From Climate Risks to Resilient Energy Systems: Addressing the Implications of Climate Change on Indonesia’s Energy Policy

Abstract

Climate change has presented significant challenges to Indonesia’s energy sector, increasing vulnerabilities in power generation, infrastructure resilience, and energy security. Rising sea levels, extreme weather events, and increasing temperatures disrupt energy systems, highlighting the urgent need to build resilient energy systems. To support Indonesia’s energy transition, this study addresses a critical gap by providing an integrated analysis of climate resilience, renewable energy policies, and Indonesia’s socio-economic and environmental goals, emphasizing the importance of enabling policies and financial mechanisms. The recommendations mentioned in this study include increasing renewable energy capacity through solar and geothermal projects, modernizing infrastructure to enhance resilience, and adopting decentralized energy systems to reduce dependency on centralized networks. Strengthened governance and stakeholder collaboration are also essential for the successful implementation of energy policies. This study underscores the importance of having comprehensive energy policies to address climate change, promote sustainable development, and help Indonesia achieve its renewable energy targets and long-term goal of net-zero emissions.

1. Introduction

The global climate is currently undergoing significant changes and is predicted to continue changing. Extreme weather events are increasing, and ice is melting both on land and at sea. Since 1880, sea levels have risen by about 8 inches and are projected to rise by between 1 to 4 feet by 2100. Future climate change will depend on global emissions. Earth will continue to warm due to ongoing greenhouse gas emissions, resulting in significant impacts on economies, ecosystems, and human well-being [1,2]. Global initiatives, such as the Paris Agreement [3], highlight the critical need to reduce emissions and limit the global annual average temperature rise to 2 degrees Celsius or less to prevent further consequences [1,3]. Despite these efforts, the impacts are widespread and affect every region of the Earth, impacting various sectors such as human health, agriculture and food security, water supplies, transportation, and energy. These disruptions will become increasingly severe in coming decades, including in the economic sector [4].

Indonesia, as an agrarian archipelago country with over 17,000 islands, is highly vulnerable to the effects of climate change [1]. The World Bank Group (2021) report ranks Indonesia as one of the top countries at risk of climate change disasters, including floods, landslides, and rising sea levels [4]. Indonesia also faces significant challenges as both a contributor to GHG emissions and a victim of climate change [4]. This country is among the top ten global emitters of GHGs, including CO₂, CH₄, and N₂O, with emissions driven by land use changes, deforestation, and its reliance on coal for energy, industry, and waste [5]. The energy sector plays a key role in Indonesia’s climate change response due to its dual role as a major greenhouse gas (GHG) emitter and a country that is highly vulnerable to climate risks, with rising sea levels threatening coastal power plants, and extreme weather events, including storms and flooding, risking damage to transmission lines and substations [4,6].

Energy demand and consumption patterns in Southeast Asia are expected to grow annually through 2035, driven by population growth and economic expansion [7]. In Indonesia, rising incomes and urbanization are increasing household energy use, with air conditioning adoption forecasted to increase from 15% to 50% in 2035 [8]. This growing demand places pressure on Indonesia’s electricity sources and highlights the urgent need for sustainable energy solutions, considering that Indonesia still predominantly uses coal in its energy mix, currently accounting for 60% of its electricity generation. This contributes significantly to its greenhouse gas emissions, but also serves as a critical driver of Indonesia’s economic growth [8]. The dual role of coal as both an economic resource and a significant contributor to emissions presents a challenge, as coal exports represent around 10% of Indonesia’s total export revenue, making it an important component of the national economy’s growth [1]. On the other hand, reliance on coal increases Indonesia’s contribution to global emissions, attracting attention from other countries. International policies, such as the Carbon Border Adjustment Mechanism, are expected to challenge Indonesia’s coal exports, which currently account for 10% of its total export revenue [1,8].

Given this issue, Indonesia faces an urgent need to transition toward sustainable energy solutions. Addressing this challenge requires a shift from coal dependency to renewable energy sources such as solar, wind, and geothermal power. As emphasized by previous studies, floating solar photovoltaic (PV) systems such as the Cirata 145 MW project offer a critical pathway for reducing carbon emissions while overcoming land use constraints [9]. Additionally, enhancing energy efficiency and adopting a climate-resilient infrastructure is crucial for mitigating the risks of climate change while meeting growing energy demands. Furthermore, using network partitioning to design a green supply chain offers insights into optimizing energy distribution and logistics, which can be applied to Indonesia’s renewable energy infrastructure to enhance efficiency, reduce costs, and minimize environmental impact [10]. This paper explores how Indonesia can navigate the transition from climate risks to a resilient energy system by analyzing the implications of climate change on its energy policy, highlighting the importance of balancing economic growth with environmental sustainability, leveraging renewable energy potential, and addressing the international and domestic challenges associated with decarbonization efforts in Indonesia.

Previous studies on Indonesia’s energy sector have examined different aspects of its renewable energy transition, such as challenges in policy implementation, inefficiencies in fossil fuel subsidy reforms, and the technical barriers to renewable energy adoption [11,12]. However, these studies often focus on individual issues and tend to lack an integrated perspective between renewable energy policies, socio-economic challenges, and environmental vulnerabilities. Additionally, the alignment of policy frameworks with international mechanisms such as the Carbon Border Adjustment Mechanism has not been sufficiently analyzed, leaving a gap in the understanding of how global frameworks impact Indonesia’s energy exports and domestic policy adjustments [13,14]. Furthermore, the effectiveness of policies in addressing coal dependency and enhancing the resilience of the energy infrastructure to climate risks has not been sufficiently analyzed.

Unlike previous studies, this research provides a comprehensive analysis by integrating climate resilience, renewable energy policies, and Indonesia’s socio-economic and environmental goals, addressing the lack of a comprehensive framework that connects energy policy reforms, renewable energy adoption, and resilience planning with both domestic and international pressures. The novelty of this study lies in bridging policy formulation and implementation gaps, exploring the impacts of fossil fuel subsidy reforms and renewable energy policies, and evaluating the feasibility of adaptive and decentralized energy systems tailored to Indonesia’s geographic and socio-economic aspects to support energy access and climate goals. This research explicitly differs from prior studies by providing a multi-dimensional framework that links policy reforms with renewable energy adoption and resilience strategies with international frameworks like the Carbon Border Adjustment Mechanism.

The main objective of this study is to evaluate Indonesia’s energy policy framework in terms of facilitating resilient and sustainable renewable energy policies. Additionally, this paper examines the role of fossil fuel subsidy reforms, renewable energy adoption, and decentralized energy systems in enhancing energy security and resilience. By analyzing policy gaps and alignment with international frameworks, this study provides insights and strategic recommendations regarding governance, financial mechanisms, and implementation strategies for Indonesia’s renewable energy policies. Several questions need to be addressed, namely how Indonesia’s current energy policy framework addresses climate resilience and sustainability; what challenges and gaps exist in the implementation of renewable energy policies; how Indonesia can leverage international frameworks and financial mechanisms to achieve its renewable energy policy goals; and what strategies can enhance the resilience of Indonesia’s energy systems in the face of climate change.

The remaining sections of this paper proceed as follows: Section 2 presents the literature review; Section 3 analyzes Indonesia’s renewable energy policies and climate goals by reviewing its current energy policy framework, including the dominance of coal in the national energy mix, and its commitment to renewable energy targets; Section 4 outlines strategies for building resilient energy systems and emphasizes mitigation measures; and finally, Section 5 concludes the paper by summarizing the key findings, including the relationship between climate change and energy sector vulnerabilities.

2. Literature Review

Energy policy studies in Indonesia have covered several key areas, including renewable energy challenges, energy supply security [12,15], governance frameworks [16,17], and financial mechanisms [15,17]. However, these studies often focus on specific issues without offering an integrated policy framework. There is an evident lack of research on adaptive energy systems that consider Indonesia’s diverse geographic conditions and socio-economic complexities [18]. Furthermore, the role of financial incentives, such as tax breaks, subsidies, and green bonds, and their effectiveness in fostering renewable energy adoption remain insufficiently analyzed [9,19]. Public–private partnerships, which are essential for funding and implementing large-scale renewable projects, are often overlooked [9,20]. Additionally, the influence of international policies, such as carbon pricing and cross-border carbon adjustments, on Indonesia’s domestic energy strategies needs further study [13,19]. This research aims to bridge these gaps by providing a holistic analysis that integrates policy development, socio-economic considerations, technological advancements, and environmental resilience, ultimately supporting Indonesia’s transition to a future of sustainable energy. A summary of the literature review can be found in

Table 1. Literature review.

