04 Nov 2025
Indonesia’s National Energy Policy 2060: Key Changes and Pathways to Net Zero

The Government of Indonesia issued Government Regulation No. 40 of 2025 on National Energy Policy (“GR 40/2025”), which officially revokes its predecessor, Government Regulation No. 79 of 2014 (“GR 79/2014”).  The new regulation reflects recent shifts in both national and global energy landscapes, including Indonesia’s goal to become an advanced economy by 2045, rapid advances in energy technology, and the growing role of new and renewable energy sources.

Unlike GR 79/2014 which covered the 2014-2050 period, GR 40/2025 extends the policy framework to 2060, aligning with Indonesia’s Net Zero Emissions (NZE) commitment. While it retains the four key policies from GR 79/2014—ensuring energy availability, optimizing energy utilization, prioritization of energy development, and maintaining energy reserves—GR 40/2025 provides more detailed guidelines for each of these policies. The regulation also introduces several additional supporting policies designed to reinforce the overall achievement of these objectives. In this newsletter, we outline several key supporting policies newly introduced under GR 40/2025.

1. Energy Mix Target

                                                                                                                                  

   GR 40/2025 introduces a much more ambitious and detailed roadmap for Indonesia’s national energy mix compared to GR 79/2014. Under GR 79/2014, the government targeted a minimum share of new and renewable energy (NRE) at 23% of the primary energy mix by 2025 and 31% by 2050, with fossil fuels such as oil and coal still playing a significant role—oil was to be kept below 25% by 2025 and below 20% by 2050, while coal was set at a minimum of 30% by 2025 and 25% by 2050. 

    

   In contrast, GR 40/2025 establishes a clearer trajectory toward decarbonization and net zero emissions by 2060. The regulation targets an NRE share of 19–23% by 2030, 36–40% by 2040, 53–55% by 2050, and a 70–72% by 2060. At the same time, the share of oil is targeted to drop dramatically to just 3.9–4.7% and coal to 7.8–11.9% by 2060. 

    

   GR 40/2025 also provides more detailed targets for each energy source, including solar, hydro, wind, biomass, geothermal, hydrogen, ammonia, and nuclear, reflecting Indonesia’s commitment to a diversified, low-carbon energy future. This shift marks a significant policy evolution from GR 79/2014, which focused on energy security and gradual diversification, to GR 40/2025, which prioritizes rapid decarbonization, climate resilience, and a green economy as central pillars of national energy policy.

    

2. Electricity Export-Import Policy 

    

   As part of the new supporting policies aimed at ensuring national energy availability, GR 40/2025 introduces provisions on the export and import of electricity. These matters were previously governed under MEMR Regulation No. 11 of 2021 on Electricity Business Implementation (“MEMR Reg 11/2021”). While GR 40/2025 does not alter the existing framework under MEMR Reg 11/2021, it provides several important clarifications, as follows:

   1. GR 40/2025 emphasizes that cross-border electricity export and import must be conducted by:
      (i) electricity companies owned by the exporting or importing country; or 

      (ii) business entities appointed to represent the exporting or importing country.

   2. Under MEMR Reg 11/2021, cross-border electricity sales and purchases may be conducted through the granting of cross-border electricity sales and/or purchase licenses (izin penjualan dan/atau pembelian tenaga listrik lintas negara) by the Indonesian authority, which may only be obtained by the holders of an integrated electricity supply business license (IUPTLU).

   Based on these provisions, while MEMR Reg 11/2021 broadly allows integrated IUPTLU holders—including PLN and other private entities—to engage in cross-border electricity transactions (subject to the required licenses), GR 40/2025 expressly refers to the state-owned electricity company (i.e., PLN) as one of the entities authorized to conduct cross-border electricity sales and/or purchases.

    

   As PLN is the primary integrated IUPTLU holder covering most of Indonesia’s electricity supply area, cross-border electricity export and import have effectively fallen under its purview even prior to GR 40/2025. The new regulation reinforces PLN’s central role in this regard, while not categorically excluding participation of other, provided that they are duly appointed and licensed by the government.

    

   GR 40/2025 also reaffirms the existing requirement under MEMR Reg No. 11/2021 that cross-border electricity sales must prioritize the fulfilment of domestic electricity needs. 

    

3. Electricity Export-Import Swap Transaction

    

   In line with MEMR Decree No. 5.K/TL.01/MEM.L/2025 on National Electricity General Plan (RUKN 2025), issued in March 2025, GR 40/2025 sets out a similar provision allowing electricity exports and imports to be conducted through swap (penukaran) transactions. Under both RUKN 2025 and GR 40/2025, the implementation of the swap transactions is based on a sales and purchase agreement in the following cases:

   1. a swap transaction between energy sources and other energy sources; or

   2. a swap transaction between energy sources and other commodities.

