Jakarta, 21 September 2021– Accelerating deep decarbonization in the energy sector is needed to achieve carbon neutrality by 2060 or sooner as the Indonesian government has targeted. Different low-carbon technologies can be the option in decreasing greenhouse gas (GHG) emission, such as renewable energy, Carbon Capture, and Storage/Carbon Capture, Utilization, and Storage (CCUS), even Nuclear Power Plants (PLTN). However, the government needs to analyze it carefully because each technology has a different character and risk level.

In terms of global development, Mycle Schneider, an Independent International Analyst on Energy and Nuclear Policy, in his presentation said that the development of nuclear power plants has been stagnant in the last ten years, compared to renewable energy, which has increased rapidly. He gave an example that in France, the electricity mix from nuclear power reached the lowest record in 2020 for the last 30 years. The reason is that there is cheaper renewable energy.

“Investing in nuclear power plants can even hinder the achievement of climate change targets because existing funding should be allocated to technology options that are readily available, inexpensive, and can be implemented quickly,” explained Schneider on the second day of the Indonesia Energy Transition Dialogue (IETD) 2021 organized by Indonesia. Clean Energy Forum (ICEF) and Institute for Essential Services Reform (IESR), Tuesday (21/09/2021).

Sharing the same views with Schneider, Craig Morris, Independent Consultant of Energy Transition, said that it is difficult to predict the price of electricity from nuclear power plants considering that nuclear power plants do not respond to market prices.

“If we go back to the year 2000 and see projection and hope of 2050, we are already in 2050 by having renewables and storage, and if you go with nuclear and CCS, you go back to 2000. We are far further with renewables than with the two technologies,” said Morris.

Moreover, CCS/CCUS technology is one of the global strategies to reduce carbon emissions. Samantha McCulloch, Head of Carbon Capture Utilization and Storage Technology, International Energy Agency said CCS/CCUS could be one of the solutions in Southeast Asia to improve energy infrastructure in the region. However, renewable energy will be the main choice for decarbonization shortly. Meanwhile, the development of CCS/CCUS will play a role in avoiding lock-in emission due to newly built infrastructure and enabling emission mitigation options in the future.

Another opportunity for CCUS in the ASEAN region is the production of low-carbon hydrogen from gas and CCUS. Currently, this option can be cheaper than producing hydrogen using electrolysis of water at a natural gas production site that can be used as storage carbon at the same time. However, the cost-effectiveness of this option needs to observe the potential for hydrogen production using electrolysis which is also expected to have significant price declines in the next few years.

Dr. M. Rachmat Sule, Senior Lecturer at the Faculty of Mining and Petroleum Engineering, Bandung Institute of Technology (ITB), also sees that the development of CCUS can help reduce emissions, such as in coal power plants adjacent to oil and gas fields. Yet, there are limitations in its development, such as to be more economical, the source location of the emission and reservoir should be next to each other. Besides, it is necessary to implement other strategies such as hub clustering or use CCUS support infrastructure such as gas pipelines to reduce CAPEX costs.

However, on different occasions, Deon Arinaldo, Program Manager of Energy Transformation, IESR encouraged the government to prioritize renewable energy technology to carry out deep decarbonization in the energy sector.

“Decarbonizing the energy sector needs to happen quickly and start now to be compatible with the Paris Agreement. In Indonesia itself, low-carbon technology that is commercially ready and quickly built is renewable energy, while other technologies such as nuclear power plants and CCS are still in the development stages and piloting. We do not have much time to mitigate this climate crisis,” he said.

Responding to the variety of low-carbon technologies in the framework of new and renewable energy, Prof. Dr. Zaki Su’ud from the Faculty of Mathematics and Science at the Bandung Institute of Technology (ITB) recommends several policies that the government needs to take to support the achievement of Indonesia’s decarbonization target by 2060 or sooner. First, all energy resources must be utilized optimally to preserve energy quality and security in Indonesia. Second, the energy mix policy must be implemented and evaluated properly toward reliable, cheap, and sustainable energy availability. Third, The government needs to allocate sufficient research and funding for H&D related to new and renewable energy.

“New renewable energy is still developing and requires appropriate and consistent policies from the government to support national energy security and achieve Indonesia’s decarbonization target,” Zaki explained at the IETD 2021.

The IETD 2021 was held for five days, from September 20-24. This event is in collaboration with Clean, Affordable, and Secure Energy for Southeast Asia (CASE), a partnership project from several countries in Southeast Asia and is funded by the Federal Government of Germany. Further information can be accessed at ietd.info.

