Collaboration on Ecological Initiatives between Taiwan and Indonesia

Collaboration on Ecological Initiatives between Taiwan and Indonesia

The Indonesia-Taiwan energy compact, a new collaborative initiative, aims to accelerate Indonesia's clean energy development while expanding Taiwan's renewable energy footprint in Southeast Asia. This partnership is a strategic move for both countries, addressing their respective energy needs and ambitions.

As of last year, renewables accounted for 16.8% of electricity generation in Taiwan, but the nation is behind in meeting its net zero emissions goal by 2050. On the other hand, Indonesia added only 3 gigawatts (GW) of renewables from 2018 to 2023 and is unlikely to meet its renewable energy goals. As of the end of 2023, renewables made up 13% of on-grid electricity generation in Indonesia, falling short of a 23% target.

The proposed compact could aid Indonesia's energy transition by accelerating decarbonization and grid stability. The collaboration would bring advanced technologies like floating solar, biomass cogeneration, and grid flexibility solutions to Indonesia's regions such as Java and Sulawesi. It would also help Indonesia overcome investment and permitting barriers through cooperation with Taiwanese developers.

For Taiwan, the compact offers a strategic opportunity to expand its green industrial footprint and integrate more deeply into ASEAN value chains, strengthening its position in Southeast Asia's growing renewable energy markets. This aligns with Taiwan's need to diversify and secure energy supplies given geopolitical risks and its dependence on fossil fuel imports.

The partnership would be coordinated by a Green Energy Task Force with pilot proposals such as solar-storage islands and modular wind equipment yards integrated into each country's energy plans. The first pillar of this compact could be floating solar megawatt corridors, with a shared 500MW pilot pairing Indonesia's water-based solar potential with Taiwanese engineering and financing.

The second pillar is offshore wind supply-chain cooperation, with Taiwanese firms establishing assembly and component yards in Batam or Sulawesi to serve both Taiwan's Changhua wind projects and Indonesia's emerging coastal wind zones. In return, Indonesian universities could pilot solar-hydro storage, biomass cogeneration, and grid-flexibility solutions in Java and Sulawesi.

Knowledge exchange is the third pillar of the Indonesia-Taiwan energy compact. Indonesian engineers could receive training in mooring systems, microgrids, and offshore structural resilience in Taiwan's Green Energy Science City in Tainan. Taiwanese insurers and pension funds, inspired by Cathay Life's offshore wind investment, could provide equity or credit for floating PV and wind projects in Indonesia, potentially bridging the country's clean-energy financing gap.

The energy compact aims to accelerate Indonesia's decarbonization and grid stability while expanding Taiwan's green industrial footprint in Southeast Asia and integrating into ASEAN value chains. A Jakarta-based clean-energy fund backed by Taipei investors could facilitate the unlocking of stalled projects and deliver returns for Taiwan's asset managers. However, it's crucial that Indonesia relaxes barriers to investment, and Taiwan's developers and insurers align with international environmental, social, and governance standards, engage in labor consultation, and prioritise community hiring.

Skeptics may raise concerns about Indonesia's permitting delays and Taiwan's regulatory inconsistency. The compact calls for addressing these issues through reform, not retreat. Indonesia is a key target of the G7-backed Just Energy Transition Partnership (JETP), aiming to mobilize US$20 billion in public and private capital for a 44% renewable electricity share by 2030. However, as of this year, only US$1.1 billion has been committed to 54 projects, including just US$233 million in grants. The Indonesia-Taiwan energy compact could serve as a step towards achieving these ambitious goals.

This compact, proposed by Muhammad Zulfikar Rakhmat, director of the China-Indonesia Desk at the Center of Economic and Law Studies in Jakarta, represents a pragmatic, mutually beneficial agreement fostering clean energy deployment and technical cooperation, which supports Indonesia’s green energy goals and Taiwan’s regional energy and economic ambitions.

1. The Indonesia-Taiwan energy compact, a strategic initiative, aims to propel Indonesia's decarbonization while expanding Taiwan's green industrial footprint in Southeast Asia, both in line with their respective energy goals and ambitions.
2. Taiwanese insurers and pension funds, inspired by Cathay Life's offshore wind investment, could potentially bridge Indonesia's clean-energy financing gap by providing equity or credit for floating PV and wind projects.
3. Knowledge exchange is a significant aspect of the compact, with Indonesian engineers receiving training in advanced technologies like mooring systems, microgrids, and offshore structural resilience in Taiwan.
4. Skeptics may raise concerns about Indonesia's permitting delays and Taiwan's regulatory inconsistency, but the compact calls for addressing these issues through reform, not retreat, supporting a pragmatic, mutually beneficial agreement for sustainable energy deployment and technological collaboration.

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