Indonesia Energy Mix Law and Regulatory Framework Overview

Indonesia need to reduce dependence on fossil fuels and diversify national energy sources has grown urgent in recent decades, propelled by rising energy demand, environmental concerns, and international commitments to combat climate change. Central to this effort is Law No. 30/2007 on Energy, which forms the overarching legal cornerstone for national energy management. This law outlines fundamental principles such as energy sovereignty, efficiency, and sustainability, and it stipulates the roles and responsibilities of government institutions, private sector actors, and regional authorities. Its focus on renewable energy development and energy conservation reflects Indonesia’s broader objective to harness indigenous resources while minimizing the ecological impacts of energy consumption (Government of Indonesia, 2007).

This need further reinforced by Indonesia international commitment to reduce carbon emission. In 2015, Indonesia has joined all member of the United Nation to support the United Nations General Assembly 2030 Agenda for Sustainable Development. As an official endorsement  the SDGs Indonesia government quickly ratified the SDGs through Presidential Regulation No. 59 of 2017 on the Implementation of Achieving the SDGs which serve as regulatory framework and commitment for Indonesia to achieve SDGs. Additionally in 2016 Indonesia also enact Law No. 16 of 2016 on Ratification of the Paris Agreement of the United Nations Framework Convention on Climate Change.

Based on the law Indonesia committed to reduce its carbon emission by 29% in a business of usual scenario or 41% with international assistance by 2030. It can be inferred that sustainable energy policy is a crucial element for Indonesia to achieve its Paris Agreement and SDGs target. Indonesia as a developing country with 4th largest population in the World has long depended on coal, oil and gas as its primary energy source to fuel its economic growth. Furthermore, Indonesia increasingly depended on coal which emits more carbon than oil or gas which coal share in energy mix expanded from 15% in 2005 into 30,3% in 2021.

Regulatory Framework To Boost Indonesia Renewable Energy

Under the mandate of Law No. 30/2007, the Indonesian government has rolled out subsidiary regulations to operationalize its national energy strategy. One key regulation is Government Regulation No. 79/2014 on National Energy Policy, which provides a detailed blueprint for implementing strategic energy initiatives. It targets reducing reliance on oil, boosting natural gas utilization, and promoting renewable energies to ensure long-term national energy resilience (Government of Indonesia, 2014). This regulation further identifies the 23% renewable energy share by 2025 and 31% by 2050 as cornerstones of the energy mix, pointing to a clear directional shift away from the conventional dominance of fossil fuels. The impetus behind these targets is not merely environmental; from an economic standpoint, developing renewable energy industries stands to generate domestic jobs and reduce foreign exchange outflows, thus contributing to broader national growth.

The translation of these high-level objectives into actionable policy is facilitated by Presidential Regulation No. 22/2017 on the National Energy Plan (Rencana Umum Energi Nasional, RUEN). This presidential regulation serves as a roadmap for sector-specific strategies involving coal, oil, gas, and renewables, obliging central and local governments to work in synergy. Each province is further instructed to craft its own Regional Energy Plan (Rencana Umum Energi Daerah), ensuring that energy policies are attuned to local needs and resource availability (Government of Indonesia, 2017). The Ministry of Energy and Mineral Resources supervises this multi-tiered policy execution, supported by the National Energy Council (Dewan Energi Nasional), which oversees planning, monitors progress, and advises on necessary adjustments. These entities collectively hold the responsibility for aligning energy policies with sustainable development goals, climate change commitments, and national economic objectives.

Despite the comprehensive legal framework, challenges persist in realizing Indonesia’s desired energy mix. The existing fossil fuel infrastructure, supported by substantial subsidies, has historically made renewables less competitive. Moreover, land acquisition and permitting processes often pose delays for large-scale renewable energy projects, contributing to protracted development timelines. The limited availability of attractive financing options further complicates efforts to scale up renewable capacity. Consequently, while the regulatory landscape signals a strong policy commitment to shifting the country’s energy mix, progress remains uneven across different regions and energy sectors. International financial institutions, development agencies, and foreign investors are progressively recognizing Indonesia’s renewable potential, but concerns about regulatory certainty continue to influence investment decisions. As a result, the government is under pressure to refine existing policies and improve institutional coordination to accelerate the transition.

Conclusion

Looking ahead, Indonesia’s energy mix law framework stands at a critical juncture between ambitious policy visions and tangible implementation outcomes. Instruments such as feed-in tariffs and tax incentives for renewable energy developments could further incentivize private participation. There is also growing interest in integrated approaches combining renewable energy targets with broader objectives in climate policy, rural electrification, and sustainable economic development. Several pilot projects, including geothermal plants and solar PV initiatives, have demonstrated the viability of environmentally friendly energy alternatives, highlighting the possibility for scalable models to spread throughout the archipelago. Ultimately, while Law No. 30/2007 and its subsidiary regulations have laid down the legal groundwork, consistent policy updates and effective governance remain paramount. The energy transition is an evolving process, requiring continual oversight, regulatory clarity, and stakeholder collaboration. If Indonesia can persistently strengthen its policy instruments and address structural challenges, it holds significant potential to foster a more diverse, resilient, and sustainable energy landscape that aligns with both national interests and global climate imperatives.

References:

Government of Indonesia. (2007). Law No. 30/2007 on Energy.

Government of Indonesia. (2014). Government Regulation No. 79/2014 on National Energy Policy.

Government of Indonesia. (2017). Presidential Regulation No. 22/2017 on the National Energy Plan.