Indonesia Maps $2 Bn Hydrogen Pipeline as Financing Test Begins

Indonesia has identified 93 hydrogen ecosystem initiatives with potential investment of Rp32 Tn, or about $2 Bn, as it tries to turn a national clean-energy roadmap into commercially viable projects.

The initiatives are spread across the country and are intended to support the decarbonisation of industry, transport and electricity generation, Eniya Listiani Dewi, director-general of new, renewable energy and energy conservation at the ministry of energy and mineral resources, said this week.

The headline figure, however, indicates the pipeline rather than evidence that all the projects have secured financing. The ministry did not publish a project-by-project list, disclose how much capital had been committed or say how many initiatives had reached a final investment decision, secured customers or entered construction.

That distinction is important in a hydrogen market where proposed capacity has grown much faster than projects able to attract investors and buyers. Indonesia and Malaysia account for more than 90% of Southeast Asia’s nearly 480,000 tonne pipeline of low-emissions hydrogen production capacity expected by 2030, according to the International Energy Agency (IEA). But only 6% of that regional pipeline reached a final investment decision.

Indonesia, nevertheless, has an advantage over countries trying to create hydrogen demand from scratch. It already consumes about 1.75 Mn tonnes of hydrogen annually, with 88% used in urea production, 4% in ammonia and 2% in oil refining, according to the energy ministry.

Those established industrial uses offer a more immediate route to scale than entirely new markets such as hydrogen-powered road transportation. The IEA has identified Indonesia’s existing ammonia demand as a potential anchor for low-emissions production, particularly where state-owned companies can replace hydrogen already used in industrial processes.

The government formalised its ambitions in April 2025 through the National Hydrogen and Ammonia Roadmap, which contains 215 proposed actions covering production, use, implementation and the development of domestic and export markets. The document followed Indonesia’s earlier hydrogen strategy and is intended to guide the industry through to 2060.

This week’s Global Hydrogen Ecosystem Summit in Jakarta showed how the government is beginning to test that framework outside traditional industrial uses.

Indonesia unveiled a diesel bus modified to use hydrogen alongside conventional fuel and outlined a proposed 194 km green hydrogen corridor connecting Jakarta, Karawang and Patimban. The bus pilot involves the energy ministry, state electricity company PLN, public transport operator DAMRI, testing and certification company Sucofindo and contractor Tritunggal Prakarsa Global.

The vehicle retains its diesel engine and uses hydrogen to replace part of its conventional fuel consumption. Sucofindo reported that testing reduced exhaust opacity by 57.66%, carbon monoxide by 45.45%, carbon dioxide by 39.37% and nitrogen oxides by 21.16%. The ministry released the figures, but Sucofindo, which is involved in the pilot, did not independently confirm them, and the underlying test data were not published.

The pilot is, therefore, better viewed as a test of whether existing diesel fleets can be converted to use less fuel, rather than as a zero-emission transport project. The ministry did not disclose the cost of the conversion, hydrogen consumption, operating range or how the vehicle’s total costs compare with conventional diesel and battery-electric alternatives.

The proposed Jakarta–Karawang–Patimban corridor could give producers and users a defined area for developing hydrogen supply and refuelling infrastructure. But the government has not announced the investment required, participating companies, production capacity, prospective customers or construction timetable. At this stage, it remains a development concept rather than a financed infrastructure project.

The economics may be different in Indonesia’s remote power systems, where electricity generation can depend on diesel transported across long distances.

The government is supporting hydrogen initiatives under its diesel-replacement programme, including a project in Sumba targeted to begin commercial operations in 2028 and another on Rote Island in partnership with PLN. The ministry projects that the programme could reduce electricity-production costs in some locations from about $1 to $0.25 per kilowatt-hour.

But that projected reduction has not yet been demonstrated in commercial operations, and the ministry did not publish the assumptions behind it. Still, remote systems provide a potentially stronger early use case than markets where hydrogen must compete with cheaper grid electricity or established transport fuels.

Indonesia has also begun testing different methods of producing green hydrogen, although current projects remain small compared to existing industrial demand.

PLN opened the country’s first green-hydrogen plant at its Muara Karang power complex in Jakarta in October 2023. The facility was designed to produce up to 51 tonnes of hydrogen a year, replacing hydrogen previously made through conventional methods at the plant. Solar power would supply part of the electricity required, while renewable-energy certificates would be purchased for the remaining grid power.

Pertamina Geothermal Energy is developing another pilot at Ulubelu in Lampung, where geothermal electricity will power an electrolyser designed to produce up to 100 kg of green hydrogen a day. The company describes the facility as a centre for technology testing, commercial-feasibility work and studies of potential demand.

The pilots demonstrate that Indonesia can produce hydrogen from several renewable resources. They do not yet establish that it can do so at the scale and price required by fertiliser plants, refineries, power companies or transport operators.

Energy Minister Bahlil Lahadalia acknowledged at the summit that hydrogen remained more expensive than competing energy sources, including Indonesia’s B50 biodiesel blend. He said advances in technology would be needed to make it more competitive.

That cost gap is not unique to Indonesia. The IEA said the global pipeline of announced low-emissions hydrogen production targeting 2030 had shrunk by 10 Mn tonnes to 27 Mn tonnes following delays, suspended developments and cancellations. Projects with committed investment represented 4.3 Mn tonnes of annual production.

Capital spending on low-emissions hydrogen projects nearly doubled to $7 Bn in 2025. More than 85% of that investment went to projects serving established markets, including industrial production, oil refining and hydrogen-derived fuels. The pattern reinforces the case for building early projects around customers that already consume hydrogen rather than relying on new applications to create demand.

Without policy support, the maximum price most industries can afford to pay for hydrogen is below $2 a kg, according to the IEA. Even with incentives, the cost gap with incumbent fuels and production methods remains open in most regions and applications.

For Indonesia, that makes the composition of the Rp32 Tn pipeline more important than its headline value. Projects tied to existing fertiliser, ammonia and refining demand have identifiable customers and established uses. Remote power systems may also support higher costs where diesel generation is unusually expensive.

Transport demonstrations and proposed export supply chains face a harder path because they require new infrastructure, firm buyers and confidence that demand will survive beyond government-backed trials.

The government has now shown where it wants Indonesia’s hydrogen economy to develop. The more meaningful measure will be how many of the 93 initiatives disclose their investors, secure long-term customers, reach final investment approval and begin operating at prices those customers can afford.