Greening Growth: Navigating opportunities from the UAE-Indonesia Energy Partnership

In this explainer, our Editor, Wesley, examines how the United Arab Emirates and Indonesia, as part of their efforts to diversify their economies, are strengthening interregional and bilateral cooperation, by championing green diplomacy.  

Image: Radio Republik Indonesia 

Executive Summary 

• The United Arab Emirates and Indonesia are shifting from oil-focused trade to joint renewable energy projects. 

• This growing partnership is a pertinent example of interregional and South-South cooperation in the energy transition. Both nations gain market access, investment opportunities, and benefits from clean technology. 

• Financing constraints, policy gaps, and infrastructure limitations hinder progress. Investors must remain cautiously optimistic given the nascent stage of this relationship.  

With a new world order, we continue to see a momentous shift from multilateralism to bilateralism – one that is grounded in supply chain resilience and greening investments. The United Arab Emirates (UAE) and Indonesia, two regional middle powers with distinct yet complementary energy profiles, exemplify such partnerships. Both nations maintain robust diplomatic and economic relations, particularly in the areas of commerce, investment, and energy. A Comprehensive Economic Partnership Agreement (CEPA) was signed in 2022 to eliminate trade barriers, boost bilateral trade, and foster investment in key sectors, including infrastructure, logistics, agriculture, and healthcare. Subsequently, non-oil economic exchange between the two countries reached US$4.1 billion, making the UAE an instrumental trading partner for Indonesia’s rise as a regional power. 

Indonesia, the largest economy in Southeast Asia, with a GDP of $1.4 trillion in 2025 and a population of 284.4 million, is attempting to diversify its energy sources away from coal and reduce its carbon footprint. The UAE, with a growing domestic economy, boasts a GDP of $548.6 billion in 2025 and is a major oil exporter transitioning towards renewable energy sources. In the context of the global energy transition, trade is not the only aspect of partnership between two countries. It serves as an example of how the transition from fossil fuels to renewable energy sources can be co-piloted by developing economies. The case of Indonesia and UAE not just represents Global South cooperation but also highlights the growing opportunities that come from MENA-APAC partnerships. 

The UAE has invested in Indonesian energy infrastructure, including refining capacity and storage facilities, and has provided technical expertise and oilfield services to the growing Indonesian energy sector. Additionally, the two countries are prioritising renewable energy sources due to emerging climate and sustainability goals. For instance, starting in 2023, the UAE has supported solar and wind projects through the Abu Dhabi Future Energy Company (Masdar), aiming to achieve 44% clean energy by 2050. Meanwhile, Indonesia aims to reach at least 17% renewable energy by the end of 2025 and zero net emissions by 2060. 

In 2024, the two nations elevated their bilateral cooperation in the renewable energy sector. On 23 November 2024, a Memorandum of Understanding (MoU) was signed in Abu Dhabi, formalising the UAE-Indonesia partnership in the presence of Prabowo Subianto, President of Indonesia, and Mohamed bin Zayed Al Nahyan, President of the UAE, to advance technology transfer, business collaboration, and project funding. This partnership, although based on green diplomacy, highlights a future-focused partnership.  

The UAE-Indonesia energy collaboration offers reciprocal benefits: through its ‘Energy Strategy 2050’, the UAE secures market entry in ASEAN, diversifies its economy beyond oil, exports clean technology, and enhances interregional and South-South cooperation. For Indonesia, on the other hand, it enables the country to accelerate its energy sector development, create opportunities for collaborative business ventures in the mineral supply chain, attract Gulf investment, reduce its dependence on coal, and enhance its innovation capacity. 

Nevertheless, the transition faces significant challenges. Renewable projects in Indonesia frequently encounter weather and environmental constraints, financial gaps and regulatory hurdles. Differences in policy timelines between the two nations could slow progress, while infrastructure, particularly in rural and remote regions, poses technical barriers. Additionally, both countries continue to maintain fossil fuel subsidies, with Indonesia's estimated at $49.65 billion and the UAE at $37.03 billion in nominal terms (2022), which may undermine incentives for investment in greener energy. Overcoming these challenges will require persistent political will, coordinated planning, and a harmonisation of policies to unlock the full potential of this evolving partnership. Businesses must ensure that scenario planning and due diligence be a prerequisite to any investment decisions.  

If you would like to learn more about what this means for your business, please contact us at ceo@northstar-insights.com