Domestic demand is the engine of Indonesia’s steel sector. That makes government purchasing power one of the most direct levers available to drive the transition to green steel, but only if the right policy frameworks are in place. In this session of our bi-monthly Green Steel 62 virtual learning forum, we explored how Green Public Procurement (GPP) can create the market certainty needed to stimulate demand for low-carbon steel, reduce investment risk, and protect Indonesia from carbon lock-in as global standards tighten. Drawing on international case studies and local policy analysis, our speakers examined what a stronger GPP framework could look like in practice and what it will take to move from voluntary commitments to mandatory action.
What we discussed
GPP as a market starter
While global and private demand for low-carbon products remains limited, GPP offers a critical opportunity to generate domestic market pull. Without this shift, Indonesia risks long-term carbon lock-in, where infrastructure becomes structurally tied to high-emission technologies. Building a domestic green market now also acts as a buffer against the dumping of high-emission steel as international standards raise the bar.
Lessons from global leaders
International experience offers a useful playbook. The US Buy Clean California model requires state-funded projects to meet Environmental Product Declaration (EPD) certifications for steel. Italy has leveraged its large scrap-based steel industry through national municipal procurement mandates. Japan has combined substantial subsidies for primary steelmaking with long-term carbon price projections to provide market certainty. Each model offers something Indonesia can learn from and adapt.
Indonesia’s path forward
Indonesia has the technical feasibility to decarbonise its steel sector. The challenge is policy ambition. A legal framework exists, but it must transition from voluntary to mandatory to be effective. A phased approach, starting with a defined mandate for specific sectors and scaling up over time, could offer a practical entry point. Critically, climate and industrial policy need to work together, not in silos, to create the institutional commitment that industrial players need to invest with confidence.
Key takeaways
- GPP is essential for generating domestic demand for green steel while global private demand remains low.
- Transitioning from voluntary to mandatory procurement frameworks is a necessary next step for Indonesia.
- Developing a robust domestic scrap supply chain, alongside the right monitoring, reporting and verification (MRV) systems, is key to making green steel viable and cost-competitive.
- GPP can also help stimulate the domestic scrap ecosystem, where many actors are SMEs, supporting both lower-carbon steel production and circular economy value chains.
- The success of GPP depends on the level of government ambition and the provision of clear, long-term revenue certainty for producers.
- Climate and industrial policy must be better integrated to move beyond a fragmented, normative policy environment.
Watch the webinar
Some sections of this webinar were conducted in Bahasa. Please turn on closed captions from the video settings and select the language you prefer these subtitles to be in.
Speakers
Sangeeth Selvaraju: Policy Fellow, Grantham Research Institute, London School of Economics Sangeeth is a policy fellow at the Grantham Research Institute at LSE, where his work focuses on climate and industrial policy. In this session, he drew on international case studies from the US, Italy, and Japan to explore how GPP frameworks can be designed to effectively stimulate demand for green steel, and what lessons Indonesia can apply from these experiences.
Irvan T. Harja: Program Manager, JETCA, The Habibie Center Irvan leads work on Indonesia’s just energy transition at The Habibie Center. In this session, he mapped out the current state of GPP in Indonesia, including the structural barriers to implementation, and set out what a more effective, domestically-grounded framework could look like, anchored in the five pillars needed to ensure measurable and transparent emissions reductions.
The Green Steel 62 series is a bi-monthly virtual learning forum for stakeholders working on steel decarbonisation in Indonesia. Each 62-minute session brings together international expertise and local insight to exchange ideas, share research, and strengthen collaboration. To find out about upcoming sessions or get in touch, contact suka@climatecatalyst.org
