How Indonesia and China Can Get Geothermal Right
Muhammad Zulfikar Rakhmat and Yeta Purnama argue that clean energy partnerships must not repeat the exploitative dynamics of extractive industries.
When Indonesia’s state-owned PT Pertamina Geothermal Energy (PGE) signed a high-profile deal with China’s Sinopec Star in Beijing in February, the announcement came with all the familiar fanfare of a green energy breakthrough. The partnership, aimed at expanding geothermal development in both countries and potentially producing green hydrogen, was billed as a win-win for the climate and the economy.
But beneath the diplomatic smiles and corporate statements lies a more complicated truth: while geothermal energy has long been hailed as a clean alternative to fossil fuels, its development in Indonesia has too often come at the expense of local communities and the environment.
The collaboration between PGE and Sinopec Star represents China’s growing interest in Indonesia’s renewable energy potential—and the country’s vast geothermal reserves, which account for nearly 40 percent of the global total. PGE alone manages over 1,800 megawatts (MW) of geothermal capacity, making it the largest player in Indonesia’s geothermal sector. Sinopec Star, for its part, brings technical expertise in low- and medium-temperature geothermal applications and hydrogen production.
At face value, the partnership appears mutually beneficial: Indonesian resources meet Chinese capital and technology. But turning this collaboration into a model for responsible energy cooperation will require more than engineering know-how and business contracts. It demands a serious reckoning with how geothermal energy is developed—and who bears the costs.
Take the Ijen geothermal project in East Java, developed without Chinese involvement but still instructive. According to a 2025 study by the Center of Economic and Law Studies (CELIOS), the project caused land dispossession, water contamination, and economic harm to local farmers. Out of more than 7,000 working-age residents in nearby villages, only 63 secured employment. Crops were damaged to make way for transmission infrastructure, and compensation was often inadequate. Roads used by farmers to transport their harvests were left in disrepair after heavy machinery passed through. Water sources turned murky and bitter following drilling, affecting over 200 households for six months—with no clear explanation from project operators.
Ijen is a cautionary tale. It shows that even “green” energy can turn extractive if left unchecked. If Chinese-backed geothermal projects in Indonesia repeat these same mistakes, public backlash will grow—and so will the risks of social unrest, environmental degradation, and lost trust.
The solution is not to abandon geothermal cooperation, but to manage it better.
First, any future Indonesia–China energy agreements must guarantee that local communities benefit directly. That means clear commitments to local hiring, fair compensation, and long-term economic inclusion. Corporate Social Responsibility (CSR) programs must be embedded in project design—not treated as afterthoughts.
Second, environmental safeguards must be strengthened. Comprehensive environmental impact assessments (EIAs) should be mandatory for all geothermal sites, with full public access to data and regular third-party reviews. Monitoring should involve independent watchdogs and civil society—not just government agencies and companies.
Third, China’s energy investments should go beyond megaprojects and support decentralized geothermal solutions: microgrids, small-scale direct-use systems, and community energy models. These approaches are not only more inclusive, but also more resilient in Indonesia’s geographically diverse landscape.
Fourth, decision-making must be transparent and participatory. Local communities should be meaningfully consulted from the start—not merely informed after deals are signed. A national public tracking system could help communities monitor project progress and report environmental or social issues in real time.
Finally, energy diplomacy between Jakarta and Beijing must prioritize equity and sustainability. Bilateral agreements should include enforceable standards on labor rights, environmental protection, and transparency. Review committees with Indonesian and Chinese representation can evaluate projects regularly and ensure compliance.
Indonesia has every reason to work with China to unlock its geothermal potential—but it also holds the right, and the responsibility, to set the terms. Clean energy partnerships must not repeat the exploitative dynamics of extractive industries. Done right, geothermal cooperation with China can be a cornerstone of Indonesia’s energy transition. Done wrong, it risks becoming a green mirage.
There is power beneath Indonesia’s surface. Whether that power uplifts or exploits will depend on how the next chapter of geothermal cooperation is written.
Muhammad Zulfikar Rakhmat is the Director of the China-Indonesia and Indonesia-MENA Desks at the Center of Economic and Law Studies (CELIOS) in Jakarta.
Yeta Purnama is a Researcher at the China-Indonesia Desk at CELIOS.
Photo by Francesco Ungaro
