On this page
- Clean technologies opportunities in Indonesia
- Current tariff landscape and tariff outcomes under the CEPA
- Technical barriers to trade
- Trade in services
- Investment
- Temporary movement of natural persons
- Intellectual property
- Trade and sustainable development
- Provincial and territorial interests
Clean technologies opportunities in Indonesia
Indonesia’s government has set ambitious targets to reach approximately 34% renewable energy capacity by 2034, driving demand for clean technologies across various industries. Indonesia faces significant environmental challenges, including air pollution, inefficient waste management, outdated and lack of water/wastewater treatment plants, and high greenhouse gas emissions, particularly from coal mining and power generation. Canadian companies specializing in carbon capture and storage, waste-to-energy solutions, smart grid technologies, and transportation infrastructure stand to benefit from the CEPA’s tariff reductions and investment protections. Additionally, Indonesia’s growing preference for innovative and scalable clean technology solutions aligns with Canada’s expertise in environmental management, renewable energy, and can support broader environmental sustainability objectives.
Current tariff landscape and tariff outcomes under the CEPA
Prior to the CEPA, Canadian clean technology products faced tariffs averaging 5%. High-demand clean technology products, including wind generating sets (5%), water filtration equipment (5%), hydrogen and fuel cell systems (5%), and carbon capture technology (ranges from 5% for activated carbon to 10% for carbon fibers, turbines, and other materials), faced import duties that restricted Canada’s ability to compete in the Indonesian market.
Under the CEPA, Canadian clean technology exports will receive preferential tariff treatment, enhancing affordability for Indonesian buyers and project developers:
- Wind turbines – 5% tariffs to be phased out over 5 years, supporting Indonesia’s renewable energy expansion.
- Water filtration equipment – 5% tariff phase-out from 5 to 15 years on most tariff lines, strengthening Canada’s position in Indonesia’s water security sector.
- Hydrogen fuel cells – 5% tariffs to be phased-out over 15 years, boosting Canadian exports in Indonesia’s green transportation and industrial energy sectors.
- Battery energy storage systems – 5% or 10% tariffs to be phased out over 5 years.
Technical barriers to trade
The CEPA encourages Indonesia to use technical standards for clean technologies that align with international environmental and safety standards. The agreement promotes greater transparency in certification and testing requirements, reducing costs for Canadian exporters and facilitating market entry.
Trade in services
The CEPA enhances predictability and regulatory transparency for Canadian clean technology-related service providers. Canadian clean technology-related sectors are likely to benefit from the CEPA in related services sectors such as engineering services including environmental (engineering, renewable energy engineering, mechanical engineering, chemical engineering and research and development).
Investment
The CEPA’s Investment chapter safeguards Canadian clean technology investors pursuing opportunities in Indonesia’s renewable energy sector, smart infrastructure development, and environmental technology implementation. It provides protection against discriminatory treatment, ensures fair access to commercial opportunities for Canadian investors in Indonesia’s clean technology industry and fosters business stability for long-term investments. Additionally, the Agreement includes safeguards against expropriation without compensation. Additionally, Canadian firms benefit from access to investor-state dispute settlement (ISDS), which provides an impartial legal recourse in case of investment disputes and helps contribute to a stable investment environment.
Temporary movement of natural persons
The CEPA simplifies business travel and stay for investors for Canadian clean technology businesspeople by facilitating temporary entry. Additionally, environmental engineers, industrial sustainability specialists, and technical consultants benefit from increased transparency regarding their access to Indonesia as they support renewable energy and waste management projects.
Intellectual property
The CEPA’s Intellectual Property chapter bolsters minimum protections for patents, trademarks, and proprietary clean technologies, ensuring that Canadian innovators can operate with greater predictability in Indonesia. The agreement sets out minimum standards that require effective enforcement mechanisms against the infringement of Canadian owned intellectual property, including trade secrets, over clean technology proprietary inventions, designs and processes. The chapter promotes cooperation between Canadian and Indonesian authorities to exchange information and share best practices on IP, allowing the federal government to maintain effective lines of communication with the Indonesian government on developments in its IP regime that may affect Canadians operating in this sector.
Trade and sustainable development
The Trade and Environment Section of the CEPA’s Trade and Sustainable Development (TSD) chapter promotes high levels of environmental protection and responsible business practices, ensuring that trade and investment activities do not undermine environmental protection efforts. The Agreement commits both Parties to effectively enforce environmental laws and not to lower them as a means to attract trade or investment. The TSD chapter also contains provisions that encourage cooperation on the transition to clean energy, pollution reduction and addressing climate change. Additionally, the CEPA recognizes the importance of individual and collective action to reduce greenhouse gas emissions. Finally, private-sector entities are encouraged to develop and use voluntary mechanisms to protect the environment.
Provincial and territorial interests
British Columbia has cleantech companies with strengths in hydrogen and fuel cells, carbon capture, water purification, and smart grid technologies. The CEPA’s tariff elimination on water filtration equipment and carbon capture products directly supports British Columbia’s export ambitions in Southeast Asia.
Alberta’s cleantech companies lead in carbon capture and storage, hydrogen, waste-to-energy, and smart grid innovation. The CEPA’s phase-out of tariffs on hydrogen fuel cells and carbon capture technologies will boost Alberta’s exports. Alberta’s strong innovation ecosystem and venture capital support for clean tech firms position it to benefit from CEPA’s investment protections and intellectual property enforcement mechanisms.
Ontario’s cleantech sector excels in energy storage, water technologies, smart grids, and environmental engineering services. CEPA’s tariff elimination on battery energy storage systems and water filtration equipment will enhance Ontario’s competitiveness in Indonesia’s clean energy and water security sectors. Ontario’s interest in liberalizing services and investment aligns with CEPA’s outcomes on engineering services and investor protections.
Quebec’s cleantech companies have strengths in bioenergy, waste management, water technologies, and transport electrification. CEPA’s tariff phase-outs on waste-to-energy and water treatment technologies support Quebec’s export potential. The province’s interest in liberalizing tariffs on environmental goods and machinery aligns with CEPA’s outcome of reducing technical barriers and promoting sustainable development.
Nova Scotia and New Brunswick are emerging players in Canada’s cleantech landscape. CEPA’s provisions on sustainable development and cooperation offer Atlantic provinces a platform to deepen collaboration and showcase regionally developed technologies.