Economic Transformation of Paser Regency Towards Renewable Energy: Adaptation and Sustainability Solution

Fabby Tumiwa, Direktur Eksekutif Institute for Essential Services Reform (IESR),

Paser, May 8, 2024 -Indonesia is trying to reinforce its commitment to renewable energy development to achieve its net-zero emission targets by 2060 or even earlier. These efforts are part of the global initiative to tackle climate change and are expected to significantly impact the coal industry, including the one in Paser Regency, East Kalimantan.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), underlined the importance of economic transformation in the region to respond to the ongoing energy transition. This was revealed during the Development Planning Conference (Musrebang) of the Initial Draft of the Regional Long-Term Development Plan (RPJPD) of Paser Regency for 2025-2045 on Wednesday (8/5/2024),

“Economic transformation needs to be carried out in the face of the energy transition because of the decline in local revenue (PAD) from the coal sector, and a decrease in the number of jobs in the coal sector and the opening of jobs in other economic sectors,” Fabby said.

Fabby emphasized that based on an IESR study, the contribution of the coal sector to the gross regional domestic product (GRDP) of the Paser district is enormous, more than 70 percent. However, the GRDP per capita of the Paser district has been relatively stagnant in the last decade. It is essential to undergo an economic transformation to address the issue at hand. This is where the capacity of local governments comes into play. They need to have a well-defined direction and strategy for the energy transition, establish a systematic and cohesive monitoring and evaluation system, and enhance collaboration between agencies at the regional level.

“However, the challenge is local governments’ limited authority and budget. For example, different agencies at the regional level handle new and renewable energy (NRE) affairs and NRE project funding that is not sustainable. IESR suggests the establishment of a special agency in charge of energy affairs at the City / Regency level by the direction of Government Regulation (PP) No. 18/2016 and building a horizontal communication forum between the central, provincial, and local governments, with assistance from international cooperation organizations,” said Fabby. 

According to Fabby, in the context of economic transformation, several potential sectors in Paser Regency can be maximized, citing the IESR study, including agriculture, transportation, financial services, and education. However, in developing these new economic sectors, aspects of justice and equity need to be considered to avoid injustice due to extractive industries.

“Paser Regency can also utilize corporate social responsibility (CSR) funds and revenue sharing funds (DBH) for initial funding of the economic transition process. The existence of a ‘pooling fund’ for the transition program encourages regions to become independent and helps regions prepare for economic sector transformation,” said Fabby.

Furthermore, Fabby suggested that preparing human resources, such as formal educational institutions, universities, vocational schools, and training programs focused on energy and environmental transition, can help individuals prepare themselves for the workforce and increase public participation in equitable energy transition planning. This economic transformation is a crucial step towards addressing global climate change goals. It will help Paser Regency adapt to and sustain itself in the face of challenges and opportunities in the renewable energy era.

Meanwhile, Rusdian Noor, Acting Head of Bappedalitbang Paser Regency, said the Paser regional economy’s diversification is still low due to the suboptimal growth of agricultural business fields, the suboptimal development of the tourism sector, the lack of downstream industry, and the suboptimal diversification of derivative products based on natural resources (SDA). For this reason, the initial draft of the RPJD needs to answer this problem, among others. 

“Paser’s RPJD will be divided into four stages. First, we strengthen the foundation of transformation as a driver of the agricultural economy. Second, focusing on accelerating transformation. Third, regional expansion in sustainable economic development. Fourth, the realization of a noble Paser that is prosperous and superior and competitive,” Rusdian said. 

After Global Stocktake of COP28: Decarbonizing the Energy Sector in Southeast Asia toward Post ASEAN Vision 2025

Jakarta, April 26, 2024 – At COP28, a decision was made to adopt a global stocktake (GST). The decision acknowledged that the world is facing challenges in meeting the Paris Agreement target and projected that the global temperature may exceed 2.1 to 2.8°C by the end of this century even with full implementation of the current Nationally Determined Contributions. While current climate action may not be sufficient to fully address the global challenges we face, decarbonisation of the energy sector , including power generation, industry, transport, and buildings in the mid of this century, could make significant contribution to climate mitigation action, as the energy sector is responsible for a significant proportion of global greenhouse gas emissions around 79% of global GHG emissions, according to the IPCC AR6 report of 2023

As parties to the UNFCCC, ASEAN Member States (AMS) have also agreed to support a just, orderly and equitable transition away from fossil fuels in energy systems. This includes tripling renewable energy and doubling energy efficiency by 2030, phasing out unabated coal power, phasing out inefficient fossil fuel subsidies and reducing emissions from road transport. In essence, this GST decision can be used as a starting point to strengthen regional progress towards a more ambitious renewable energy target in Post ASEAN Vision 2025. 

