Indonesia's Energy Transition Policy in the Perspective of Political Economy Under Geopolitical Risk

Ica Cahayani; Della Nurlaela; Rachel Kamilia Faradiba Nibal

doi:10.15642/siyar.2026.6.1.74-106

Authors

Ica Cahayani Universitas Malikussaleh
Della Nurlaela Universitas Malikussaleh
Rachel Kamilia Faradiba Nibal Universitas Malikussaleh

DOI:

https://doi.org/10.15642/siyar.2026.6.1.74-106

Keywords:

Energy Transition, Geopolitics, Political Economy, Indonesia

Abstract

This study discusses Indonesia's energy transition policy amid geopolitical risks and global economic and political instability based on the perspectives of energy economics, power structures, economic dependence, and trade wars. Energy transition is proposed due to its increasing popularity as Indonesia promotes clean energy and aims to achieve net zero emissions by 2060 amid geopolitical issues and global economic and political instability. The selection of Indonesia's energy transition policy is to determine the significance and urgency of this policy from an economic policy perspective. This study analyzes Indonesia's energy transition policy from an economic policy perspective through the dimensions of power structures, economic dependence, and trade wars. This study uses a narrative literature review and adopts a research design to extract research data. The data comes from a review of relevant literature found based on predetermined keywords on the topic of the development of Indonesia's energy transition policy. Indonesia's energy transition policy amid the risk of geopolitical instability shows a dynamic that continues to change depending on geopolitical conditions, the international power structure, and ongoing trade wars. This study proves that the energy transition policy is driven by the Indonesian government's commitment to become an zero emission country. The international push for energy transition has an external influence on Indonesia's energy transition policy-making. In its energy transition policy, the Indonesian government faces a major dilemma, structural power challenges, economic/funding dependence, and the existence of national fossil fuels that frame the energy transition policy.

Downloads

Download data is not yet available.

References

Aalbers, M. B. (2025). Political economy. In K. Jacobs, K. Flanagan, J. D. Vries, & E. MacDonald, Research Handbook on Housing, the Home and Society (pp. pp. 78-94). Belgium: Edward Elgar Publishing Ltd., https://doi.org/10.4337/9781800375970.00012.

Ayu Arsita, S., Eko Saputro, G., & Susanto, S. (2021). Perkembangan Kebijakan Energi Nasional dan Energi Baru Terbarukan Indonesia. Jurnal Syntax Transformation, 2(12), 1779–1788. https://doi.org/10.46799/jst.v2i12.473

Badan Penelitian dan Pengembangan. (2025, April 16). Perang Dagang AS–Tiongkok: Dampak, Peluang, Tantangan dan solusi strategis bagi Indonesia. Kementerian Pertahanan Republik Indonesia.

Barizi, M. H., & Triarda, R. (2023). RANTAI PASOKAN GLOBAL DAN NASIONALISME SUMBER DAYA ALAM: KAJIAN TERKAIT HILIRISASI NIKEL DI INDONESIA. Indonesian Journal of International Relations, 7(2), 312–338. https://doi.org/10.32787/ijir.v7i2.466

Berahab, R. (n.d.). The Energy Transition Amidst Global Uncertainties: A Focus on Critical Minerals.

Gourdel, R., Monasterolo, I., & Gallagher, K. (2025). Climate transition spillovers and sovereign risk: Evidence from Indonesia. Energy Economics, 143. https://doi.org/10.1016/j.eneco.2025.108211

Official Website of the International Trade Administration. (2023, September 27). Indonesia Critical Minerals. https://www.trade.gov/market-intelligence/indonesia-critical-minerals

Pan, X., & Liu, S. (2024). The development, changes and responses of the European Union carbon border adjustment mechanism in the context of global energy transition. World Development Sustainability, 4, 100148. https://doi.org/10.1016/j.wds.2024.100148

Rajagopalan, S., & Landrigan, P. J. (2023). The Inflation Reduction Act – implications for climate change, air pollution, and health. The Lancet Regional Health - Americas, 23, 100522. https://doi.org/10.1016/j.lana.2023.100522

Salinan Kepmen ESDM Nomor 301 RPMBN 2022 sd 2027. (n.d.).

Ardiansyah, H., Wahyuni, E., & Ekadewi, P. (2024). Bridging the Gap between Policy and Net-Zero Realization in Indonesia: An Outlook of Available Approaches. Journal of Physics: Conference Series, 2828(7), pp.1-10, https://doi.org/10.1088/1742-6596/2828/1/012003.

ESDM. (2025). Detil Berita - Ditjen Minerba. https://www.minerba.esdm.go.id/berita/minerba/detil/20250811-indonesia-penuhi-45-kebutuhan-listrik-dunia-ekspor-batu-bara-capai-238-juta-ton

Flint, C. (2022). Putting the ‘‘geo’’ into geopolitics: a heuristic framework and the example of Australian foreign policy. GeoJournal, 87(1), pp.2577-2592, https://doi.org/10.1007/s10708-021-10387-5.

Gatica, J. P. (2025). Geopolitics in the digital age: the U.S.-China competition through their narratives on digital technologies. Revista de Internet, Derecho y Politica, 43(1), pp.1-17, https://doi.org/10.7238/idp.v0i43.428663.

Gong, X., & Xu, J. (2022). Geopolitical risk and dynamic connectedness between commodity markets. Energy Economics, 110(106028), pp.1-15, https://doi.org/10.1016/j.eneco.2022.106028.

Gourdel, R., Monasterolo, I., & Gallagher, K. (2025). Climate transition spillovers and sovereign risk: Evidence from Indonesia. Energy Economics, 143(108211), pp.1-31, https://doi.org/10.1016/j.eneco.2025.108211.

Hafner, M., & Tagliapietra, S. (2020). The Geopolitics of the Global Energy Transition. http://www.springer.com/series/8874

Hechmi, S. (2025). Renewable energy dynamics in Southeast Asia: Analyzing the impact of CO2 emissions, geopolitical risk, tourism, and GDP through FMOLS and CCR estimation approach. International Journal of Innovative Research and Scientific Studies, 8(2), pp. 4278-4288, https://doi.org/10.53894/ijirss.v8i2.6279.

IRENA. (2022a). Estimating energy demand of the energy poor Contents. http://electrification.energydata.info/

IRENA. (2022b). INDONESIA ENERGY TRANSITION OUTLOOK ABOUT IRENA. www.irena.org

Jazuli, M. R., Roll, K., & Mulugatta, Y. (2024). A review of Indonesia's JETP through the dynamics of its policy regime. Global Policy, 15(5), pp. 989-1006, https://doi.org/10.1111/1758-5899.13452.

Kaufmann, D. + I. R. (2016). Close to home: The critical importance of subnational governance in oil, gas, and mining. https://www.brookings.edu/articles/close-to-home-the-critical-importance-of-subnational-governance-in-oil-gas-and-mining/

Kram, H., & Idel, R. (2021). More transitions, less risk: How renewable energy reduces risks from mining, trade and political dependence. Energy Research & Social Science, 82(1), pp.1-11, https://doi.org/10.1016/j.erss.2021.102311.

Lonardo, L. (2022). The Contribution of Geopolitics to the Study of EU Foreign Policy Illustrated Through the Example of Empires and Colonialism. European Foreign Affairs Review, 27(4), pp.445-462, https://doi.org/10.54648/EERR2022031.

Massagony, A., Pandit, R., & White, B. (2025). Political economy of energy policy in Indonesia towards net zero emissions by 2060. Energy for Sustainable Development, 88(101757), pp. 1-15, https://doi.org/10.1016/j.esd.2025.101757.

Maulidia, M., Dargusch, P., Ashworth, P., & Ardiansyah, F. (2019). Rethinking renewable energy targets and electricity sector reform in Indonesia: A private sector perspective. Renewable and Sustainable Energy Reviews, 101(1), pp.231-247, https://doi.org/10.1016/j.rser.2018.11.005.

Mazza, I. (2020). Political economy. In R. Towse, & T. N. Hernández, Handbook of Cultural Economics, Third Edition (pp. pp. 430-440). United Kingdom: Edward Elgar Publishing Ltd., https://doi.org/10.4337/9781788975803.00054.

Mori, A. (2020). Foreign actors, faster transitions? Co-evolution of complementarities, perspectives and sociotechnical systems in the case of Indonesia’s electricity supply system. Energy Research & Social Science, 69(101594), pp.1-9, https://doi.org/10.1016/j.erss.2020.101594.

Nugraha, U., & Hermawan, M. S. (2024). The Prospect and Challenge of Energy Transition Through Electric Vehicle Development in Indonesia: A Sustainable Development Perspective. In A. Sharma, O. Moses, R. B. Sharma, & S. Gupta, Sustainable Innovation for Industry 6.0 (pp. pp.364-388). New York: IGI Global, https://doi.org/10.4018/979-8-3693-3140-8.ch018.