No.	Author	Region	Data Set	Objective Focus	Examined Factor
1	Santika et al. (2020) [10]	Indonesia	Energy policy impact assessment	Impact of energy policy on SDG 7	Policy gaps, renewable challenges
2	Mujiyanto and Tiess (2013) [11]	Indonesia	Energy supply analysis	Energy supply security in 2025	Supply challenges, policy needs
3	Maulidia et al. (2019) [14]	Indonesia	Private sector perspective	Rethinking renewable targets	Investment challenges, private sector
4	Setyowati and Quist (2022) [15]	Indonesia	Regional energy planning	Politics of energy planning	Governance challenges
5	Jasiūnas et al. (2021) [16]	Indonesia	Energy resilience review	Energy resilience measures	Resilience measures
6	Hersaputri et al. (2024) [17]	Indonesia	OSeMOSYS modeling	Energy transition pathways	Transition models, sustainability
7	Kusuma et al. (2024) [18]	Indonesia	Wind turbine technology	Wind energy challenges	Technical barriers, wind energy
8	Merdekawati et al. (2024) [19]	Indonesia	REC market assessment	Market readiness for RECs	Market gaps, integration
9	Halimatussadiah et al. (2024) [20]	Indonesia	Energy procurement analysis	Barriers in energy procurement	Procurement inefficiencies, policy barriers
10	Marquardt (2014) [21]	Indonesia	Energy governance study	Multi-level governance of energy	Policy coordination
11	Rifansyah and Hakam (2024) [9]	Indonesia	Floating solar project study	Techno-economic study	Solar project feasibility, cost analysis
12	Zahari and McLellan (2024) [12]	Indonesia	Transportation sector energy demand	Low carbon transition strategies	Energy demand, sustainability
13	Perdinan et al. (2024) [13]	Indonesia	Integrated risk assessment	Climate change, land use policies	Risk assessment, policy integration
14	Mulyana (2023) [22]	Indonesia	Carbon pricing regulations	Carbon market mechanisms	Pricing mechanisms, regulatory frameworks
15	Hakam (2019) [23]	Indonesia	Electricity sector restructuring	Market power mitigation	Market regulation, energy market structure
16	Pan et al. (2018) [24]	Indonesia	Thermoelectric power analysis	Cooling water challenges	Water–energy nexus, efficiency challenges
17	Zhou (2023) [25]	Global	Reviewed articles	Climate adaptation in energy district	Adaptation strategies, district resilience
18	Okere and Uche (2024) [26]	Africa	Panel data and KAYA identity model	Examining energy efficiency and eco-complexity for climate resilience	Energy intensity, carbon intensity, ICT, eco-complexities, policy gaps
19	Tootkaboni et al. (2025) [27]	Italy	Energy simulations under future scenarios	Evaluating building energy performance and thermal comfort under climate change	Retrofitting, resilient cooling (ventilation, glazing), overheating risk, sensitivity analysis

.

This study is based on several key theoretical frameworks that help contextualize Indonesia’s energy transition. Energy Transition Theory explains how nations transition from fossil fuel dependency to renewable energy use. The Indonesian case highlights policy, economic, and governance challenges in transitioning from a coal-dominated energy mix to a more sustainable system [20]. Climate Resilience and Adaptation Theory emphasizes Indonesia’s vulnerability to climate change, requiring resilient energy policies. This theory supports the discussion on how policy interventions and renewable energy adoption can mitigate climate risks, such as rising sea levels and extreme weather events [20].

2.1. Impacts of Climate Change on Energy System

The impacts of climate change are already resulting in a wide range of effects across every region of the Earth that affect many sectors, such as human health, agriculture and food security, water supply, transportation, and energy, and will become increasingly disruptive over the coming decades [4]. Increases in temperature, precipitation extremes, extreme weather events, and rising sea levels could lead to extreme heat, poor air quality, reduced food and water quality, and population displacement, all of which affect heat-related illness, cardiopulmonary illness, food, water vector-borne disease, mental health, and stress [28,29]. According to the Intergovernmental Panel on Climate Change (IPCC), rising temperatures will persist throughout the 21st century due to greenhouse gas emissions. Even if emissions were to stop today, the impacts of previous emissions would remain because greenhouse gases are still present in the atmosphere. This continued warming will increase energy demand, particularly in countries experiencing hotter climates, where the need for air conditioning is projected to rise rapidly. As can be seen in Figure 1, total electricity generation is projected to increase significantly—from 300 TWh in 2000 to 4000 TWh by 2050—in the Stated Policies Scenario (STEPS), which is based on the strong assumption that governments will fulfill all of the important economy-wide pledges. The Announced Pledges Scenario (APS) is based on an analysis of the real situation [7,30].

