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Decarbonisation of Indonesian Industry: 80% of Steel Sector Production Produces High GHG Emissions

Steel Industry

Industrial Decarbonization Transformation in Indonesia

Indonesia, as one of the largest economic hubs in Southeast Asia, faces major challenges in reducing greenhouse gas (GHG) emissions from the industrial sector. Apart from the steel industry, there are a number of other sectors that contribute significantly to national GHG emissions. As a real effort to overcome this problem, concrete steps are needed to carry out a comprehensive decarbonization transformation.


Challenges from Various Industrial Sectors

The industrial sector in Indonesia has various challenges in reducing GHG emissions. Apart from the steel industry, which has been the main focus, the following sectors also have a significant impact on the environment:


  1. Steel Industry: The steel industry uses conventional technology, including a blast furnace process that uses coal and coke as fuel. Around 20-30 million tons of carbon dioxide are produced per year.

  2. Industri Semen: The cement industry is also a large contributor to GHG emissions. The clinker-burning process in cement production produces quite high emissions, especially through the use of fossil fuels.

  3. Energy Industry: The energy sector, including coal-fired power plants, also has a large impact on GHG emissions. Dependence on coal as the main energy source is still a challenge in efforts to reduce emissions in this sector.

  4. Chemical Industry: Industrial chemical production, such as ammonia production, also contributes to significant GHG emissions. The complex chemical processes in ammonia production require large energy consumption, most of which comes from fossil fuels.

  5. Transportation Industry: The transportation sector, including land, air and sea transportation, also has a significant contribution to GHG emissions. Dependence on fossil fuels in transportation remains a challenge in efforts to reduce emissions from this sector.

  6. Textile, Pulp and Paper Industry: The textile, pulp, and paper sector also significantly contributes to GHG emissions. The dyeing and finishing processes in the textile industry cause quite high GHG emissions. Pulp processing and paper making are also sources of GHG emissions, especially through the fuel combustion process.


Joint Efforts to Decarbonise

To overcome this challenge, cooperation between government, industry players, and other stakeholders is needed to design and implement effective decarbonization strategies. Steps that can be taken include:


·       Adoption of clean and environmentally friendly technologies in the production process.

·       Increasing energy efficiency and utilizing renewable energy sources.

·  Implementation of regulations that support and encourage decarbonization


·   Invest in research and development for more sustainable technological innovation.

Future Prospects

Although there are still many challenges to overcome, especially in terms of costs and resistance from conventional industry, the prospects for industrial decarbonization in Indonesia are very important. With strong commitment and concrete steps taken by all relevant parties, Indonesia has great potential to become a leader in the transformation towards a more sustainable and environmentally friendly economy.


GHG Emissions of the Steel Industry in Indonesia

One sector that is the main focus of decarbonisation efforts is the steel industry. With a significant contribution to national GHG emissions, the steel industry requires a comprehensive transformation to reduce its negative environmental impact.


Major Challenges Faced

The main challenge in reducing GHG emissions from the steel industry in Indonesia is dependence on conventional technology, which produces high emissions, especially through the blast furnace process, which uses coal and coke as fuel.

Around 80% of steel production in Indonesia still uses this technology, which produces 20-30 million tons of carbon dioxide per year.


Urgency for Action: Emissions and Their Impact

GHG emissions from the steel industry contribute around 7% of total national industrial emissions.

This number is a serious concern, considering the rapid economic growth in Indonesia and its impact on global climate change. In addition, the energy-intensive steel industry also contributes to local environmental crises, including air pollution and water pollution.


Decarbonisation Efforts: Strategies and Actions

To address these challenges, various decarbonization efforts have been proposed and partially implemented. One of them is replacing conventional steel production technology with more environmentally friendly technology, such as Electric Arc Furnace (EAF) which uses recycled steel and has a lower carbon footprint.

Increasing energy efficiency is also a main focus of decarbonization efforts. Steps such as using renewable energy and maximizing steel recycling will not only reduce GHG emissions but also reduce dependence on scarce and expensive raw materials.


Role of Regulation and Policy

Strong regulations and incentives from the government are key in driving this transformation. A carbon tax is one of the instruments proposed to encourage the steel industry to reduce its emissions. Through the implementation of a carbon tax, companies will be encouraged to adopt cleaner and more efficient technology.

Apart from that, the government also needs to develop a clear and comprehensive road map for the decarbonisation of the steel industry. This includes short-, medium- and long-term targets for reducing emissions as well as concrete steps to be taken to achieve them.


Hopes and Challenges

Although many challenges remain, such as high investment costs and resistance from the conventional industry, the prospect of decarbonizing the steel industry in Indonesia is very important. With collaboration between the government, industry players, and other stakeholders, the steel industry can become the main motor in efforts to reduce national GHG emissions and achieve global climate change targets.



The decarbonisation transformation of industry in Indonesia requires cooperation between all stakeholders to overcome the challenges of GHG emissions from various sectors. The steel industry in Indonesia has an important role in efforts to decarbonise and mitigate climate change. Through the use of cleaner technology, improved energy efficiency, and strong regulatory support, the steel industry can be an example of other industrial sectors facing the challenges of global climate change. With the right steps and strong commitment, Indonesia can become a leader in the transformation towards a sustainable and environmentally friendly economy.


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