   However, neither regulation provides further guidance on the mechanism or contractual structure for implementing these swap transactions between exporters, importers, and the relevant recipients.

4. Decarbonization: Compliance for Non-Renewable Energy Industry

    

   GR 40/2025 introduces new provisions on Decarbonization on Energy Sector as one of the new supporting policies to optimize energy utilization, establishing a foundation for reducing greenhouse gas emissions from the energy sector to achieve a green economy and NZE by 2060.

    

   To implement decarbonization, GR 40/2025 requires Non-Renewable Energy industries to comply with the (i) New and/or Renewable Energy (NRE) portfolio standards; and/or (ii) utilize technology to achieve the greenhouse gas emission reduction targets. If a Non-Renewable Energy industry is unable to meet the NRE portfolio standard, it must obtain a renewable energy certificate.

    

   Although GR 40/2025 does not elaborate the substance or implementation of the NRE portfolio standards, it defines them as the minimum threshold imposed on business entities generating electricity from Non-Renewable Energy sources, requiring such entities to supply a certain portion of electricity derived from NRE sources.

    

   Similar provisions appear in the draft New and Renewable Energy Bill (NRE Bill), which has been publicly circulated but not yet enacted. The Bill provides that:

   1. business entities engaged in the provision of electricity sourced from Non-Renewable Energy that sign a power purchase agreement after the NRE Bill comes into effect must comply with the renewable energy portfolio standard.

   2. the use of renewable energy in accordance with the renewable energy portfolio standard must be adjusted to the national energy policy targets.

   3. business entities are required to periodically report their plans for providing renewable energy to the Minister Energy and Mineral Resources.

   4. non-compliant business entities must purchase renewable energy certificates.

   5. if the non-compliant business entity is a state-owned electricity company, the Central Government must provide compensation for the costs incurred to fulfill the obligation to purchase a renewable energy certificate.

       

   Based on the above, the main difference is that, while GR 40/2025 is silent on compensation, the NRE Bill explicitly provides government compensation to PLN for the purchase of renewable energy certificates. However, as the NRE Bill has not yet been enacted, we may need to wait for further updates. 

    

5. Development of Green Energy and Circular Economy 

    

   GR 40/2025 also introduces new provisions on Green Energy and Circular Economy as part of the supporting policies to optimize energy utilization. Green Energy is defined as a clean and environmentally friendly energy source, while the Circular Economy is defined as a closed circular economic system approach, by maximizing the use and value of materials, components, products, as well as waste utilization.

    

   In the context of energy development, the use of Green Energy must be prioritized by way of:

   1. improvement of economic growth by taking into account the availability of Energy Resources and maintaining the balance of a sustainable energy system;

   2. implementing the National Energy Policy (NEK) in accordance with prevailing laws;

   3. provision and strengthening of the implementation of energy sector decarbonization programs; 

   4. strengthening cooperation with other countries in developing innovative and affordable green energy infrastructure; 

   5. acceleration of electrification, especially in underdeveloped, frontier, outermost, remote, and small inhabited islands; 

   6. assurance of supply security and affordable, fair energy prices; and/or

   7. expansion of green energy business types and transformation of expertise and skills.

   Meanwhile, to promote Circular Economy, the following actions must be taken:

   1. minimization of waste generation;

   2. reuse of waste in the production processes;

   3. reduction in the use of energy resources, land, buildings, and materials in the production process;

   4. reuse of waste for other purposes; and/or

   5. recycling of materials that still have economic value.

       

6. Development of Non-Renewable Energy 

   Under GR 40/2025, the development of non-renewable energy sources (such as coal, oil, and natural gas) remains permitted to address needs that cannot yet be met by new and renewable energy sources. However, all activities— including exploration, extraction, and processing—must employ low-carbon technologies, including efficient processes, renewable or low-carbon energy use, and carbon capture and storage (CCS/CCUS).

7. New Energy: Hydrogen, Ammonia, and Nuclear

   As part of the supporting policies aimed at prioritizing energy development, GR 40/2025 expands the definition of “New Energy” to include hydrogen, ammonia, and nuclear.  GR 40/2025 stipulates that the use of hydrogen and ammonia as energy fuels should be prioritized when produced from renewable sources and efficient technologies. Where renewable sources are not available, these fuels may also be produced from non-renewable sources, provided that low-carbon technologies are applied.

