The global steel industry is accelerating its transition towards net-zero emissions, with roadmaps emphasizing green hydrogen and Electric Arc Furnace (EAF) technology. However, Indonesia’s steel sector faces significant hurdles, as carbon emissions surged between 2019 and 2020 and are projected to reach 24.9 million tons by 2030. While companies like Krakatau Steel and Posco Korea have initiated decarbonization efforts, their expansion plans—such as the “Cilegon 10 Million Ton Steel Cluster Roadmap”—lack a concrete emissions mitigation strategy. Additionally, the financial instability of Krakatau Steel, coupled with unresolved debt restructuring and aging infrastructure, further complicates the transition to greener steel production.
Despite these challenges, several internal and external factors provide momentum for steel decarbonization in Indonesia. Krakatau Steel’s restructuring efforts are improving liquidity, while global demand for green steel and the introduction of policies like the EU’s Carbon Border Adjustment Mechanism (CBAM) encourage cleaner production. However, financing constraints, policy misalignment, and the financial risks of CCS/CCUS technologies pose substantial obstacles. To overcome these barriers, Indonesia must develop a comprehensive steel decarbonization roadmap, accelerate carbon pricing implementation, and invest in renewable-powered ironmaking facilities. Ensuring a just transition for workers will also be crucial in balancing economic growth with sustainable industrial practices.
