Challenging the 'Sustainable' in Development

A Closer Look at Indonesia’s Geothermal Energy Expansion

By Ernielly Leo (@erniellyleo)

Aerial view of Mount Merapi volcano and six other volcanoes on the island of Java, Indonesia. (Source: Wikimedia Commons)

A lush archipelago scattered along the Pacific Ring of Fire, Indonesia’s recent foray into harnessing geothermal energy to meet its growing domestic demand is a quiet but potentially perilous force. Increasing national production of clean energy seems to fit right into the United Nations’ Sustainable Development Goals (‘SDGs’), as well as meeting national targets at reducing carbon emission. In short, a win-win solution worthy of international applause...or so it seems on the surface. If we dig a little deeper, the hidden cost of green energy expansion in Indonesia begins to emerge.

According to the World Bank, Indonesia holds up to 40% of the world’s geothermal energy potential due to its location on the Pacific Ring of Fire. Organisations such as the World Bank and Asian Development Bank have long called for increased national governance to create systems that could finally unlock the equatorial state’s geothermal energy potential. In an effort to create institutional change, the Indonesian government passed Undang Undang Nomor 21 in 2014, a national law separating geothermal energy production from mining activity. Despite being a relatively small regulatory shift, this was a big step towards facilitating investment in geothermal, leading to the establishment of geothermal power plants across the nation. Geothermal energy was now governed under its own set of regulations.

This new law came together with acceleration of funding packages and risk-reduction strategies to attract private investors into the geothermal industry in Indonesia. Currently, the World Bank plans to channel about $650 million to finance exploration projects. Of this, a rough sum of $150 million will come from the Indonesian government, matched by another $175 million from concessional climate finance: a lenient loan system with low or no interest. These financial incentives are part of a broader strategy to create appropriate infrastructure to tap into Indonesia’s geothermal energy potential. To top it all off, in the case of insufficient profit generated, up to 50% of this loan will be forgiven.


As the world’s fourth most populous country with 264 million people, Indonesia’s demand for energy is rising with its increasingly urban population. The gargantuan capital city, Jakarta, comes at the top of the list of energy consumers, followed closely by the rapid growth of numerous urban centres across the nation. Despite this growing urban appetite, about 20 million people in less urbanised areas lack access to reliable and uninterrupted energy supplies.

These urban and rural energy supply issues have been tricky for the government to navigate. Indonesia’s geothermal expansion simultaneously tackles both domestic sustainable development goals, and involves Indonesia in international climate action. SDG 7 calls for access to affordable, reliable, sustainable and modern energy for all. Indonesia’s current reliance on fossil fuels to meet its domestic energy demands directly contradicts this aim. Geothermal energy could be key in tackling the challenges of sustainable development with a rapidly expanding population, while simultaneously inching towards meeting the state’s contributions to the Paris Agreement. Indonesia now holds the title of world’s second largest producer of geothermal energy, just behind the US.

The centralized government of Indonesia is hungry for projects that will increase its international reputation. As a constant recipient of international development aid, its rapid GDP growth has not been matched with increasing living standards for the majority of the population - not something the international community looks favourably on. The government is also still recovering from public relations disasters concerning rapid deforestation, and recurrent transboundary haze issues generated from peat fires in Borneo. When domestic deforestation isn’t on the news, the rare times Indonesia will be visible internationally will be when disasters strike, which unfortunately has happened frequently in 2018. The country’s continued association with palm oil and deforestation, as well as rife poaching and wildlife smuggling cases, contribute to Indonesia’s notorious reputation in poor environmental management.

"SDG 7 calls for access to affordable, reliable, sustainable and modern energy for all. Indonesia’s current reliance on fossil fuels to meet its domestic energy demands directly contradicts this aim...Indonesia’s claim to fame through geothermal could be an attractive atonement for these issues."

Indonesia’s claim to fame through geothermal could be an attractive atonement for these issues. A national energy strategy that could meet people’s demands, while showcasing the country’s effort to fulfill its international climate promise, brings alluring promises. Geothermal expansion was widely reported by both international and domestic media as a push towards enabling regulations that would support national clean energy production. However, the overwhelmingly positive media coverage and national narrative meets opposition in the unlikeliest of places.

Small voices of dissent come from Indonesian conservationists as an unsavoury truth emerges: a large portion of Indonesia’s geothermal energy reserves are located within conservation areas.