    

   With respect to nuclear energy for electricity generation, GR 40/2025 requires that nuclear power plants be constructed and operated in compliance with safety, security, safeguards, assurance of nuclear fuel supply, and radioactive waste management requirements. Additionally, the construction of nuclear power plants must take place in locations that are safe from geological disaster risks, have low population density, and are not designated as food production centers.

    

8. Carbon Tax and Local Content

   GR 40/2025 now incorporates carbon tax and local content provisions into Indonesia’s national energy policy. These aspects were not covered under GR 79/2014, but were later introduced through separate regulations such as MEMR Regulation No. 11 of 2024 on Use of Domestic Products for Electricity Infrastructure Development and Presidential Regulation No. 98 of 2021 on the Implementation of Carbon Economic Value to Achieve Nationally Determined Contribution Targets.

    

   This development reflects a consolidation of previously separate policy measures into a single framework under the national energy policy and indicates the Government’s increasing support for decarbonization efforts and domestic industry. In this context, GR 40/2025 stipulates that carbon tax may be gradually implemented for the utilization of non-renewable energy. It also requires business entities engaged in energy activities to prioritize the use of domestic components, which comprise: 

    

   1. technology and engineering designs developed domestically; 

   2. domestically sourced material goods; 

   3. other domestic components related to Energy business activities; 

   4. Indonesian manpower; and/or 

   5. domestic sources of funding. 

9. Institutional Provisions

   GR 40/2025 adds a provision aimed at strengthening coordination and financing mechanisms for Indonesia’s energy transition, whereby: (i) Central Government to work in synergy with Bank Indonesia and the Indonesian Financial Services Authority (Otoritas Jasa Keuangan/OJK) to mobilize financial-sector participation in funding initiatives that support national energy security and energy sector decarbonization; and (ii) business entities and other parties to contribute funding to achieve these objectives. 

10. Government Incentives

    GR 40/2025 introduces a more detailed provision on the implementation fiscal and non-fiscal incentives provided by the Government to both energy providers and energy users in order to support the supply, business activities, utilization, and development of new and renewable Energy.

    Fiscal incentives may include tax reductions, import duty exemptions, or other forms of financial relief as governed by laws and regulations in the field of state finance. Meanwhile, non-fiscal incentives may include licensing facilitation, training, technical assistance, or other forms of non-financial support.

    These incentives may be granted to energy providers that develop core technologies in the NRE sector as well as to energy providers and users that comply with energy conservation obligations in relation to energy supply, business operations, and utilization.

    In addition to these incentives, GR 40/2025 also provides that the Government may also extend other forms of support such as financing, guarantees, and/or compensation to state-owned enterprises and other business entities.

ABNR Commentary

The issuance of GR 40/2025 marks a significant evolution in Indonesia’s national energy policy, reflecting the country’s determination to address global climate challenges, accelerate its energy transition, and position itself as a leader in sustainable development. By extending the policy horizon to 2060 and setting more ambitious and detailed targets for renewable energy, decarbonization, and green economic growth, the government is sending a strong signal to both domestic and international stakeholders about Indonesia’s long-term commitment to achieving net zero emissions.

Compared with the previous framework under GR 79/2014, the new regulation not only raises the bar for renewable energy adoption and emissions reduction but also introduces a broader set of supporting policies, ranging from electricity export-import mechanisms and swap transactions to the integration of green energy, circular economy principles, and carbon tax provisions. The inclusion of new energy sources such as hydrogen, ammonia, and nuclear, along with stronger institutional and financial sector involvement, further demonstrates Indonesia’s readiness to embrace innovation and global best practices.

As Indonesia embarks on this new chapter in its energy policy, the successful implementation of GR 40/2025 will be subject to strong collaboration between government, industry, and the financial sector. While the regulation sets out a bold vision and introduces many important updates, it is worth noting that some areas, such as the provisions for swap transactions in electricity export and import, still lack detailed guidance on practical implementation. This leaves room for further regulatory development and clarification from the government in the future. Overall, GR 40/2025 lays a solid foundation for Indonesia’s journey toward a cleaner, more resilient, and sustainable energy future, supporting both national economic ambitions and global climate commitments.

By partners Emir Nurmansyah (enurmansyah@abnrlaw.com), Serafina Muryanti (smuryanti@abnrlaw.com),  Maher Sasongko (msasongko@abnrlaw.com), and associates  Adya Sepasthika (asepasthika@abnrlaw.com), Kenny Poltak Adrianus (kadrianus@abnrlaw.com), and Jason Daniel Edgar (jedgar@abnrlaw.com). 

This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.