Media Briefing: Preparing for Indonesia’s Energy Transition & Anticipating Its Implications and Launching The Indonesia Energy Transition Dialogue (IETD) 2023

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Background

Between 2021 and 2022, the Intergovernmental Panel on Climate Change (IPCC) issued reports from three working groups, all of which uniformly conveyed that there is already scientific evidence related to the climate crisis and its impact on the Earth. One of the key findings of the report is that greenhouse gas emissions due to human activities have contributed to an increase in the Earth’s average temperature by 1.1°C since 1850-1900 and have the potential to rise beyond 1.5°C within the next 20 years. Furthermore, the report also outlines mitigation options that can be pursued and the scale of change that needs to occur, especially in this decade, to stay on track for 1.5°C.

Indonesia ratified the Paris Agreement through Law No. 16/2016. This means that Indonesia has legally committed itself to addressing the challenges of climate change by supporting global efforts to limit the increase in the average temperature to 1.5°C below the pre-industrial era average temperature. According to one of the IPCC models, to achieve this temperature limit, greenhouse gas (GHG) emissions must be reduced by 45% by 2030 compared to GHG emission levels in 2010 and reach net zero by 2050.

As a country that has ratified the Paris Agreement, Indonesia has reaffirmed its commitment to contribute to addressing the climate crisis. Indonesia’s own GHG emission reduction target in the Updated Nationally Determined Contributions (UNDC) is 29%, which increases to 31.89% in the Enhanced Nationally Determined Contributions (ENDC), while the target with international support in the UNDC is 41%, increasing to 43.20% in the ENDC.

A study by the Institute for Essential Services Reform (IESR) and the University of Maryland (2022) found that 9.2 GW of coal must be phased out from the state-owned utility (PLN) grid by 2030, and all unabated coal generation must be retired by 2045 at the latest, to put Indonesia on track to achieve the Paris Agreement’s global temperature target of 1.5°C. The study also concluded that coal emissions should begin to decline before the end of the decade.

Several initiatives and measures are in place to support and facilitate the early retirement of Indonesia’s power plants. In addition to the Transition Mechanism (ETM) launched at COP-26, during the G20 Summit, Indonesia and the International Partnership Group (IPG) have also signed the Just Energy Transition Partnership (JETP) agreement. This agreement aims to achieve the power sector’s peak emissions target of 290 million metric tons of CO2 (MtCO2) by 2030, attain a renewable energy mix of 34% by 2030, and make the power sector carbon-neutral by 2050.

In an effort to strengthen Indonesia’s climate action, the Government of Indonesia received a funding commitment of USD 20 billion from the Just Energy Transition Partnership (JETP) program. The formulation of the implementation of the funding is translated into a Comprehensive Investmentand Policy Plan (CIPP), which focuses on investment areas consisting of developing transmission and distribution networks, the early retirement of coal-fired power plants, accelerating the utilization of baseload-type renewable energy, accelerating the utilization of variable-type renewable energy, and building renewable energy supply chains. The government has finalized the CIPP document and will conduct public consultations over the next few months.

The energy transition can reduce Indonesia’s exposure to similar problems in the future. A smooth and successful energy transition requires the support of all parties, including the general public. Therefore, the process of preparing for the energy transition also needs to pay attention to aspects of inclusiveness. Additionally, it is important to consider impact management and anticipate the implications of the energy transition process. This includes considerations such as the fate of CFPP workers whose operational periods are ending prematurely, the creation of new jobs (green jobs), and how Indonesia’s energy transition can support economic growth through the shift from fossil industries to low-carbon industries.

Therefore, to further discuss the readiness of the energy transition in Indonesia and the launch of the 6th Indonesia Energy Transition Dialogue (IETD), we will organize a Media Briefing. This media briefing aims to provide an overview of the process and impact of Indonesia’s energy transition and to convey the implementation plan of the IETD as a forum for fact-based discussions that support the best policy formulation in the energy sector, facilitating more ambitious climate targets.

¹ www.ipcc.ch/sr15/chapter/chapter-2/

² IESR UMD, 2022, Financing Indonesia coal phase-out

Objective

1. To inform about the JETP program’s Comprehensive Investment and Policy (CIPP) development.
2. To discuss the socio-economic implications of the energy transition and anticipation measures in Indonesia.
3. To announce the implementation details of the Indonesia Energy Transition Dialogue 2023 event on September 18-20, 2023.

Presentation Material

ESDM

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Faisal Basri

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