Careful socioeconomic planning key for Indonesia's 2060 net-zero goal: McKinsey

It will see significant opportunities emerge as it pursues its sustainable development goals.

It will be critical to engage in careful green transition planning that includes a comprehensive examination of socioeconomic metrics for Indonesia to reach net-zero emissions by 2060, according to McKinsey.

“Indonesia could secure a sustainable future by identifying and acting on opportunities on the road to net zero,” McKinsey said.

According to the consulting firm, the country will see significant opportunities emerge as it pursues its sustainable development goals.

For instance, the country has large reserves of nickel, a critical mineral in the electric-vehicle supply chain; untapped potential in the energy sector in renewables; potential to develop carbon capture and storage resources; and an abundance of natural capital.

“The transition to a low-carbon energy system could also allow Indonesia to reduce its dependence on fossil fuel imports,” McKinsey added.

However, the transition will also lead to burdens that must be carefully managed to ensure equitable outcomes from climate action, including increases in the delivery costs of electricity and substantial shifts in the labour market.

Further, the transition will require a significant increase in investment in low-emission technologies. In the power sector alone, average annual investments in low-emission technologies are expected to total $17.9b per year—or 1.7% of gross domestic product.