Official Website of the International Trade Administration. (2023, September 27). Indonesia Critical Minerals. https://www.trade.gov/market-intelligence/indonesia-critical-minerals

Pan, X., & Liu, S. (2024). The development, changes and responses of the European Union carbon border adjustment mechanism in the context of global energy transition. World Development Sustainability, 4, 100148. https://doi.org/10.1016/j.wds.2024.100148

Palle, A. (2021). Bringing geopolitics to energy transition research. Energy Research & Social Science, 81(1),pp.1-9, https://doi.org/10.1016/j.erss.2021.102233.

Potss, S. (2025). Political economy. In V. Mamadouh, N. Koch, C. Y. Woon, & J. A. Agnew, The Wiley Blackwell Companion to Political Geography, 2nd Edition (pp. pp. 305-321). New York: Wiley, https://doi.org/10.1002/9781119753995.ch18.

Prasetro, C. P., Effendi, A. J., & Chaerul, M. (2025). Is our energy system sustainable? Gap analysis of fuel supply and demand in Indonesia. IOP Conference Series: Earth and Environmental Science, 1448(1), pp.1-11, https://doi.org/10.1088/1755-1315/1448/1/012019.

Qin, Y., Hong, K., Chen, J., & Zhang, Z. (2020). Asymmetric effects of geopolitical risks on energy returns and volatility under different market conditions. Energy Economics, 90(104851), https://doi.org/10.1016/j.eneco.2020.104851.

Rahman, A., Dargusch, P., & Wadley, D. (2021). The political economy of oil supply in Indonesia and the implications for renewable energy development. Renewable and Sustainable Energy Reviews, 144(111027), pp. 1-14, https://doi.org/10.1016/j.rser.2021.111027.

Rajagopalan, S., & Landrigan, P. J. (2023). The Inflation Reduction Act – implications for climate change, air pollution, and health. The Lancet Regional Health - Americas, 23, 100522. https://doi.org/10.1016/j.lana.2023.100522

Rasoulinezhad, E., Taghizadeh-Hesary, F., Abdoli, G., Jabalameli, F., & Dorbash, S. B. (2023). Determinants of energy transition in Asia. In F. Taghizadeh-Hesary, & D. Zhang, The Handbook of Energy Policy (pp. pp. 511-534). Singapore: Springer, Singapore, https://doi.org/10.1007/978-981-19-6778-8_23.

Resosudarmo, B. P., Rezki, J. F., & Effendi, Y. (2023). Prospects of Energy Transition in Indonesia. Bulletin of Indonesian Economic Studies, 59(2), pp.149-177, https://doi.org/10.1080/00074918.2023.2238336.

Rogelj, B. (2006). Back to Europe - Geopolitical discourses about central and Eastern Europe inside institutions of European union. Dela, 26(1), pp.181-202, https://doi.org/10.4312/dela.26.181-202.

Roukanas, S. (2020). Measuring Economic Development and the Impact of Economic Globalisation. Studies in Business and Economics, 15(3), pp185-207, https://doi.org/10.2478/sbe-2020-0053.

Roukanas, S. (2021). Measuring Global Political Economy. 11th International Conference on the Economies of the Balkan and Eastern European Countries, EBEEC 2019 (pp. pp.119-133). Bucharest: Springer Science and Business Media B.V., https://doi.org/10.1007/978-3-030-57953-1_8.

R. Wardhana, A., & Marifatullah, W. H. (2020). TRANSISI INDONESIA MENUJU ENERGI TERBARUKAN. J. Tashwirul Afkar, 38(02), 274–275. http://tashwirulafkar.net/index.php/afkar/index

Sabet, A. G. (2015). Geopolitics of a changing world order: US strategy and the scramble for the Eurasian Heartland. Contemporary Arab Affairs, 8(2), pp.163-180, https://doi.org/10.1080/17550912.2015.1018717.

Salinan Kepmen ESDM Nomor 301 RPMBN 2022 sd 2027. (n.d.).

Santoso, N. I. (2023). Accelerating electric energy transition in support of green economy. Journal of Energy and Environment, 10(1), 65–78.

Sempa, F. P. (2017). Geopolitics: From the cold war to the 21st Century. New York: Taylor and Francis Inc., pp.1-124, https://doi.org/10.4324/9780203790816.

