Day one of The 3rd Indonesia Energy Transition Dialogue 2020 #IETD2020 #EnergyTransition
Jakarta, 7 December 2020 – Carbon emissions from Steam Power Plants (PLTU) tended to be low during the Covid-19 pandemic due to decreased consumption of electrical energy. However, the target for reducing carbon emissions is not yet on track to meet the Paris Agreement. For carbon emission reduction to be sustainable, the Indonesian government should be able to take advantage of post-Covid-19 recovery by more massively developing renewable energy potentials.
Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) in his remarks during the opening of the Indonesia Energy Transition Dialogue 2020 (IETD 2020) highlighted the phenomenon of falling coal prices in the international market and the stronger commitment of coal-importing countries such as China, Korea, and Japan to go carbon neutral in 2050.
“Ten years ago, people might not have imagined that solar panel technology would be one of the energies to power electricity. Or, decades ago, people might not believe that coal would become history since it is no longer economical. However, all of that is happening right now. Solar energy is getting cheaper, and coal is becoming unpopular, ”he said.
Fabby also explained that Indonesia has great renewable energy potential from sunlight, geothermal, biogas, and hydropower. Using these potentials, Indonesia must achieve 23% renewable energy use by 2025.
According to the IESR research, Indonesia’s chance of achieving its energy mix target is quite positive. The energy mix penetration in Indonesia can reach 40%. IESR’s recent study with Finland’s Lappeenranta University of Technology (LUT) and Agora Energiewende said that Indonesia could reach 100% renewable energy demand by 2050 cost-effectively without compromising on energy security. Achieving this requires collaboration from all stakeholders in government and community policy.
Although not as fast as ASEAN countries like Thailand in promoting renewable energy development, the Indonesian government through the Ministry of Finance has made various fiscal policies that support the renewable energy industry. Some of them are tax holiday and tax allowance for the renewable energy industry.
In addition, Suahasil Nazara, Deputy Minister of Finance who attended the Indonesia Energy Transition Dialogue (IETD), emphasized the importance of synergy between institutions to determine the direction of Indonesia’s renewable energy.
“The government is basically very passionate about renewable energy development. Come, every institution, especially the Ministry of Energy and Mineral Resources and related institutions, sit together and have a deep discussion, so that we, from the Ministry of Finance, can provide maximum support in terms of encouraging renewable energy investment in Indonesia,” Suahasil said.
The government also continues to improve Indonesia’s economy through various national economic recovery (PEN) programs, namely a fund allocation of Rp318 trillion rupiahs. Thanks to this program, Indonesia’s economy began to improve as seen from the graph of the national income development that rose from -5.32% to 3.49% in the third quarter.
Unfortunately, the economic stimulus has been flowing more towards fossil energy than renewable energy. Therefore, the government provides various sources of funding for the renewable energy industry. One of them is through the issuance of Sukuk hijau.
This article was developed from the recent discussion within the 3rd Indonesia Energy Transition Dialogue, Monday, December 7th. Join and participate in the dialogue virtually, 7 – 11 December 2020, visit ietd.info.
The second day of IETD 2020, will bring the discussions among The Governors (local government of Indonesia) and Special guest: Governor of Chungcheongnam-do, South Korea with the topic of Local governments lead the way in energy transition.