Jakarta—Observers consider that China has great potential to become a major partner in encouraging energy transition financing amid the stagnation of climate commitments from developed countries. This support is predicted to be even stronger through the Belt and Road Initiative (BRI) cooperation scheme, which has been the mainstay of China’s economic and energy expansion in the Global South.
According to Saffanah R Azzahrah, a researcher from the Indonesian Center for Environmental Law (ICEL), in an online discussion entitled “Encouraging South-South Collaboration in Climate Action”, Thursday, 8 May, China’s current position is increasingly strategic in global climate financing, along with achievements in renewable energy development that exceeded 1,200 GW – far exceeding their national target.
“Seeing China’s success in massively promoting renewable energy, we can learn and utilise opportunities for collaboration with them, especially through BRI,” said Saffanah.
Indonesia is one of the largest recipients of BRI investment in the Southeast Asia region. Historical data shows that China’s total financing to Indonesia is estimated to reach USD2.1- 9.3 billion annually and could touch USD14.7- 65.1 billion cumulatively from 2024-2030.
Of that figure, the portion of investment for the energy sector specifically is in the range of USD490 – 900 million per year, or around USD3.4 – 6.3 billion for the next seven years.
“If directed appropriately, this fund could support most of the energy transition needs in Indonesia, both for variable generation such as solar and wind, as well as controlled generation such as geothermal and bioenergy,” said Tata Mustasya, Executive Director of the Sustainable Prosperity Foundation of Indonesia (SUSTAIN).
However, the main challenge remains on the financing side. To achieve the renewable energy mix target of 23% by 2025 and 34% by 2030, the Indonesian government needs up to USD146 billion per year in the 2025-2030. However, by 2023, the realisation of clean energy investment had only reached USD1.5 billion, a far cry from the need.
“Collaboration with China is a concrete opportunity to close the investment gap. However, transparency and compliance with sustainability principles must be maintained,” said Tata.
Forestry issues get additional attention
In addition to the energy sector, attention is also being paid to how Chinese investment affects the forestry sector in Indonesia. Forestry industry activities, which often involve foreign capital companies, are considered far from sustainability principles and cause socio-environmental conflicts.
Woro Supartinah, Director of Lembaga Pemberdayaan Ekonomi dan Sosial Masyarakat (LPESM) Riau, emphasises the importance of improving forestry governance in the context of investment.
“The forestry industry has a dark record in environmental damage and social conflict. As a large investor, China needs to comply with local regulations and encourage transformation towards green investment,” she explained.
According to Woro, green investment policies must be applied to corporations, financial institutions, and industrial support systems.
The shift in climate support from northern to southern countries opens up new opportunities for Indonesia to consolidate resources, both political and financial. In this context, China is seen not only as a funder, but also as a strategic partner that can accelerate the transformation of the national energy system.
With a collaborative approach and strict governance oversight, China’s investment under BRI has the potential to strengthen Indonesia’s climate agenda and address structural challenges in financing the energy transition. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2025)
