UK-Indonesia collaboration on environmental sustainability

A Westminster Hall debate on UK–Indonesia collaboration on environmental sustainability is scheduled for 2:30 pm to 4:00 pm on Tuesday 23 June 2026. The debate will be led by Kerry McCarthy MP (Labour).

This briefing provides an overview of the UK’s strategic partnership with Indonesia, Indonesia’s environmental and climate challenges, and related UK aid programmes and support for the climate transition.

Indonesia and the environment

Indonesia’s growing economy heavily depends on coal for its energy. Electricity demand in Indonesia is expected to grow further, though the country’s government aims to phase out coal use by 2040.

Deforestation is a significant environmental challenge in Indonesia. It is often driven by the agricultural and mining industries.

Indonesia’s recent economic development

Indonesia has a population of 270 million people, making it the fourth-most populous country in the world. According to the World Bank, Indonesia “has achieved remarkable economic growth” during the last two decades and has achieved middle-income status. Poverty rates have “decreased significantly” according to the UN Development Programme, and electricity access is now near-universal in Indonesia, reaching 99.4% of the population in 2023.

Indonesia and carbon emissions

Indonesia heavily relies on coal for its power generation. The International Energy Agency (IEA) says that coal provided 69.1% of Indonesia’s electricity in 2023. IEA statistics show that Indonesia’s coal power capacity rose by more than 150% from 2013 to 2023 – from 118 Terawatt-hours (TWh) to 299 TWh – driving up emissions. Around 53% of Indonesia’s total CO2 emissions came from fuel combustion in 2023, and its CO2 emissions from coal increased by 663% in the years 2000 to 2023.

Indonesia has announced ambitious targets to reduce its greenhouse gas emissions. It has said it will phase out coal by 2040 and achieve net-zero emissions by 2050. It plans to achieve these targets through initiatives such as expanding biodiesel production and transitioning coal-based power plants to renewable energy.

Meeting these targets will be challenging. Indonesia’s electricity demand is expected to double by 2040, according to the thinktank Ember Energy. Its analysis suggests that Indonesia will need to increase its renewable energy generation to 65% of its total power generation to be able to phase out coal by 2040 and meet the projected increases in electricity demand. In 2023, renewable energy comprised just over 18% of Indonesia’s total electricity generation.

Indonesia’s environmental challenges

Environmental challenges in Indonesia include deforestation, rising sea levels and increasing forest fires. According to the World Bank, Indonesia has more than 120 million hectares of officially designated forest area and is home to the world’s third-largest expanse of tropical rainforest. However, the percentage of Indonesia’s land area covered in forests decreased significantly by the end of the 20th century, going from nearly 80% in the 1960s to 50% by 2001. Since 2000, tree cover has declined by 18%.

Deforestation in Indonesia is being driven by urbanisation and the mining and agriculture industries. A significant share of forest loss is reported to be due to palm oil plantations, with one study estimating that palm oil plantations contributed to more than two fifths of deforestation in Indonesia from 2001 to 2016. Indonesia accounted for 57% of global palm oil production in 2025/26, according to the US Department of Agriculture.

UK–Indonesia relations and 2026 strategic partnership

In 2022, the Conservative government announced that it would develop a strategic roadmap with Indonesia.

In 2026, the Labour government announced that a strategic partnership had been agreed. This includes a commitment to collaborate on climate and environmental goals.

UK and Indonesia collaboration on environmental sustainability, 2022 to 2024

In 2022, under the Conservative government, Indonesia and the UK announced a two-year “Partnership Roadmap”. The roadmap set out how the two countries would cooperate in five areas, including “climate change, low carbon and sustainable development”.

On low-carbon development, it said the UK and Indonesia would:

• collaborate to support the development of Indonesia’s National Medium-Term and Long-Term Development Plan
• enhance cooperation in the field of carbon markets and trade, through the Indonesia–UK dialogue on carbon trade and carbon pricing

On forestry and sustainable land use, the roadmap said that the UK and Indonesia would:

• promote cooperation on Indonesia’s ambition to achieve net sink (that is absorbing more emissions than it produces) for the forest and land use sector
• promote progress in the Forest, Agriculture Commodity and Trade Dialogue, and promote cooperation to achieve the roadmap of actions, aiming to protect forests and other important terrestrial ecosystems

On low carbon, transportation and renewable energy, the roadmap said that the UK and Indonesia would:

• strengthen cooperation on the transition to clean energy in the power and transport sectors
• explore potential collaboration on community-based mitigation and adaptation
• galvanise international support through the Indonesia–UK co-chaired, multi-donor Friends of Indonesia Renewable Energy Dialogues
• share best practices, knowledge, and expertise for planning and delivering renewable energy projects
• mobilise green finance to support low-carbon energy investment
• enhance cooperation on transport through signing a memorandum of understanding on cooperation in the transport sector in 2022.

January 2026 strategic partnership

In January 2026, the Labour government announced a new strategic partnership with Indonesia (the new strategic partnership was first trailed in November 2024). The new strategic partnership has four pillars:

• economic growth
• climate, energy and nature
• defence and security
• people and society

Under the second pillar on climate, energy and nature, the strategic partnership acknowledges the challenges posed to both countries by climate change:

the climate crisis presents our maritime nations with similar challenges. Together we will champion global efforts to preserve a liveable planet for future generations, while delivering clean energy, green jobs and long-term food and energy security for our people.

