The new P4G-Getting to Zero Coalition report “Shipping’s energy transition: strategic opportunities in Indonesia” explores the potential for Indonesia to accelerate and benefit from international maritime decarbonisation.
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 in order to unlock these opportunities.
International shipping
International shipping accounts for approximately 3% of global Greenhouse Gas (GHG) emissions, and this will increase in a business-as-usual scenario.
To decarbonise the maritime industry, there will be a massive need for green fuels and associated technologies. In particular, scalable zero-emission fuels (SZEF) such as green hydrogen and green ammonia are considered the most promising fuels for shipping’s energy transition.
International maritime decarbonisation
Indonesia should seek to leverage its influence in international negotiations"
“The increasing momentum behind international maritime decarbonisation holds huge potential for countries like Indonesia,” says Ingrid Sidenvall Jegou, Project Director at Global Maritime Forum.
"To better realise 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."
Maritime activities
With over 17,000 islands, 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 the strong potential to leverage these activities to decarbonise other industrial activities and support wider economic development.
Renewable energy production
Indonesia could decarbonise domestic industry and aid the broader shipping energy transition"
“Identifying strategic opportunities for renewable energy production in emerging and developing economies, like Indonesia, is central to enabling a just & 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 decarbonise domestic industry and aid the broader shipping energy transition, a pathway that could enable Indonesia to become a major producer and supplier of sustainable zero-emission fuels, create new sustainable jobs and contribute to economic growth."
Green hubs
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.
The development of scalable zero-emission fuel infrastructure could lead to an investment of between Rp 46 – 65 trillion IDR ($3.2-4.5 billion USD) by 2030.
Three key opportunities
This is in addition to the potential development of other industries, expertise, environmental protection benefits, and R&D emanating from the decarbonisation of maritime shipping and the adoption of SZEF.
After extensive 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 decarbonisation hub powered by geothermal activities.
Capacity building, technology transfer
Maritime decarbonisation in Indonesia provides several interesting business opportunities"
“Maritime decarbonisation in Indonesia provides several interesting business opportunities, such as electrification of the small boat fleet, domestic production of zero carbon marine fuels, and synergies with large land infrastructure projects,” says Dr. Domagoj Baresic, Research Associate at UCL Energy Institute.
"In all cases increased capacity building and technology transfer will be paramount in realising these opportunities to their fullest potential."
Facilitative policy, financial framework
However, 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 decarbonisation opportunity.
Attracting new funding
Setting a clear direction for travel and demonstrating public buy-in would enhance Indonesia’s ability
Indonesia also benefits from its existing successes and future ambitions concerning the reception of funding from international sources. This is something that is much needed in supporting Indonesia’s existing decarbonisation efforts in conjunction with its development needs.
Setting a clear direction of travel and demonstrating public buy-in would enhance Indonesia’s ability to attract these funding sources.
Comprehensive assessment
“Having supported the alignment of the IMO GHG Strategy with Paris Agreement temperature goals, the Indonesian Government needs to carry out a comprehensive assessment of the impact and strategies of shipping decarbonisation,” says Dr. Mas Achmad Santosa, CEO of the Indonesia Ocean Justice Initiative.
"This could help position the Indonesian Government in subsequent IMO negotiations and serve as an evidence base to support the adoption of more ambitious GHG measures, which operationalise the principle of common but differentiated responsibilities and respective capabilities."
Quick and strategic action
Indonesia relies on ocean transport for the movement of goods and people"
As other countries take steps to enhance their efforts and begin to unlock this opportunity, Indonesia should take quick and strategic action to position itself as a key player in this space.
“As the largest island state in the world, Indonesia relies on ocean transport for the movement of goods and people which contributes to significant domestic maritime emissions,” says Ian de Cruz, Global Director at P4G.
Low-carbon economy
"This report outlines key steps Indonesia can take to harness its renewable energy potential and decarbonise its local maritime industry."
"By creating jobs and providing environmental benefits across sectors, this approach can serve as an example for other developing countries transitioning to a low-carbon economy."
