Qatar and Indonesia must channel their $4 billion fund into renewable energy

In April 2025, a pivotal agreement marked a new chapter in Indonesia–Qatar relations. Danantara, Indonesia’s newly established sovereign wealth fund, and the Qatar Investment Authority (QIA), one of the most powerful state-owned investors in the Middle East, established a joint investment fund worth $4 billion—$2 billion from each party. This collaboration, announced after a state visit by President Prabowo Subianto to Doha and a bilateral meeting with Emir Sheikh Tamim bin Hamad Al-Thani, is being rightly celebrated as a milestone in South–South cooperation and a testament to growing confidence in Indonesia’s institutional maturity. But to be truly transformational, this partnership must be guided by a clear priority: channelling the majority of this capital toward renewable energy.

Indonesia and Qatar have long maintained cordial economic ties, particularly through labour, trade, and investment. But this joint fund represents an unprecedented move toward strategic alignment. Structured as a co-managed investment vehicle, it will focus on projects in Indonesia and—according to Danantara CEO Rosan Roeslani—potentially abroad. Its sectors of interest include mineral down-streaming, healthcare, digital economy, infrastructure, and new and renewable energy. The scope is promising, but the danger lies in diffusion. Without deliberate prioritization, especially in a sector as urgent as energy transition, the fund risks becoming another broadly diversified vehicle with limited long-term impact on global climate goals.

Indonesia, the world’s fourth most populous country, is uniquely positioned at the intersection of rapid development and acute environmental vulnerability. The nation still relies heavily on coal for electricity, despite facing climate impacts ranging from sea-level rise to intensifying storms and droughts. Renewable energy is not merely a development option for Indonesia—it is a necessity. Yet the financial and technical barriers to large-scale energy transition remain formidable. This is where sovereign-backed capital can play a catalytic role. The $4 billion fund between Danantara and QIA should be structured to break these barriers and unlock broader market confidence in clean energy infrastructure.

Indonesia’s renewable potential is vast. The country holds approximately 40 percent of the world’s geothermal reserves. It enjoys consistent solar irradiance, large hydropower potential, and considerable wind resources, especially in eastern regions. Microgrids, battery storage, and distributed solar could revolutionise power access in remote communities, reducing reliance on diesel and driving inclusive development. By strategically placing clean energy at the center of this investment agenda, Danantara and QIA can deliver not just economic returns, but system-wide resilience.

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This partnership also presents a singular opportunity for Qatar to exercise climate leadership. As a leading liquefied natural gas (LNG) exporter, Qatar faces scrutiny over its emissions and long-term energy model. While the state has invested in global financial assets and high-profile ventures from London to Silicon Valley, its climate-aligned investments remain underdeveloped. Supporting Indonesia’s clean energy transition offers Qatar the chance to redefine its role—from provider of hydrocarbons to enabler of decarbonisation. It aligns with the Gulf region’s growing narrative of economic diversification, and would elevate Qatar’s profile as a serious actor in global climate diplomacy.

Importantly, this is not a one-sided moral imperative. Indonesia’s energy demand is projected to nearly double by 2045. The clean energy sector offers immense commercial potential—from project development to equipment manufacturing and carbon credit markets. For QIA, early entry into this space is a sound economic strategy. For Danantara, directing joint investments toward renewables will set the tone for its institutional identity and long-term impact as Indonesia’s premier development investor.

Yet the structure of the fund must reflect these priorities. While the broad mandate—including digital economy, healthcare, and infrastructure—acknowledges Indonesia’s diverse development needs, the energy transition is unique in its urgency, scale, and multiplier effect. Investments in renewable energy support health (through reduced pollution), education (via electrified schools), digital access (through reliable power), and industrial growth (by enabling sustainable processing of Indonesia’s mineral wealth). Energy is the backbone, not a side sector. A commitment to allocate at least 60 to 70 percent of the fund to clean energy would reflect both strategic clarity and global responsibility.

President Prabowo’s administration has an opportunity to show that economic modernization and environmental responsibility are not opposing goals. His visit to Qatar, accompanied by key ministers including Investment and SOE officials, signalled a pivot to global capital and institutional reform through Danantara. Already, the agency has absorbed state shares in strategic firms like PLN, Telkom, and state-owned banks. With this foundation, it can move swiftly to structure pipelines for renewable projects, attract co-investment, and create new public-private instruments that scale clean technologies.

At the same time, Qatar must embrace this as more than a portfolio diversification strategy. It is a reputational opportunity. Climate finance from the Global North continues to fall short of international pledges. The Global South must increasingly look inward—and across—to mobilize meaningful capital. If executed with focus and ambition, the Danantara–QIA fund could serve as a global model of climate-aligned South–South cooperation. It would represent more than dollars invested; it would reflect shared vision and shared accountability.

Ultimately, this fund is more than a bilateral venture. It is a test case for how the developing world organises capital, balances interests, and defines the future. A diversified fund may bring steady returns, but a renewable-focused fund could transform economies and secure futures. That is the bolder, braver, and wiser path. Indonesia and Qatar must take it together.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.