A policy paper setting out more details on the partnership (PDF) list areas of joint work, including:

• supporting Indonesia to set up an independent climate body modelled on the UK’s Climate Change Committee
• advancing both countries’ climate and nature agendas through the G20 and Association of Southeast Asian Nations (ASEAN) -led mechanisms, and exploring trilateral partnerships (both countries are G20 members and the UK is an ASEAN dialogue partner)
• strengthening collaboration on climate adaptation, including through “improved data systems, climate impact modelling, developing early warning and observation system and enhanced sub-national capacity”, and exploring “joint initiatives in research, innovation, and financing instruments”
• continuing collaboration between the UK Met Office and Indonesia’s equivalent Agency for Meteorology, Climatology, and Geophysics on the Weather and Climate Science for Service Partnership Southeast Asiaproject

UK and Indonesia trade relations

The UK and Indonesia do not currently have a free trade agreement.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

However, Indonesia has expressed interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement, which the UK joined in 2024.

In a statement following the November 2025 CPTPP ministers’ meeting in Melbourne, the CPTPP said it had identified four countries which wanted to join the CPTPP and which met the three core criteria for accession (the ‘Aukland Principles’). The four countries were Uruguay, the United Arab Emirates, the Philippines, and Indonesia. The statement said the ministers had decided to commence an accession process with Uruguay, and “will commence with the others in 2026, if appropriate”.

Joint Economic and Trade Committee

In April 2021, the UK and Indonesia announced that they were setting up a Joint Economic and Trade Committee (JETCO).

In the 2022 two-year strategic partnership roadmap outlined above, the two countries said that the next steps for the JECTO would include “a potential enhanced trade partnership and actions to promote trade in key sectors”, and the beginning of a “discussion on exploring a potential FTA [Free Trade Agreement] under the JETCO mechanism”.

UK aid and Indonesia

In 2023, the government described low-carbon development as a “priority theme” in its aid work with Indonesia. Although total UK aid to Indonesia has generally declined since 2019 (as the UK aid budget has been reduced), it increased again in 2024, driven primarily by climate-related projects.

UK aid priorities

The Foreign, Commonwealth and Development Office’s (FCDO) UK–Indonesia development partnership summary, published in July 2023, described Indonesia as “critical” to achieving global goals on climate change. It cited the country’s significant emissions of greenhouse gases and vulnerability to the effects of climate change.

At the time of publication in 2023, the FCDO said that low-carbon development would “remain one of the flagship themes” of UK engagement with Indonesia, and that aid would be focused on forestry and timber supply chains. The partnership summary said that the UK would provide technical advice, help mobilise trade and finance, and support the development of sustainable supply chains.

Section 1 of the annex to the UK–Indonesia Economic Growth Partnership of 2026 provides further information on UK–Indonesia priorities on promoting clean energy and climate cooperation. This includes actions beyond aid, such as through UK Export Finance (a government agency which provides financial support to UK businesses to help them export).

Bilateral aid

In 2024, Indonesia received a total of £26.8 million in bilateral aid (aid for a specific programme or purpose) from the UK. This was an increase on 2023, when it had received £16.3 million, but is still relatively low: 30 countries received more bilateral UK aid than Indonesia in 2024.

As the chart below shows, over half of the UK’s aid to Indonesia in 2024 (£14.7 million) had either mitigating or adapting to the effects of climate change as its primary objective. A further £2.7 million had climate change as a significant objective, with £9.4 million of aid unrelated to the climate.

Source: OECD, CRS: Creditor Reporting System (flows) dataset, April 2026

The largest single UK contribution in 2024 was £5 million towards the World Bank’s Indonesia - Second Sustainable Least-Cost Electrification-2 programme, which is building electricity transmission lines and battery storage capacity in Indonesia.

Some of the aid that was not labelled as being significantly associated with climate change was still environment related. For example, the UK provided £1.3 million in 2024 towards the MENTARI UK-Indonesia low carbon energy partnership, and £0.4 million to the PISCES programme addressing plastic pollution.

For a list of active UK aid programmes in Indonesia, see the FCDO Development Tracker webpage for Indonesia (note that the budgets shown are live and are subject to revision and amendment). The UK Government has not confirmed country-level spending plans for 2026/27.

Indonesia’s Just Energy Transition Partnership

In addition to bilateral aid programmes, the UK has supported Indonesia’s Just Energy Transition Partnership. Launched in 2022, it intends to mobilise around US$20 billion in private finance up to 2027 to address climate change. UK support includes a $1 billion guarantee for additional lending from the World Bank. Other G7 states have also backed the partnership.

However, there are concerns about the level of funding that the partnership has mobilised. For example, see:

• Climate Home News, Indonesia’s failing Just Energy Transition Partnership is a cautionary tale (3 June 2026)
• The Diplomat, Why Southeast Asia’s just energy transition partnerships have stalled (29 May 2026)