Furthermore, thermal power plants, which currently account for 80% of the world’s electricity generation, are designed to operate under specific climate conditions. Rising temperatures can reduce the efficiency of converting heat to electricity. For example, studies indicate that for every 1 °C rise in temperature, the efficiency of thermal plants can drop by up to 1%, significantly impacting energy production [6,8]. In addition, many countries will face reduced availability of water for cooling, and the warmer water that remains may further decrease power generation efficiency, forcing plants to operate at reduced capacity or even shut down [6,31,32]. Extreme weather events could affect all types of power plants, including nuclear facilities. Additionally, climate change impacts the hydrological cycle, disrupting hydropower generation, while higher temperatures and extreme weather pose challenges for solar, wind, and biomass energy production. The coal, oil, and gas sectors are also affected, as melting Arctic Sea ice opens new areas for oil and gas extraction [33]. However, this can create additional challenges for pipelines and powerlines, exacerbating the overall impact of climate change on global energy systems [6].

2.2. Indonesia’s Unique Challenges

Indonesia faces challenges in addressing the implications of climate change on its energy systems. As a major exporter of coal and palm oil, as can be seen in Figure 2 and Figure 3, Indonesia’s economic structure is deeply tied to carbon-intensive industries, as evidenced in Figure 2. The oil, gas, and coal sectors comprise approximately 7.2% of Indonesia’s national Gross Domestic Product (GDP) and employ 1.1% of its total workforce [1]. Similarly, its palm oil production represents 3.3% of the GDP, with Indonesia holding a dominant 55% share of the global palm oil export market [34].

However, Indonesia faces challenges due to increasing global environmental policies targeting deforestation and land use changes linked to carbon emissions, which are causing the projected decline of coal exports after they peaked in 2024, as can be seen in

Table 2. Total coal exports in million metric tons (Mt), 2023–2027 [35].

Region/Country	2023	2024	2025	2026	2027	CAAGR
Australia	353	361	341	341	341	−1.9%
Mongolia	71	88	71	71	71	−6.9%
Indonesia	521	557	474	453	453	−6.7%
United States	91	98	85	83	83	−5.4%
Columbia	57	58	52	50	50	−4.9%
Russia	211	199	180	178	178	−3.7%
South Africa	74	70	66	64	64	−2.9%
World	1502	1547	1432	1381	1353	−4.4%

[35]. The compound annual growth rate from 2024 to 2027 is projected to decline by −6.7%, reflecting a substantial decline in coal exports. Globally, total coal exports are forecasted to drop from 1547 million tons in 2024 to 1353 million tons by 2027, reflecting a decline of −4.4% in the global Compound Annual Growth Rate (CAGR). This decline aligns with Indonesia’s broader transition strategy to reduce its carbon footprint and meet its commitments under the Nationally Determined Contributions (NDCs) of the Paris Agreement. This issue highlights the urgent need for Indonesia to accelerate the shift toward renewable energy by investing in solar, wind, and geothermal projects.

To visualize Table 1, we can see that Figure 4 provides a representation of coal export trends across regions from 2023 to 2027 [35]. Indonesia is the highest exporter of coal among the listed countries, consistently surpassing 600 million Mt in 2023, followed by a slight increase in 2024 before starting to decline, supporting the net-zero emission target. This trend highlights Indonesia’s dominant position in the global coal export market while also showing the potential challenges of maintaining its exports while supporting global energy transitions.

3. Methodology

This study conducts a qualitative research approach using policy analysis and a literature review. Data were collected from secondary sources, including government reports, international agency publications, and several academic research papers. The analysis carried out during this study uses critical assessment, focusing on Indonesia’s current energy policies, renewable energy initiatives, and climate resilience strategies. Furthermore, the study evaluates the alignment of Indonesia’s energy policies with international climate agreements, such as the Paris Agreement. As illustrated in Figure 5, climate risks such as the rising sea level and extreme weather create pressure on the energy sector and require urgent policy responses. These risks trigger regulatory and infrastructural reforms and are further shaped by international mechanisms and socio-economic tradeoffs. Through aspects of energy transition such as carbon pricing, renewable energy targets, and governance mechanisms, this study evaluates how Indonesia can move toward more decentralized, adaptive, and sustainable energy systems. The framework helps us to understand and analyze the available information, with a focus on how Indonesia’s energy policies respond to climate change and how well they support the country’s efforts to build a stronger, more sustainable and climate-resilient energy system.

