being a strong potential to leverage these activities to decarbonize other industrial activities and support wider economic development.

Traditional Indonesia’s neighbor Singapore has been the world’s leading bunker port. Positioned on one of the major sea lanes the city-state has long been the leader in supplying fuel to passing ships, but the report argues that by establishing green hubs, Indonesia can cement its position as a key maritime axis, creating new revenue streams from SZEF exports and bunkering and improving access to import and export markets.

“Identifying strategic opportunities for renewable energy production in emerging and developing economies, like Indonesia, is central to enabling a just and equitable transition for international shipping,” says Margi Van Gogh, Head, Supply Chain and Transport at the World Economic Forum. “By scaling its renewable energy potential, Indonesia could decarbonize domestic industry and aid the broader shipping energy transition – a pathway that could enable Indonesia to become a leading producer and supplier of sustainable zero-emission fuels, create new sustainable jobs, and contribute to economic growth.”

They estimate that the development of scalable zero-emission fuel infrastructure could lead to an investment of between $3.2 to $4.5 billion by 2030. This is in addition to the potential development of other industries, expertise, environmental protection benefits, and R&D emanating from the decarbonization of maritime shipping and the adoption of SZEF.

After consultation with key Indonesian stakeholders, the report names three key opportunities including the possibility of establishing Kalimantan as a bunkering hub, the electrification of the small boat fleet, and a decarbonization hub powered by geothermal activities.

However, the report also concludes that essential to unlocking these opportunities is a facilitative policy and financial framework capable of effectively motivating and convening key actors across sectors and value chains. Presently, Indonesia benefits from its existing policy frameworks in the field of maritime, energy and climate policy, however, more work is needed to coordinate policies more specifically around the maritime decarbonization opportunity.