Home to incredible biodiversity, many of Indonesia’s intact forests face continuous threats from deforestation, leading to habitat destruction. For many of its more charismatic wildlife such as the cockatoo or pangolins, the illegal smuggling of these endangered species remains rampant due to a complex nexus of poverty, as well as increasing demands both nationally and internationally for these so called ‘exotic’ species. Some efforts to protect the diverse ecosystems in Indonesia have been made, including the creation of conservation zones and protected areas. Unfortunately, many of these nature reserves lack appropriate funding and governance to function properly. The overlap between geothermal spots and a potential change to regulations regarding conservation is setting Non-Governmental Organisations (‘NGOs’) on high alert.

Indonesia’s conservation bill faces a proposed amendment which will allow geothermal energy concessions to be given out within protected areas. The government views geothermal as ‘clean’ energy, and therefore not harmful for the environment. The separation of geothermal from mining activity also means that it will be subjected to different exploration and activity regulations as well as a potentially more lenient regime of environmental impact assessments.

While geothermal exploration indeed has a smaller impact compared to other mining and drilling programmes, the existence of a geothermal plant will inevitably be followed by roads. Roads will open up forested areas to more traffic, disturbing natural species migration as well as increasing noise pollution that affects many sonar-dependent species. Roads also don’t discriminate against those with more nefarious intentions: enabling plant operations to take place, but also granting poachers access to previously restricted areas of the forests.

The creation of roads in intact forests leads to habitat fragmentation. This is not only bad for animals, but also for the forest itself, as trees become less resilient to external pressures. Research has shown that forest edges become more susceptible to fires. This ‘edge-effect’ causes serious harm to ecological integrity of a forest. Ecological degradation typically stretches 5 km away from forest edges, but can reach up to 40 km away in tropical forests.


The often-cited success story of geothermal power plant at Mount Salak in Java offers us a glimpse into the complexity behind energy production in a conservation area. Mount Halimun-Salak consists of two forested areas connected by a corridor, to assist species migration between two connected mountain ecosystems. Since its official designation as a national park in 1992, no human activity is allowed in the core zone of Mount Halimun Salak.

However, the history of land use in the area has always been complicated. Conflicting land rights, vague governance, and multiple changes to land-use designation in the area has meant that industries established prior to 1992 may retain their land concession. One of them, Chevron’s geothermal plant, continues to operate today within the core zone of Mount Halimun Salak. The plant has been active since 1984, long before the park was established. Moreover, the current pro-geothermal narrative has meant that when its concession expired in 2016, it was renewed with vigour - as Chevron had only used about 3% of its exploration area.

While future geothermal plants will go through a different permit process, labyrinthine governance systems and overlapping jurisdictions remain common in Indonesia’s political system. This bureaucratic entanglement is a legacy of colonization, an authoritarian era, and a massive push towards governmental decentralization. The many legislative loopholes that have ensued, combined with a more relaxed conservation bill and an appetite for geothermal expansion, could spell disaster for the remaining conservation areas in Indonesia and global biodiversity.

Local communities around such geothermal plants are anything but unanimous in their attitudes towards industry presence in their area. In the case of Halimun Salak, Chevron has a good reputation for its corporate social responsibility practices around the corridor and nearby community. The company encouraged skills-training to diversify local economy beyond agriculture, and helped in building infrastructures such as public washrooms and schools. In a country where the ‘small people’ often feel neglected by its federal government, the presence of these private companies might provide tangible and long-awaited improvements in infrastructure and living conditions.

About 400 km east of Halimun Salak stands Mount Slamet, an active stratovolcano in Central Java, also home to another geothermal power plant. Here, locals do not have such a favourable opinion of geothermal energy, and instead mobilized in anger as their source of drinking water turned highly turbid. Large-scale forest clearing to make way for roads and other plant infrastructure on the slopes of Mount Slamet led to an influx of mud and debris downstream, polluting nearby rivers. While many of the well-off urbanites in Indonesia can afford paying for drinking water, these local springs are crucial for villagers who still depend on their environment for clean water. Forest loss around mountain slopes also increases the vulnerability of communities downhill: without trees to hold rainwater and soil in place, communities are subjected to potential landslides and flooding disasters. Safe to say, villagers around Mount Slamet are heavily opposed to geothermal energy project in the area. Responses by the company so far have been relatively slow, even in the face of local protests.