“Sustainability is no longer merely an ethical choice, but also a strategic imperative that determines whether Indonesia controls its own economic and infrastructure future.”
This sounds like a statement from a climate think tank. It was from an official of Indonesia’s National Public Procurement Agency (LKPP), speaking at a recent event on green public procurement for steel.
Similar sentiment was expressed by officials of the Ministry of Industry, and the Indonesia Iron and Steel Industry Association.
This is a profound shift.
It shows growing alignment by civil society, industry, and key policymakers as the need and opportunity for industrial decarbonisation is becoming evermore clear.
The momentum for green steel is growing unstoppable..
Coming together for action
This was clear at the “Baja Hijau Tanpa Pembeli? Peran Negara dalam Menciptakan Pasar” (Green Steel Without Buyers? The State’s Role in Creating a Market) event hosted in Jakarta on June 4, 2026.
Co-hosted by The Habibie Center, TARA Climate Foundation, and Climate Catalyst, it served as a launching pad for a newly commissioned report and policy brief centered around Green Public Procurement (GPP) and its role in transforming Indonesia’s industrial landscape.
The report highlights how the Indonesian government, as the nation’s largest consumer of steel and construction materials, holds a unique lever to drive decarbonisation.
By embedding strict, transparent environmental criteria into public infrastructure projects, the government can systematically reduce national carbon emissions while simultaneously modernising domestic supply chains. The report outlines actionable legal and technical frameworks to transition GPP from a conceptual policy into a nationwide standard.
Four ways Indonesia’s steel market is at a tipping point
Drawing from the rich discussions and findings presented at the event, here are the four key takeaways on why the momentum for steel decarbonisation is reaching a tipping point in Indonesia:
1. Decarbonisation equals industry resilience
Decarbonising the steel sector is no longer viewed merely as an environmental obligation, but as a core requirement for industry survival. This sentiment was strongly echoed by both the Indonesian Iron and Steel Industry Association (IISIA) and the Ministry of Industry (MoI). The MoI is already actively pushing forward its decarbonisation roadmap, and cites a slew of policy instruments including the SIH (Green Industry Standard), fiscal and non-fiscal incentives, carbon markets, green financing, and many others to future-proof the sector.
2. Protecting domestic industry to allow room for growth
For steelmakers to invest in a green transition, they first need a stable economic foundation. Many firms currently consider themselves in “survival mode”, as cheap imports leaves domestic steel players with very little breathing room to plan medium- to long-term sustainability strategies. As noted by IISIA, trade protection and sustainability must go hand-in-hand. Globally, defensive trade policies are increasingly being viewed through a strong environmental lens. The EU’s Carbon Border Adjustment Mechanism (CBAM) is a prime example of this. Indonesia can similarly align its import safeguards with green incentives.
3. Creating a viable market is the ultimate prerequisite
We cannot talk about technology adoption or unlocking green financing without first answering a fundamental question: who is going to buy the green steel? A strong market signal is essential for any steel producer to justify high capital expenditure (capex) investments.
4. Capitalising on a shifting global landscape
The global economic landscape is changing rapidly. Global demand for low-carbon materials is rising, CBAM is already penalising carbon-intensive imports, and the market for green steel in Asia-Pacific (APAC) will be severely undersupplied in 2030. Indonesia sits on a golden opportunity to fill this gap—if it acts fast.
The Power of a Government Market Signal
As LKPP aptly noted during the discussion: “GPP is a strategic instrument to create a market for green materials.” Without direct policy intervention, green steel will struggle to find buyers in its early stages due to the inevitable “green premium” (the higher initial cost of cleaner technology). The current global export market alone isn’t strong or stable enough yet to justify the massive capex required to overhaul steel plants.
This is where the Indonesian government can change the game. A strong, predictable market signal through public procurement will do two crucial things:
- Boost capacity: It will immediately increase the utilisation rate of our domestic steel industry by guaranteeing that state-funded projects prioritize local, lower-carbon steel.
- Build a global bridge: It acts as a vital bridge, nurturing our domestic industry today so that Indonesian steelmakers can emerge as highly competitive, low-carbon players in the future global market.
The moment is here, alignment is growing, it needs to be continued with real work in implementing the right policies.
About the Author
Arief Aziz
Arief has long worked in campaigning for social and environmental change. He co-founded and was country director of Change.org Indonesia, and helped build other organisations committed to a social mission. Arief leads Climate Catalyst’s efforts in building networks and partnerships that create collective action for the climate.