Jakarta, 21 September 2021– Achieving Indonesia’s carbon-neutral target in Indonesia by 2060 or sooner as the Indonesian government has targeted, requires clear policies and strategies, including in the energy sector as one of the largest emitting sectors in Indonesia. The pack of the energy sector decarbonization policy is being prepared by the Indonesian government to realize a smooth and just energy transition.

Arifin Rudiyanto, Deputy for Maritime Affairs and Natural Resources at the Ministry of National Development Planning, Bappenas, said that there are several strategies that Bappenas has prepared to achieve low-carbon development and climate resilience. These include the development of sustainable energy, waste management, circular economy, and the development of green industries. Moreover, he explained that there are three important things in realizing energy transition, they are political will, solid legal basis, and a comprehensive strategy.

“Political will has been obtained, a good strategy has been outlined in the Medium-Term National Development Plan (RPJMN) to transform towards green energy, while a strong legal basis has been prepared through the new and renewable bill,” said Arifin on the second day of the Indonesia Energy Transition Dialogue (IETD) 2021 organized by Indonesia Clean Energy Forum (ICEF) and Institute for Essential Services Reform (IESR), Tuesday (21/09/2021).

Responding to the statement, Sugeng Suparwoto, Chairman of Commission VII the House of Representative of Republic Indonesia (DPR RI) promised that the New Renewable Energy Bill would be ratified in 2021.

“The era of renewable energy has become a necessity. In the new renewable energy bill, there are incentives for developing new renewable energy and disincentives for energy development, which still contributes the largest carbon contribution,” he explained.

Herman Darnel Ibrahim, a Member of the National Energy Council, warned that the implementation of energy system decarbonization should also mitigate economic risks, as well as maintain national energy security, in particular, to keep energy prices affordable. Furthermore, it needs to create a level playing field between renewable energy and fossil energy, such as by utilizing carbon tax instruments.

Knowing that needed the higher funding to achieve carbon neutrality with renewable energy, Febrio N. Kacaribu, Head of the Fiscal Policy Agency (BKF), Ministry of Finance of the Republic of Indonesian analyzed that at least needs IDR 3500 trillion to achieve the NDC target in 2030.

“Our state spending planning budget is only 40% of the need, so it must involve the local government, the private sector, and international support,” he said.

Febrio revealed that the government has prepared financial instrument green bonds with low-interest rates in which the global market has responded well. The Ministry of Finance is also currently conducting tax harmonization to support the principle of reducing carbon emissions.

“So we need a carbon market mechanism to connect sectors that have not implemented net zero emissions with those carried out,” said Febrio.

Febrio added, if the carbon market mechanism in Indonesia has been established, the carbon tax signal for coal actors will be stronger as well. Therefore, Indonesia will be recognized by the global new energy market. It will certainly help the process of funding renewable energy projects in Indonesia to accelerate the achievement of Indonesia’s decarbonization targets.

Dewa Putu Ekayana, Policy Analyst, Ministry of Finance of Indonesia stated that now Indonesia is almost in the final process for the draft presidential regulation related to the economic valuation of carbon.

“The fiscal aspect of the economic valuation of carbon is not a carbon tax but a levy on carbon. This expansion of meaning is expected to include not only taxes but also other instruments. The next consideration is the balance of central and sub-national government finances. Our suggestion from the Ministry of Finance is that the financing mechanism will be paid for with carbon credits or carbon certificates,” explained Dewa.

On a different occasion, responding to the carbon economic value policy, Fabby Tumiwa, Executive Director of IESR said that the government needs to set emission reduction targets and determine targets in each sector, as well as assess the value or effective carbon price that can support the achievement of these targets.

“The price of carbon should be linked to emission reduction targets and should promote economic actors to change their technology choices. If the carbon price is too low, it is worried that it will not provide an adequate signal to encourage substantial emission reduction efforts,” explained Fabby.

Regarding the implementation of the carbon tax, Fabby said that the government needs to openly communicate the importance of carbon tax instruments to restrain the growth of carbon emissions, determine the mechanism and instruments, as well as the economic sectors that will be affected by the implementation of the carbon tax.

IETD 2021 runs for five days, from 20-24 September. This event is in collaboration with Clean, Affordable, and Secure Energy for Southeast Asia (CASE), a partnership project from several countries in Southeast Asia and is funded by the Federal Government of Germany. Further information can be accessed at ietd.info