4. Results and Discussion

4.1. Policy Analysis: Indonesia’s Energy Transition and Climate Goals

4.1.1. Current Energy Policy Framework

Indonesia’s energy sector is heavily dependent on fossil fuels, with coal fired plants accounting for over 60% of the nation’s power generation capacity. This reliance on coal poses challenges for achieving climate goals and transitioning toward renewable energy sources. As the world’s most prevalent coal producer, coal accounts for 66% of Indonesia’s primary energy mix used in electricity generation, as shown in Figure 6, with oil and gas contributing 2% and 19%, hydropower 6%, and renewable energy sources contributing only 12% [19,36]. Figure 5 highlights the fact that, despite government policies promoting renewable energy development and carbon reduction initiatives, progress remains hindered by high dependency on coal. These figures also emphasize the significant underutilization of Indonesia’s renewable energy potential. The difference in energy distribution highlights the urgent need for the government to transition from a coal-dependent energy system to a sustainable framework, which will require substantial investment, infrastructure development, and policy support.

Furthermore, from

Table 3. Natural energy inputs of Indonesia [36].

Natural Energy Inputs	2018	2019	2020	2021	2022
Non-Renewable Energy Inputs	19.698	20.005	18.446	19.437	21.021
Coal	14.957	15.527	14.258	15.373	17.268
Crude Oil	1.885	1.809	1.726	1.611	1.364
Natural Gas	2.856	2.669	2.462	2.453	2.389
Renewable Energy Inputs	726	890	900	928	912
Hydro	62	69	76	69	80
Wind	1	2	2	1	1
Solar	~0	~0	1	1	1
Biomass	613	773	774	799	770
Geothermal	50	46	46	57	60
Total Natural Energy Inputs	20.424	20.895	19.347	20.365	21.933

we can see that the natural energy inputs in Indonesia from 2018 to 2022 highlight the country’s continued reliance on fossil fuels, particularly coal, while showing limited but slow progress in developing renewable energy sources. Despite Indonesia’s substantial potential for renewable energy, actual utilization remains limited. Hydropower, geothermal power, and solar power are the most promising sources, but their development is unevenly distributed across the country. For instance, the coal input increased from 14.957 thousand tons in 2018 to 17.268 thousand tons in 2022 [36]. According to data from the International Energy Agency, global energy-related carbon dioxide (CO₂) emissions reached a record high of over 37.4 billion tones in 2023, growing by 1.1% in 2023 [37]. The primary contributors to these emissions were China, the United States, India, and Indonesia [38]. This substantial contribution to global emissions highlights the critical need for Indonesia to implement and focus more on its environmental policies and transition towards sustainable energy sources to mitigate its environmental impact while considering broader socio-economic implications, such as job creation, economic growth, and energy security.

It is important to mitigate climate change and consider using more green energy to support a greener economy. In this regard, Indonesia has demonstrated a strong commitment to addressing climate change through various policy initiatives and international collaborations. Following the Paris Agreement, Indonesia has planned to reduce greenhouse gas emissions by 29% by 2030 using only domestic resources, or by 41% with additional international support [39]. The estimated investment needed is USD 247 billion or USD 19 billion per year from 2018 to 2030. The government aims to increase the share of renewable energy in the energy mix to 23% by 2025 and achieve net-zero emissions by 2060 through significant investment in solar, hydro, geothermal, and wind energy projects. As seen in Figure 7, Indonesia has outlined their plan to focus on reducing emissions [40]. Additionally, in April 2022, Indonesia introduced a carbon tax. Ministry of Finance (MEF) Regulation Number 21 of 2022 outlines procedures for implementing and providing guidance for the carbon pricing mechanism. This is complemented by Ministry of Energy and Mineral Resources (MEMR) Regulation Number 16 of 2022, which specifies guidelines for the electric power generation subsector, and MEMR Regulation Number 21 of 2022, which focuses on incentivizing renewable energy generation through rooftop solar power plants and integrating them into the carbon market [40,41].

