Oliver Hovenden | Climate and Environment Fellow
Tanjung Batu Borneo Indonesia. Image sourced from Joseph Kiesecker via Flickr.
In 2024, greenhouse gas emissions reached record levels, with atmospheric carbon at its highest in four million years. With fossil fuel combustion for electricity, heat, and transport, the main driver of emissions, a speedy transition to clean energy is critical. The United Nations’ Sustainable Development Goals highlight ‘affordable and clean energy’ as essential to tackling global challenges like health, food security, and climate adaption. But what makes energy ‘clean’? Despite its widespread use in policy, the term ‘clean energy’ lacks a universal definition, often leading to misuse and confusion. While often defined by low emission rates, this ignores the broader environmental and social costs of energy-production.
Extracting minerals for electric batteries is wreaking ecological destruction and fuelling human rights abuses, particularly in vulnerable communities. Nickel-mining is among the most damaging, driving environmental and social harm, especially in Indonesia, home to the world’s largest reserves.
Clean energy corporations position themselves as leaders in climate action, yet many obscure the ‘dirty secrets’ of their ‘clean energy’ supply chains. Harita Nickel, for example, Indonesia’s largest integrated-nickel company, promotes its climate action while simultaneously relying on coal and polluting vulnerable ecosystems. For energy to be truly clean, companies must be held accountable for their entire environmental and social footprint. A clear international definition of clean energy that incorporates the full production impact, could be critical to ensuring strict environmental, social and governance (ESG) standards. A global effort is needed to ensure ‘clean energy’ genuinely leads to a clean future.
The Case of Indonesia: Boom or Bust?
Over the past decade, Indonesia has positioned itself as a key player in the clean energy transition. Its share of global nickel extraction has soared from 5 to 50 per cent in a decade, yet this boom has come at a heavy cost.
Indonesia’s tree coverage plummeted almost 20 per cent from 2001 to 2023. Nickel extraction has accelerated this deforestation, with rates in nickel-processing areas nearly double the national average. This destruction not only threatens some of the world’s most biodiverse ecosystems, endangering species like the Sumatran tiger, but also eliminates vital carbon sinks, making Indonesia the world’s largest forest-based emitter of greenhouse gases. Worse still, nickel smelting remains heavily coal-reliant, perpetuating fossil fuel dependence in an industry claiming to combat it.
While the Indonesian government defends deforestation as necessary for economic development, the benefits remain unevenly distributed. Around 80 per cent of mining profits flow to foreign corporations, while poverty and unemployment persist in nickel-mining regions. Meanwhile, the economic cost of deforestation is significant. A recent study warns that if current trends persist, Southeast Asia could suffer a net loss of around AUD$7 trillion by 2030, driven by soil degradation, loss of critical ecosystem services like carbon sequestration, weather regulation and water purification, and the collapse of sustainable industries. Deforestation is already devastating communities that depend on intact forests for sustainably harvesting timber, medicines, and raw materials. For many developing nations, these resources are economic lifelines, with unchecked deforestation likely pushing vulnerable populations further into poverty.
Exploitative labour practices and frequent workplace accidents and fatalities in the industry are widespread, with NGO reports recently prompting the United States to classify Indonesian nickel as a “good produced by forced labour.” While some nickel-mining regions have seen infrastructure improvements, overall education, health, and living standards have declined. Mining waste is contaminating waterways, severely impacting the indigenous Bajau people, the world’s last nomadic sea tribe, as their traditional fishing grounds vanish. Pollution is also degrading arable land and posing serious health risks, particularly to children. Meanwhile, nickel-driven land seizures, often involving coercion or unfair pricing, are displacing local communities and resulting in communal violence.
The consequences of Indonesia’s nickel-boom raise the question: can energy truly be 'clean' if its production leaves such a dirty mark?
Pathways to a Truly Clean Transition
Consumers, NGOs, and industry play a pivotal role in driving responsible practices by supporting brands committed to ethical sourcing and pressuring others to follow suit. History shows that public and industry pressure can drive change. German chemical giant BASF recently withdrew from a multibillion-dollar Indonesian project after activists highlighted threats to Indigenous groups and the company’s legal obligations under the International Labour Organisation’s Indigenous and Tribal Peoples Convention. While corporate accountability is essential, broader systemic change is also needed.
With under 30 per cent of global nickel production meeting strong ESG standards, stricter regulations and responsible extraction practices are essential. This includes establishing ‘No Go Zones’, and ensuring the Free, Prior, and Informed Consent of Indigenous Peoples. Embedding these protections into national and international governance mechanisms like the Extractive Industries Transparency Initiative (EITI) is also critical.
Investing in clean energy production, like Australia’s recent AUD$75 million investment in Southeast Asia and the European Union’s ongoing free trade negotiations with Indonesia, must be tied to robust environmental and human rights protections. Corporations must embrace accountability through transparent supply chain audits, fair compensation for affected communities, and investment in sustainable alternatives like battery recycling.
Accelerating Change
While ‘clean energy’ supply chains require scrutiny, it must be noted that traditional, fossil-fuel dependent energy sources have inflicted untold environmental harm for decades. Clean alternatives are key to addressing climate change, with the question no longer whether to transition away from fossil fuels, but how to ensure the transition is genuinely clean. Governments, corporations, and individuals must drive an energy transition that protects the world’s most vulnerable communities and ecosystems and ensures a genuinely clean future for all.
Oliver Hovenden is the Climate and Environment Fellow for Young Australians in International Affairs. He holds a Bachelor of Arts and Laws (Honours) from the University of Tasmania, majoring in Politics and International Relations. Growing up in Tasmania, the importance of environmental conservation and climate action was never far from Oliver’s mind. As a Climate and Environment Fellow, Oliver is excited to use an environmental justice lens to explore the latest international developments in climate law and policy, the impact of climate activism, and Australia’s important role in the Antarctic and Indo-Pacific regions.
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