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Back to topAs Indonesia accelerates its clean energy transition, green hydrogen is increasingly seen as a vital future component of its decarbonisation strategy. To support this, the Green Hydrogen Organisation, in collaboration with HBT and other leading Indonesian law firms, has launched a strategic report titled "Indonesia Good Green Hydrogen Contracting and Legislation." This report outlines the contractual and legislative frameworks to guide the development of green hydrogen projects in Indonesia.
The launch event, held in Jakarta on 26 March 2025, brought together government officials, legal experts, and industry leaders to explore the key pre-conditions for the development of a thriving green hydrogen ecosystem in Indonesia. The presence of representatives from the Ministry of Energy and Mineral Resources (MEMR) and the National Development Planning Agency (Bappenas) reflect the strong public sector commitment to green hydrogen development in Indonesia.
KEY TAKEAWAYS FOR ACCELERATING GREEN HYDROGEN DEVELOPMENT
Funding mechanisms, offtake and project financing
Green hydrogen development in Indonesia will require strong financial sources. This includes creating multiple revenue streams and designing bankable offtake agreements that align with international financing standards. Offtake agreements (being the contracts that guarantee the purchase of hydrogen) are essential to secure debt funding, especially in the early stages of project development. Integrating Indonesian state-owned enterprises into these early project phases can enhance project credibility and reduce completion risks increasing bankability.
Certification and categorisation of hydrogen
Establishing a clear legal and regulatory framework for green hydrogen is essential. The report recommends the adoption of a nationally recognised definition of green hydrogen, based on its production method and carbon footprint. Alongside this, there is a need for transparent certification mechanisms that verify the green credentials of hydrogen. A clear regulatory regime, including an independent supervisory body, will be critical for the operation and marketability of green hydrogen production and to ensure alignment with international market standards.
Licensing mechanisms, support infrastructure, and public access
Indonesia has already developed a regulatory framework for the development of green hydrogen projects. However, green hydrogen projects are regulated by multiple ministries, including the MEMR, the Ministry of Industry, and the Ministry of Transportation. The report recommends a more coordinated approach to licensing, infrastructure, and public access – including the adoption of an integrated ‘one-stop-shop’ regulatory body for green hydrogen projects. Infrastructure development, including transportation, storage, and distribution networks, must be planned in parallel to support the entire hydrogen value chain. Further, legislating to ensure open and equitable access to existing and future infrastructure for the development of green hydrogen will encourage participation from a broader range of stakeholders, including new investors.
Pricing, subsidies and government support
The Indonesian Government has already demonstrated its willingness to provide support for the development of green hydrogen through the availability of certain financial and non-financial incentives. However, to build a sustainable market for green hydrogen, pricing mechanisms need to offer both flexibility and predictability. Hybrid pricing models, dynamic pricing frameworks, and floor pricing are expected to provide greater certainty for investors and developers. In the early stages of market development, when costs are high and demand is still maturing, government intervention will be necessary. This could take the form of direct subsidies, further tax incentives, or other financial instruments to reduce costs and support supply and demand for green hydrogen products.