4.1.2. Gaps in Policy Implementation

Indonesia has set ambitious goals to increase the portion of renewable sources in its energy mix, aiming for 23% by 2025 [40]. However, as of 2022, renewable energy accounts for only a small portion, 4.16% from 912 divided by 21,933 of the total energy input, as can be seen in Table 3 [36]. This indicates a substantial gap between the targets and the actual progress made. Several factors may contribute to this discrepancy, including a regulatory framework for renewable energy that has experienced frequent policy changes and inconsistencies, particularly regarding tariffs (FIT) and local content requirements. For example, MEMR No. 50/2018 limits Power Purchase Agreements (PPAs) to 85% of the local generation costs, creating financial disincentives for renewable energy projects compared to subsidized coal [16,25,42]. Furthermore, achieving Indonesia’s renewable energy target of 23% by 2025 requires an estimated cost of USD 247 billion [39]. This highlights the financial burden faced by Indonesia in transitioning to a sustainable energy system. Moreover, subsidized coal further creates a market disadvantage for cleaner technologies [15,16,42].

Given this issue, Indonesia’s grid infrastructure is outdated and struggles to accommodate the variable output of renewable energy sources, such as wind and solar. This leads to energy wastage and underutilization of installed renewable capacities. For instance, offshore wind projects face technological and financial barriers due to a lack of specialized ports and high installation costs, which are 50% higher than onshore alternatives [18,21]. Furthermore, coastal and low-lying energy infrastructure faces increasing threats from the rising sea level and extreme weather events, which disrupt energy production and distribution, increasing maintenance costs and reducing reliability. The lack of climate-resilient planning further increases these vulnerabilities [15,18]. Additionally, Indonesia’s decentralized governance framework creates significant obstacles for renewable energy development, as national-level authorities often fail to align with local governance, resulting in a disconnect between planning and implementation [17].

4.2. Strategies for Building Resilient Energy Systems

4.2.1. Mitigation Measures

Indonesia’s mitigation measures for addressing this issue highlight the adoption of renewable energy sources, particularly solar and geothermal. Solar energy has the potential to reduce Indonesia’s reliance on fossil fuels, offering opportunities due to the high solar irradiation levels in Indonesia [43]. However, progress has been slow due to challenges such as high upfront costs, limited subsidies, and inconsistent policies. Similarly, although Indonesia possesses approximately 40% of the world’s geothermal energy sources, only a small portion has been developed due to high exploration costs and a complex regulatory process [20,44]. To overcome these challenges, Indonesia needs to prioritize policies that simplify permitting processes, ensure predictable power purchase agreements, and provide financial incentives for renewable energy projects. Partnerships between the public and private sectors could also help secure the necessary funding to expand the renewable energy infrastructure [23,45]. Specifically, mobilizing green financing is important, particularly through international collaborations involving loans and grants from institutions such as the Asian Development Bank (ADB), and using green bonds and concessional financing. These mechanisms not only provide necessary capital, but also encourage private sector participation to address the significant investment gap in Indonesia’s renewable energy sector [16,42].

Furthermore, retrofitting buildings with better insulation and lighting systems and upgrading industrial processes to use advanced, energy-efficient machinery could reduce emissions while also lowering operational costs for businesses and households—offering economic benefits [41]. Decentralized energy systems, such as microgrids and rooftop solar panels, are particularly effective in addressing this issue. These systems reduce dependency on large-scale networks and provide energy security in underserved areas, aligning with Indonesia’s current geographical and infrastructural conditions [20]. Additionally, the transition from LPG to induction stoves is an essential step toward Indonesia’s clean energy goals, as it optimizes the utilization of excess electricity capacity. The use of floating solar photovoltaic (PV) systems also demonstrates the potential to improve resilience by leveraging Indonesia’s abundant water resources [46]. Moreover, strengthening the infrastructure to withstand the risks of climate change—such as extreme weather and rising sea levels—is critical for ensuring long-term resilience. Coastal power plants and transmission lines need to be reinforced to minimize their risk exposure. It is important to optimize Indonesia’s electricity market structure to prevent inefficiencies and address vulnerabilities in the centralized energy system [47]. Additionally, targeted investments in adaptive technologies and strong risk management frameworks are essential for enhancing the reliability and durability of Indonesia’s energy system [18].

