Abstract

Abstract for: Changing the Fuel of Growth: An Assessment of Indonesia's Economics When Switching from Coal to Clean Development

Introduction Coal-reliant emerging economies face difficult trade-offs between development, fiscal stability, and climate mitigation. We studied how Indonesia can achieve net-zero emissions before their NDC goal while sustaining growth. Using a mixed-methods framework that integrates national policy analysis, expert elicitation, and system dynamics modeling, we compare business-as-usual, an expert-informed scenario, and a net-zero policy scenario tailored to Indonesia’s emissions profile.
Approach We worked with local Indonesian partners to survey experts and collected data. The data were used to calibrated the Energy Policy Simulator (EPS) model for Indonesia. The model is an economy-wide energy-emissions model, and includes a hybrid approach that mixes SD with an IO model. The calibration was verified by local partners. The results are being shared with decision makers and policy experts.
Results Accelerated coal retirement, rapid renewable deployment, transport electrification, and strengthened land-use measures under the Ambitious scenario deliver system-wide emissions reductions, reaching net-zero by 2056. The Ambitious pathway also yields substantial cumulative GDP gains (about US$26 billion by 2030; US$263 billion by 2060), alongside cumulative net job creation (about 4.2 million by 2030; about 30 million by 2060), and improved fiscal balances driven by carbon revenues.
Discussion Distributional impacts are uneven as clean energy infrastructure, agriculture, and electric vehicle manufacturing are emerging as major winners, while coal mining, petroleum refining, and other carbon-intensive industries experience significant contraction. This highlights the need for just transition measures. Results show that coherent, high-ambition policy packages can transform Indonesia’s net-zero pathway into a driver of inclusive growth and resilience.

Introduction	Coal-reliant emerging economies face difficult trade-offs between development, fiscal stability, and climate mitigation. We studied how Indonesia can achieve net-zero emissions before their NDC goal while sustaining growth. Using a mixed-methods framework that integrates national policy analysis, expert elicitation, and system dynamics modeling, we compare business-as-usual, an expert-informed scenario, and a net-zero policy scenario tailored to Indonesia’s emissions profile.
Approach	We worked with local Indonesian partners to survey experts and collected data. The data were used to calibrated the Energy Policy Simulator (EPS) model for Indonesia. The model is an economy-wide energy-emissions model, and includes a hybrid approach that mixes SD with an IO model. The calibration was verified by local partners. The results are being shared with decision makers and policy experts.
Results	Accelerated coal retirement, rapid renewable deployment, transport electrification, and strengthened land-use measures under the Ambitious scenario deliver system-wide emissions reductions, reaching net-zero by 2056. The Ambitious pathway also yields substantial cumulative GDP gains (about US$26 billion by 2030; US$263 billion by 2060), alongside cumulative net job creation (about 4.2 million by 2030; about 30 million by 2060), and improved fiscal balances driven by carbon revenues.
Discussion	Distributional impacts are uneven as clean energy infrastructure, agriculture, and electric vehicle manufacturing are emerging as major winners, while coal mining, petroleum refining, and other carbon-intensive industries experience significant contraction. This highlights the need for just transition measures. Results show that coherent, high-ambition policy packages can transform Indonesia’s net-zero pathway into a driver of inclusive growth and resilience.