Setyowati, A. B., & Quist, J. (2022). Contested transition? Exploring the politics and process of regional energy planning in Indonesia. Energy Policy, 165(112980), pp. 1-11, https://doi.org/10.1016/j.enpol.2022.112980.

Simshauser, P. (2025). Competition vs. coordination: Optimising wind, solar and batteries in renewable energy zones. Energy Economics, 143(108279), pp. 1-19, https://doi.org/10.1016/j.eneco.2025.108279.

Singh, S. K., Raj, R. S., & radha. (2024). The Geopolitical Significance of Afghanistan for India in Emerging World Order. In S. K. Singh, R. S. Raj, & radha, Emerging Dynamics of India-Afghanistan Relations (pp. pp.31-48). Singapore: Palgrave Macmillan Singapore.

Su, C.-W., Khan, K., Umar, M., & Zhang, W. (2021). Does renewable energy redefine geopolitical risks? Energy Policy, 158(112566), pp.1-10, https://doi.org/10.1016/j.enpol.2021.112566.

Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122 (1), pp.1-12, https://doi.org/10.1016/j.rser.2019.109547.

Virgilio, G. P., & López, M. E. (2023). Peer-Reviewing the Classics. Journal of Social, Political, and Economic Studies, 47(3-4), pp.231-252, https://doi.org/2-s2.0-85171442829.

Wahyudi, H., Awaluddin, I., Murwiati, A., Nirmala, T., Leny, S. M., & Rohman, F. (2025). The Relationship between Primary Energy Consumption, Energy Security Index, Share of Renewable Energy and the Energy Transition in Indonesia. International Journal of Energy Economics and Policy, 15(5), 645–653. https://doi.org/10.32479/ijeep.20444

Wang, Q., Chen, Z., & Li, R. (2024). Impact of different geopolitical factors on the energy transition: The role of geopolitical threats, geopolitical acts, and geopolitical risks. Journal of Environmental Management, 352(119962), pp. 1-16, https://doi.org/10.1016/j.jenvman.2023.119962.

Wang, S., Wang, J., & Wenfu, W. (2023). Do geopolitical risks facilitate the global energy transition? Evidence from 39 countries in the world. Resources Policy, 85(103952), https://doi.org/10.1016/j.resourpol.2023.103952.

Wang, X., Liang, Q., & Xie, Q. (2024). Research progress on the geopolitical impacts of energy transition. World Regional Studies, 33(4), pp. 31-44, https://doi.org/10.3969/j.issn.1004-9479.2024.05.20220115.

Xie, Q., Bi, Y., Xi, Y., & Xu, X. (2025). The impact of geopolitical risk on higher-order moment risk spillovers in global energy markets. Energy Economics, 144(108292), pp. 1-21, https://doi.org/10.1016/j.eneco.2025.108292.

Yang, Y., Wang, H., & Zhou, P. (2025). The CO2 emission effects of global supply chain geographic restructuring on emerging economies. Energy Economics, 143(108255), pp. 1-10, https://doi.org/10.1016/j.eneco.2025.108255.

Yang, Y., Xia, S., Huang, P., & Qian, J. (2024). Energy transition: Connotations, mechanisms and effects. Energy Strategy Reviews, 52(1), pp. 11-13, https://doi.org/10.1016/j.esr.2024.101320.

Yang, Z., Yuan, X., & Wenguang, T. (2024). The impact of the proportion of renewable energy consumption on geopolitical risks in the United States and the United Kingdom. Energy Exploration & Exploitation, 42 (2), pp.1958-1986, https://doi.org/10.1177/01445987241250268.

Zhang, S., Shinwari, R., Zhao, S., & Dagestani, A. A. (2023). Energy transition, geopolitical risk, and natural resources extraction: A novel perspective of energy transition and resources extraction. Resources Policy, 83(1), https://doi.org/10.1016/j.resourpol.2023.103608.

Zhu, Z., Hunjra, A. I., Alharbi, S. S., & Zhao, S. (2025). Global energy transition under geopolitical risks: An. Energy Economics, 145(108495), pp.1-16, https://doi.org/10.1016/j.eneco.2025.108495.

Zhu, Z., Hunjra, A. I., Alharbi, S. S., & Zhoa, S. (2025). Global energy transition under geopolitical risks: An empirical investigation. Energy Economics, 145(1), pp.1-16, https://doi.org/10.1016/j.eneco.2025.108495.