Challenges and Opportunities: Green Hydrogen Development in Indonesia
Key Ideas
  • Indonesia needs to reduce gas subsidies and implement carbon pricing to enhance green hydrogen competitiveness for domestic industries.
  • The country has significant renewable energy potential to develop green hydrogen, but faces challenges due to reliance on fossil fuels and high costs.
  • Advanced electrolyser technologies like SOEC can help reduce production costs, making green hydrogen more competitive.
  • The government is urged to prioritize a dedicated green hydrogen roadmap to ensure sustainable and competitively priced production by 2030.
The Institute for Essential Services Reform (IESR) highlights the challenges and opportunities for green hydrogen development in Indonesia. While the country has identified multiple sites for green hydrogen production and significant renewable energy potential, the competitiveness of green hydrogen is hindered by subsidized gas prices and lack of a detailed strategy. The government is advised to cut gas subsidies, enforce carbon pricing, and prioritize a dedicated green hydrogen roadmap to achieve sustainable and competitively priced production by 2030. IESR emphasizes the importance of developing a green hydrogen ecosystem through policies, regulations, and incentives. Green hydrogen is seen as a key solution for decarbonization in industry and transportation, especially for energy-intensive sectors. Indonesia's national hydrogen strategy aims to use hydrogen in achieving decarbonization by 2060, but detailed plans for green hydrogen acceleration are lacking. To address the high costs of green hydrogen production, the adoption of advanced electrolyser technologies like SOEC is recommended. Additionally, reducing the cost of electricity from renewable sources is crucial to improving the competitiveness of green hydrogen. Despite the challenges, Indonesia is making strides with the expected launch of a hydrogen development roadmap in April and the establishment of hydrogen refueling stations and a green hydrogen plant powered by geothermal energy. Overall, IESR stresses the importance of strong policies, incentives, and production targets to attract investors and drive the development of green hydrogen in Indonesia.
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