Indonesia advances low-carbon industrial precincts through Net Zero Industrial Precincts program

Climateworks Centre and Indonesia’s Ministry of Industry are advancing place-based industrial decarbonisation through the Net Zero Industrial Precincts (NZIPs) program.

Following the identification of priority industrial clusters, Phase 2 is assessing decarbonisation pathways and developing investment-ready pilot projects.

Industrial decarbonisation towards net zero

Imagine a heavy industrial precinct where cement, iron and steel, and aluminium plants are all working to reduce their greenhouse gas emissions while sharing connected infrastructure.

Instead of being released into the atmosphere, excess heat from these factories is captured and transported through a network of pipelines to a central facility.

The recovered heat is then reused as an input for industrial processes or used to power turbines that generate clean electricity.

The precinct is also connected to shared electricity transmission infrastructure linked to solar and wind generation, supported by battery energy storage, allowing renewable electricity to be distributed across facilities.

This is the concept behind an NZIP, an initiative where industries located within the same area work together to reduce emissions through shared energy infrastructure that improves efficiency and reliability.

This approach also requires a supportive ecosystem, including policies, investment and collaboration to ensure long-term implementation and sustainability.

Climateworks Centre has been exploring and supporting the implementation of this approach across Australia, Indonesia and Viet Nam.

Jannata Giwangkara, Indonesia Country Lead for Climateworks Centre, said the NZIPs program aims to strengthen collaboration between government, industry and communities to drive the transformation and growth of industrial precincts towards a low-carbon economy.

‘When sustainable infrastructure, green industries, demand for low-carbon products and capital investment are coordinated in the same location, the transition becomes more investable, more scalable and more commercially attractive,’ he said.

The NZIPs program in Indonesia

Indonesia’s industrial sector is one of the country’s key economic pillars and a major contributor to national greenhouse gas emissions.

According to the Ministry of Industry, Indonesia currently has 179 industrial precincts. Beyond serving as production centres, these precincts also play a strategic role in supporting sustainable and environmentally responsible industrial development.

Winardi, Director of Industrial Regional Development at the Ministry of Industry, said ‘Through a place-based approach, we can integrate renewable energy systems, manage waste more effectively, improve resource efficiency and create a low-carbon industrial ecosystem.’

Winardi, Director of Industrial Regional Development at the Ministry of Industry, opening the NZIP Phase 2 workshop.

During the first phase of the NZIP Indonesia program (2024–2025), Climateworks Centre assessed around 140 industrial precincts and more than 31,000 facilities to identify locations with the greatest potential for industrial decarbonisation.

Based on industrial, geographic, technical and stakeholder readiness considerations, Climateworks Centre and the Ministry of Industry selected four case study locations for the NZIPs program in Indonesia: Cilegon, Tuban, Halmahera and North Sumatra.

Phase 2 of the NZIP program (2025–2028) includes detailed analysis of these four industrial clusters across four key areas: industrial transition pathway modelling, socio-economic and just transition assessments, market demand analysis for low-emissions products, and the identification of investment opportunities to support industrial decarbonisation.

Industry needs coordinated policy support

During a panel discussion at the NZIPs Phase 2 workshop, Deky Tetradiono, Deputy General Manager for Sustainable Development at PT Indonesia Weda Bay Industrial Park, highlighted that building precinct-level decarbonisation requires strong coordination across government ministries to align regulations, streamline approvals for renewable energy development, and provide incentives such as tax holidays.

Representatives from industrial precinct managers, companies, industry associations and government discussing opportunities to develop industrial precincts that support net zero emissions in Indonesia’s industrial sector by 2050.

Armadhani Jati Prasetya, Senior Manager for Business Development at PT Krakatau Posco, also expressed hope that the decarbonisation agenda would be supported by coordinated government policies to maintain the competitiveness of Indonesia’s industrial sector.

Yulia Ariani Putri, Head of the Special Industrial Precincts Team at the Ministry of Industry’s Directorate of Industrial Regional Development, welcomed the collaboration with Climateworks Centre.

She said the discussions provided valuable insights to help the government better understand conditions on the ground and industry priorities, while also informing the development of more targeted policies.

According to Yulia, the Ministry of Industry is currently preparing regulations under Government Regulation No. 20 of 2024 on Industrial Regional Development, including fiscal and non-fiscal incentives, as the development of green industrial precincts is currently voluntary.

Stakeholders from across the industrial sector participating in focus group discussions.

NZIPs Phase 2 supports a comprehensive industrial transition

The NZIPs program in Indonesia is now focused on priority industrial clusters, enabling resources and industry efforts to be strategically directed towards achieving significant and sustained emissions reductions.

Working in partnership with the Ministry of Industry, Climateworks Centre has undertaken site visits and engaged with local stakeholders across the four selected industrial precincts in Cilegon, Tuban, Halmahera and North Sumatra.

Detailed analysis of each precinct has also been carried out through stakeholder discussions.

Climateworks Centre team conducting in-depth analysis with the Tuban Industrial Precinct and cement industry representatives.

Each of the selected industrial precincts has its own strengths and challenges, with varying levels of readiness and progress towards industrial decarbonisation.

Despite these differences, both the industrial precinct managers and the companies operating within them have demonstrated a strong commitment to developing decarbonisation pathways, expanding renewable energy infrastructure and supporting its deployment.

One of the selected precincts already has a strong foundation for the NZIPs approach, supported by an established industrial ecosystem and shared energy infrastructure managed by the industrial precinct operator.

The research and detailed analysis being undertaken by Climateworks Centre through Phase 2 of the NZIPs program will help support Indonesia’s industries to transition to a competitive, resilient and just net zero sector, in line with the Ministry of Industry’s target of achieving net zero emissions by 2050.

By moving from identifying opportunities to developing practical implementation pathways, Phase 2 will generate insights from priority industrial clusters that can be applied to industrial decarbonisation efforts across the country.

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