by Setyawati Fitrianggraeni and Tiara Amanda Putri

Overview

The Government has issued Government Regulation (GR) No. 40 of 2025 as the latest strategic legal framework for the national energy sector. This regulation updates the energy policy direction previously governed by GR No. 79 of 2014, with significant adjustments to global developments and environmental commitments. This update positions the energy paradigm as a foundation for national development to achieve economic self-reliance, rather than merely as an export commodity.(1)

The regulation further underscores the Government’s commitment to strengthening national energy sovereignty and security through a balanced energy transition policy. At the policy level, the regulation emphasizes the acceleration of new and renewable energy development, the gradual reduction of reliance on fossil fuels, and the optimization of natural gas as a transitional energy source, while continuing to ensure supply security and price affordability.(2)

Key highlights

• Decarbonization Roadmap and Energy Mix Transformation

This regulation sets out ambitious quantitative targets to support the transition from fossil energy to New and Renewable Energy (NRE) in achieving Net Zero Emissions (NZE) by 2060. Emissions in the energy sector are targeted to peak in 2035 and be capped at a maximum of 129 million tons of CO₂ by 2060,(1) alongside a significant increase in the share of NRE in the national energy mix from approximately 19%–23% by 2030 to 70%–72% by 2060.(1) In parallel, the role of coal is set to decline substantially from around 40.7% in 2030 to below 12% by 2060, supported by a gradual phase-out of coal-fired power plants and a prohibition on the development of new coal-fired power plants, except for those integrated with strategic industries.(1) This approach is aligned with the broader implementation of the energy transition, which requires coordinated regulatory measures to reduce long-term dependence on fossil energy.(3)

• Diversification of Future Energy Sources and Supply Security

To ensure security of supply during the energy transition, the Government is pursuing diversification of new energy sources alongside import substitution strategies. Nuclear power is planned to enter commercial-scale operations in 2032, contributing an initial share of approximately 0.4%–0.5% to the national energy mix.(1) In parallel, the Government promotes mandatory biodiesel blending (B40/B50) and the gasification of coal into dimethyl ether (DME) as a substitute for LPG, with the objective of reducing import dependency and strengthening national energy self-reliance.(4) To further anticipate potential disruptions to energy supply, the Government mandates the management of layered energy reserves, comprising Strategic Reserves for long-term needs, Buffer Reserves for crisis or emergency situations, and Operational Reserves to ensure daily continuity of energy supply.(1)

• Regional Implementation and Economic Incentives

The effectiveness of this policy is highly dependent on strong coordination between the central and regional governments, as well as the availability of adequate fiscal support instruments for business actors. Regional Governments are required to formulate Regional Energy General Plans (RUED) that are aligned with the national energy policy, with regional energy authorities increasingly directing their guidance and supervision toward expanding local NRE shares, as reflected in the target of achieving a 15.5% NRE energy mix in South Kalimantan by 2026.(5) In parallel, the regulation mandates the implementation of the Carbon Economic Value (Nilai Ekonomi Karbon/NEK) framework, including the imposition of a carbon tax on the use of non-renewable energy, while energy providers that develop low-carbon technologies or implement energy conservation measures are eligible to receive both fiscal and non-fiscal incentives.(1)

References

1. Peraturan Pemerintah (PP) Nomor 40 Tahun 2025 tentang Kebijakan Energi Nasional.

2. Balfast A. Kaleidoskop Energi 2025 PYC: Menakar Ketahanan dan Arah Transisi Energi Indonesia 2026. 2026. Available from: https://www.kosadata.com/read/kaleidoskop-energi-2025-pyc-menakar-ketahanan-dan-arah-transisi-energi-indonesia-2026

3. Manohara BP. Implementasi Kebijakan Transisi Energi di Indonesia, Tantangan dan Strategi Menuju NZE 2060. Inovasi: Jurnal Sosial Humaniora dan Pendidikan. 2025 Nov 25;5(1):582–96. Available from: https://journalcenter.org/index.php/inovasi/article/download/5259/4474/24676

4. Anam K. Ungkap Urgensi dan Strategi Menuju Kemandirian Energi Nasional. 2026. Available from: https://www.cnbcindonesia.com/news/20260122171140-4-704483/ungkap-urgensi-dan-strategi-menuju-kemandirian-energi-nasional

5. RH A. Bauran Energi Baru Terbarukan Kalsel Meningkat, Dinas ESDM Terus Dorong Energi Bersih. 2026. Available from: https://diskominfomc.kalselprov.go.id/2026/01/22/bauran-energi-baru-terbarukan-kalsel-meningkat-dinas-esdm-terus-dorong-energi-bersih/

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