The “green revolution” toward a more carbon-neutral future has focused greatly on developments in developing economies. On Jan. 20, Bolivia granted access to China’s battery manufacturing giant CTAL to help develop its lithium domestic industrial base, defeating competing companies from the United States and Russia. Such efforts have been framed by the Bolivian government, going back to the previous Morales administration, partly to redistribute the benefits of industrializing the Uyuni salt flats, the largest lithium reservoir in the world, and to uplift its economy.

This is in stark contrast to a recent occurrence in Indonesia: In Morowali, Central Sulawesi, labor protests on Jan. 14 related to the ferronickel smelter operations of China-backed PT Gunbuster Nickel Industri (GNI) resulted in violence and the deaths of three workers.

Local police were deployed to quell the protests, which were prompted by workers’ demands for safer working conditions and higher wages, as well as criticism of the discrepancy in privileges between foreign and local workers. Meanwhile, the police claimed the protests had been instigated by union workers that had forced other workers to join.

Despite the difference in outcomes, one common theme both events share is the centrality of welfare, with capital as the currency. It is arguably the single greatest reason why developing countries are willing to bear the costs of adapting to the demands of those with the technology to develop the renewable energy industry. The desire to detach from spiking fossil fuel costs and attain demonstrable economic benefits is so great that these issues were highlighted at this year’s World Economic Forum (WEF) Annual Meeting in Davos to attract more developing countries to follow suit.

While pursuing renewable energy is certainly an important endeavor to ensure the continued survival of the human species, it is nevertheless subject to politics between sovereign states.

Two important aspects need to be highlighted here: One, while developing countries may possess large deposits of ores for renewable energy, they do not necessarily have the technological and financial capabilities to extract and provide added value to these minerals, necessitating ties with advanced economies to obtain technology-sharing privileges; two, considering the huge starting investment required start such projects, it is in the best interest of these advanced economies to stimulate the recipient country’s growth so as to induce high returns, or at least to reorient the recipient country’s economic alignment closer to theirs.

The results are pretty much what one would expect.

The Mexican government’s regulatory strengthening over its energy sector in 2022 in the name of national security has been described in finance publications as endangering renewable energy investments, despite the country’s continued pledge to develop renewables.

On the other hand, South Africa is scaling back state-owned Eskom’s monopoly over energy production to make way for private green energy investment through the international Just Energy Transition Partnership (JETP), though over 95 percent of the funds come in the form of loans and requires structural adjustments that weaken existing labor laws.

For a nation with more than half (55 percent) of its population living just above the national poverty line, these are significant concessions to make. A well-known example among recipients of the One Belt One Road (OBOR) initiative is China’s condition of employing its own workers, investments in return for tax holidays and, in Morowali, creating a monopsony in which only China determines the content of the minerals it mines and the price it is willing to pay for them.

According to Yahoo!, 14 out of the world’s 15 largest renewable energy companies by market cap are based in North America and Europe, with the remaining company in China. The discrepancy introduces the unequal hierarchy commonly seen in North-South literature, where the owners of technology possess far greater power over the resources owned by the lesser of the two sides.

A variant of this view can be found in the dependency theory made popular by “third world” scholars, most notably Fernando Henrique Cardoso, who went on to become Brazil’s chief executive in 1995-2002. While the theory is situated in the context of the Cold War, economic imperialism sticks around as long as the countries acting as the “centers of production” still demand the resources owned by those on the periphery on the cheap, and are politically reliable in favor of a stable supply chain. The difference between then and now is that China has now joined the “big leagues” and is ready to extend its geopolitical influence abroad.

One big question is how Indonesia wants to proceed with this dilemma. It is currently one of many countries vying to expeditiously transform their economies into a future-friendly carbon-neutral one. Its 2022 Group of 20 presidency was marked by calls for investments to help it establish a downstream industry and manufacturing base for electric vehicles and batteries. The Investment Ministry had set a yearly target of US$15.9 billion for such purposes.

Recent policy moves have also started to favor nuclear energy, which the country has strongly considered since ratifying the 2016 Paris Agreement through the Green Climate Fund (GCF) mechanism.

My observations of other countries with a similar trajectory and interest in the renewable energy industry have gathered three key points that need to be considered.

First, Indonesia needs to plan ahead in striking a balance between the public and private sectors. State intervention in the economy is extensive, dotted by the thousands of state-owned enterprises (SOEs) engaged in every sector available. Sudden changes in the investment landscape favoring SOEs, for any reason, may disrupt the much-needed flow of capital to build the industry.

Second, Indonesia needs to position itself better at the negotiating table for green energy investments. In other words, the country needs to be on equal and just terms with its investment partners, who not only possess the technology, but also know about Indonesia’s mineral deposits better than the Indonesian government, forcing it to play catch-up with spotty surveillance. It must remember that renewable energy can be a two-way street: These advanced economies need the resources and are often the biggest polluters; Indonesia has the resources and it also needs to industrialize.

Third, foreign policy orientations should be upheld. Indonesia’s “free and active” foreign policy stresses the importance of democracy as a guiding principle, and it should very well guide how investments are implemented in the country. It should not allow for conditions whereby foreign actors dictate how Indonesia’s resources are sold and utilized. This also presents an opportunity for the government to further develop and connect the countryside surrounding renewable energy projects in partnership with the private sector.

With lithium, nickel and other minerals for renewable energy becoming the “white gold” of this generation, it is important that we ensure Indonesia has a say in how it achieves its greener future.

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The writer is a public policy analyst.

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