Indonesia’s LNG Investment: A Step Back from Climate Commitment

This report by Trend Asia and debtWATCH Indonesia argues that Indonesia's promotion of liquefied natural gas (LNG) as a 'transitional fuel' and the continued financing of gas projects by Multilateral Development Banks (MDBs) undermine the Paris Agreement and hinder a genuine transition to renewable energy. The document details the environmental, social, and governance risks associated with gas infrastructure, including methane emissions, corruption, and human rights violations.

• The Indonesian government promotes natural gas as a 'transitional fuel' to move away from coal, but this strategy risks locking the country into long-term fossil fuel dependence and failing to meet Paris Agreement commitments. The government's plan includes replacing fuel with LNG in 33 locations with an estimated demand of 83.74 BBTUD and a power capacity of 1,198MW.
• Multilateral Development Banks (MDBs), including the World Bank Group (WBG) and Asia Development Bank (ADB), have committed to aligning their financing with the Paris Agreement, yet they continue to support gas projects through technical assistance, policy loans, and trade finance. For example, the ADB approved a $500 million loan in September 2024 for the Affordable and Sustainable Energy Transition Program, and the WBG's IFC disbursed approximately USD 3.7 billion for oil and gas trade finance by 2022.
• Gas infrastructure development in Indonesia is linked to significant governance failures and corruption. Notable cases include the naming of former Pertamina President Director Karen Agustiawan as a suspect in an LNG procurement corruption case (2011-2021) resulting in state losses of approximately US$140 million, and procedural discrepancies in the appointment of PT Bakrie & Brothers for the Cirebon-Semarang gas pipeline.
• The expansion of gas projects has led to human rights violations and geopolitical tensions. This includes allegations of gross human rights violations by ExxonMobil in the Arun Field in Aceh, and territorial disputes over the Tuna Block in the North Natuna Sea with China and the Ambalat Block in the Celebes Sea with Malaysia.
• Gas infrastructure causes severe environmental damage, including hazardous waste pollution and ecosystem destruction. PT Chevron Pacific Indonesia (CPI) in the Rokan Block left behind 1.6 million cubic meters of hazardous waste contaminated soil, while a planned LNG terminal in Bali's Tahura Ngurah Rai mangrove area threatens carbon sinks and coral reefs.
• The claim that gas is a clean transition energy is contradicted by its high methane emissions. Indonesia is ranked as the third largest global methane emitter after Brazil and the United States. Methane emissions from fossil fuel combustion are responsible for approximately 30% of the global temperature rise since the industrial revolution.

APA

Gultom, D., Setiawan, A. A., Indri, N., & Amali, Z. (2025). Indonesia’s LNG Investment: A Step Back from Climate Commitment. Trend Asia. https://trendasia.org/wp-content/uploads/2025/04/Indonesias-LNGInvestment-A-Step-Back-from-Climate-Commitment.pdf

Chicago

Gultom, Diana, Alfa Arifia Setiawan, Novita Indri, and Zakki Amali. Indonesia’s LNG Investment: A Step Back from Climate Commitment. Trend Asia, 2025. https://trendasia.org/wp-content/uploads/2025/04/Indonesias-LNGInvestment-A-Step-Back-from-Climate-Commitment.pdf.

Wikipedia

{{cite report |last1=Gultom |first1=Diana |last2=Setiawan |first2=Alfa Arifia |last3=Indri |first3=Novita |last4=Amali |first4=Zakki |title=Indonesia’s LNG Investment: A Step Back from Climate Commitment |publisher=Trend Asia |date=March 2025 |url=https://trendasia.org/wp-content/uploads/2025/04/Indonesias-LNGInvestment-A-Step-Back-from-Climate-Commitment.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gultom2025indonesias, author = {Gultom, Diana and Setiawan, Alfa Arifia and Indri, Novita and Amali, Zakki}, title = {{Indonesia’s LNG Investment: A Step Back from Climate Commitment}}, institution = {Trend Asia}, year = {2025}, month = mar, url = {https://trendasia.org/wp-content/uploads/2025/04/Indonesias-LNGInvestment-A-Step-Back-from-Climate-Commitment.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }