Leveraging the resources of a volcanic nation to achieve carbon neutrality

The populous country of nearly 300 million faces challenges in building a power grid connecting its islands

In Indonesia, a country with a population approaching 300 million, various initiatives to become carbon neutral by 2060 are in motion under the new Prabowo administration, which took office in October 2024. Although it is ASEAN’s largest CO₂ emitter, Indonesia is focusing on developing renewable energy sources such as hydropower and geothermal power, leveraging the fact that it is one of the world’s most volcanically active countries. JBIC has been providing extensive support for their development.

"President Prabowo showed a positive stance toward utilizing Indonesia’s abundant renewable energy resources, mentioning the country’s rich supply of biofuel, geothermal energy, and hydropower in his inauguration speech," says OHKAWA Yoshio, JBIC’s Chief Representative in Jakarta. At the same time, the rise of the digital economy is driving a yearly increase in power consumption. Achieving both economic growth and decarbonization is a shared challenge among AZEC countries.

In addition to developing power sources, an important challenge facing Indonesia is developing a power grid for stable supply of electricity to the many islands that make up the country.

"JBIC has experience providing project financing for NeuConnect interconnector, a privately-led initiative to develop a power transmission system linking the UK and Germany. In June 2024, we held a seminar in Indonesia to showcase this project as a successful example of installing a transmission system. Through such steady, gradual efforts, we hope to build momentum for new project financing," says OHKAWA.

Infrastructure projects progress in stages, in collaboration with the relevant ministries and agencies, while harnessing private sector dynamism. JBIC plays a key role in supporting this process.

Focusing on the potential of geothermal power generation and expanding the Muara Laboh project

Against this background, Indonesia’s geothermal power is gaining attention and raising expectations across AZEC countries. The Muara Laboh geothermal power project, a joint venture between Japanese and Indonesian, utilizes JBIC financing. An ongoing expansion of the Muara Laboh plant has become an AZEC flagship project, testament to the high expectations around its success.

"Though the potential of Indonesia’s geothermal power generation is high, it is not easy to utilize steam underground,” notes OHKAWA. “Despite the challenges, the plant is producing high-quality steam, leading to the decision to expand its capacity. It stands as a benchmark geothermal power project in Indonesia."

Effectively utilizing the renewable energy resources beneath the earth’s surface is a major challenge. JBIC is expected to play its part by supporting efforts to harness the potential of this volcanic powerhouse nation.

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