4.2.2. Adaptation Strategies

Strengthening the energy infrastructure to withstand climate impacts is important for increasing resilience against climate change. The Organization for Economic Co-operation and Development (OECD) found that integrating climate resilience approaches across all levels of government is crucial for minimizing the impact of natural disasters on infrastructure assets and operations. Furthermore, such integration offers benefits well beyond the management of societal and economic risks [48]. Promoting decentralized energy systems can reduce dependency on large-scale networks; therefore, it is essential to enhance energy security and resilience. A published study discusses the transition towards renewable and decentralized energy systems as a response to climate concerns and the need for sustainable development. The integration of renewable sources like solar and wind power challenges traditional centralized energy paradigms, necessitating innovative methods to manage the stochastic nature of these resources [49]. Furthermore, by lowering reliance on a single, centralized power source, decentralized energy systems—such as microgrids—improve energy resilience. They enable local energy production and consumption, which can be particularly beneficial in mitigating the impacts of natural disasters and improving energy access in remote areas [50].

Additionally, adaptation policies should prioritize upgrading Indonesia’s vulnerable coastal power infrastructure by applying climate-resilient design standards. One of the actions that the government can perform is making climate risk assessments a mandatory part of energy infrastructure planning. Institutional coordination also needs to be strengthened, for example by establishing a national task force on energy resilience, integrating climate adaptation into regional energy development plans (RUED), and adopting digital monitoring technologies to track climate impacts in real time. These efforts must be strengthened by capacity-building programs, especially at the regional level, to ensure that the transition to decentralized energy systems is not only technically feasible, but also socially inclusive and aligned with local needs.

5. Conclusions and Recommendations

There is a close connection between Indonesia’s energy sector vulnerabilities and climate change. The energy sector has been severely impacted by rising sea levels, extreme weather, and global warming, which affect infrastructure, energy demand, and power generation. To minimize these effects, investments in resilient infrastructure and renewable energy are required—particularly for coastal power plants and transmission lines, which are extremely vulnerable. Indonesia’s heavy reliance on coal, which accounts for more than 60% of its electricity generation, further increases its greenhouse gas emissions, making the transition to renewable energy essential. The proposed framework not only evaluates current policies, but also offers strategic recommendations for financial mechanisms, governance, and infrastructure improvements, which previous approaches have not fully addressed. Indonesia needs to integrate mitigation and adaptation strategies into its energy policies to address climate change challenges. Adaptation strategies should focus on enhancing the energy infrastructure’s resilience against climate-related hazards, including extreme weather and rising sea levels. At the same time, mitigation efforts should prioritize increasing the capacity of renewable energy sources, particularly through solar and geothermal projects. Investments in energy-efficient technologies and decentralized systems, such as microgrids, are essential for ensuring reliable energy access across the country.

Additionally, strengthening governance frameworks is critical for aligning national and regional energy policies. Collaboration between government agencies, private sectors, and local communities is important for addressing issues such as policy inconsistencies and funding gaps. Furthermore, implementing decentralized governance models can help regional renewable energy projects to be implemented more successfully. To achieve renewable energy targets, Indonesia must secure substantial financial resources, considering the scale of the required investment. Green financing mechanisms, including international loans, green bonds, and concessional financing, should be leveraged to attract private sector participation. Policy reforms—such as predictable power purchase agreements (PPAs) and financial incentives for renewable energy developers—are necessary to mobilize investment and ensure the sustainability of the energy transition.

The urgency of climate risks demands immediate action to implement integrated mitigation and adaptation strategies. Indonesia must accelerate the adoption of renewable energy by rapidly implementing large-scale solar and geothermal projects, upgrading its energy system to accommodate the variability of renewable sources, and retrofitting the existing infrastructure. These steps will not only reduce emissions, but also improve the resilience and reliability of the nation’s energy systems. For Indonesia to successfully complete its energy transformation, collaborative governance is essential. Aligning energy policies with climate goals requires not only accountability measures, but also transparent and participatory decision-making processes. The $247 billion investment gap needed to reach the 2025 renewable energy target must be addressed through collaboration between the public and private sectors. Substantial investments in green energy infrastructure are non-negotiable, and clear policies must incentivize private sector involvement. By taking these urgent steps, Indonesia can build a sustainable and resilient energy system that mitigates climate risks, supports economic growth, and achieves long-term net-zero emissions goals.

Although this study offers significant insights into Indonesia’s energy policy and its resilience to climate change, there are limitations that need to be acknowledged—specifically, the reliance on secondary data and the lack of empirical validation. Future studies should address these limitations through primary data collection and empirical analysis. Research should also focus on the specific socio-economic impacts of the energy transition, particularly the effects of transitioning from coal mining and fossil fuel industries on local communities, including employment shifts, economic diversification, social resilience, and financial mechanisms.