What’s next for Indonesia’s battery ambitions? Key insights from Climateworks’ latest analysis

Indonesia has the raw ingredients to play a major role in the global battery transition: vast nickel reserves, growing refining capacity and strong investor interest. 

Our latest analysis shows that natural endowments are a necessary condition for long-term leadership in the sector, but alone are not sufficient. 

The country’s trajectory will depend on choices about technology pathways, industrial strategy and how sustainability is embedded going forward.

What is the current state of Indonesia’s battery industry?

Indonesia has successfully downstreamed nickel and the nation now accounts for a large share of the global nickel supply. 

But its domestic battery ecosystem is focused primarily on electric vehicle usage, and its development is patchy. 

Upstream mining and some refining are robust, while midstream battery cell and pack manufacturing remain limited and geographically dispersed. 

Without scaling midstream capacity, Indonesia risks being pigeonholed as a supplier of feedstock rather than a maker of finished battery systems.

If Indonesia leads in nickel supply, won’t it lead in battery supply too? 

Battery technology is evolving, and global battery supply is not just about nickel. 

While lithium-nickel-manganese-cobalt chemistries (NMC) deliver high energy density and favour certain vehicle types, lithium-iron-phosphate (LFP) batteries are cheaper, simpler and increasingly competitive in many Asian markets. 

LFP does not rely on nickel and Indonesia does not have domestic lithium – meaning chemistry choices strongly influence trade relationships and the feasibility of an entirely domestic industry. 

Nickel may be the starting point, but it does not need to be the destination.

Our analysis has identified these gaps and demonstrates how current policy levers – including protectionist rules, investment incentives and local content requirements – have steered investment but not consistently established a comprehensive, sustainable battery value chain.

What risks can Indonesia prioritise to meet its battery goals?

Environmental and social risks are central to Indonesia’s battery ambitions. 

Mining and refining operations have already drawn scrutiny for their impacts on water quality, air pollution and community wellbeing. 

As global buyers – from EV manufacturers to clean-energy developers – raise expectations around ethical sourcing, these issues increasingly shape market access and long-term competitiveness.

The carbon intensity of battery production is also heavily influenced by the electricity used in processing and manufacturing. 

Facilities reliant on coal-fired power – especially those in industrial parks with captive plants – face higher lifecycle emissions, making their products less attractive in markets that implement carbon-based trade rules or low-emission procurement standards.

How can Indonesia avoid these risks?

Remaining competitive requires pairing growth with credibility. 

Robust safeguards, transparent supply chains and emerging tools such as battery passports and verifiable recycling standards are essential.

These methods of demonstrating credibility show responsible practices from mine to finished product, protecting communities and meeting the demands of increasingly scrutiny-driven global markets.

So what can policymakers and industry do?

Climateworks, in partnership with the Purnomo Yusgiantoro Center (PYC), has brought together stakeholders and undertaken analysis to explore these options. 

The results of this consultation suggests practical levers:

• Publish a national battery roadmap that aligns industrial, energy and environmental planning. 
• Tie fiscal incentives to technology transfer, research and development collaboration, and clean-energy use. 
• Invest in midstream capacity and workforce development. 
• Seed a domestic recycling sector to recover critical materials and reduce long-term reliance on unprocessed ores.

Indonesia’s battery future is not preordained.

The nation can still avoid a narrow, nickel-centric outcome that leaves downstream value and decarbonisation opportunities elsewhere.

With thoughtful policy design – from conditional incentives to stronger sustainability rules – Indonesia can capture more value, create resilient jobs, and reduce environmental harm.

Climateworks and PYC are working together to develop a roadmap for critical mineral processing for the low-carbon battery industry between Indonesia and Australia, laying the foundation for future investments and collaborative efforts to meet the rising demand for clean energy technologies.

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