Although Southeast Asian countries have demonstrated their commitment to climate and energy transition issues, their support for the energy transition agenda in line with the Paris Agreement could be further strengthened with more ambition (Eco, 2022-24). According to IRENA (2022), ASEAN has significant renewable energy potential of around 17 TW. ASEAN could become net-zero with 90% – 100% renewable energy by 2050 (IRENA and ACE, 2022).

While the region has significant renewable energy potential, it is worth noting that the ASEAN Plan of Action on Energy Cooperation (APAEC) (2016-2025) sets a modest target of 35% installed capacity and 23% energy mix by 2025. At present, only 28.2 GW of utility-scale solar and wind power is being generated in ASEAN (GEM, 2024), suggesting that the region’s renewable energy potential remains largely untapped. 

It is also worth noting that some ASEAN Member States (AMS), such as Vietnam, Singapore, Indonesia, the Philippines and Thailand, have policies that allow for the growth of fossil fuels (Climate Action Tracker, 2024), including the development of captive coal plants, which account for around 13 GW of the 18.8 GW of new coal power in the pipeline (Mongabay, 2023), and the continuation of new coal plants until 2030 (Climate Home News, 2023). It concluded that there is room for improvement and acceleration in the implementation of ASEAN’s energy transition. Additionally, since the region is in the middle of development its vision more integrated community (ASEAN, 2025) and aligning with Paris Agreement, proposing a more ambitious renewable energy target could be beneficial for driving long term economic growth e.g. can generate USD 90 to 100 billion from renewable energy manufacturing and generating job creation (ADB, 2023). 

The two-year time span will be a crucial moment for the Southeast Asian region. It will be a period of significant change, not only in the context of the UNFCCC Global Stocktake 1 decision, but also in the context of ASEAN’s ongoing efforts to develop the New ASEAN Vision after 2025 and the ASEAN Plan of Action on Energy Cooperation Phase (APAEC) five years later. It will be important for the region to adapt to the changing times.

The former document will serve as a foundation and reflection of the political commitment of AMS leaders to take the region forward over the next twenty years. In the ASEAN Vision 2025, the term “climate change” is only mentioned once and does not seem to be considered a priority. Hopefully, in the new ASEAN Vision, the issue of climate change and energy transition can be addressed more strategically and become a priority issue, given its urgency and low-hanging fruit that can contribute to regional economic growth (IRENA, 2023). It would be beneficial for the region if this could become the North Star of national policies in ASEAN.

On the other hand, the development of the ASEAN Long-Term Renewable Energy Roadmap (ACE, 2023) is a positive step towards harmonising the achievement of a more targeted and ambitious collective renewable energy target. However, it is worth noting that in regional energy planning documents there is room for Clean Coal Technology (including CCUS), whose economics, effectiveness and safety are still questionable (CNBC, 2021) and could potentially lead to carbon lock-in.

It is worth noting that the path to accelerating the energy transition and increasing renewable energy targets in ASEAN is a long one, with many challenges to overcome in terms of policy design, implementation, and funding sources. However, there is great potential for economic growth in this area, including the market for energy storage (Mordor Intelligence, 2023), the electric vehicle market (FDI Intelligence, 2023), and solar PV manufacturing (REGlobal, 2023).. It would be beneficial for ASEAN to consider incorporating the results of GST1 into a regional vision that emphasizes green and low-carbon development, as well as more ambitious renewable energy targets. This could help to achieve optimal economic benefits at this crucial moment.

Looking at the Integration of Corporate Environmental Management Performance Assessment in Sustainable Taxonomy

Farah Vianda

Jakarta, April 25, 2024– Indonesia’s sustainable development requires economic activities that consider environmental and social aspects. To support this, the Government of Indonesia, through the Financial Services Authority (OJK), transformed the Indonesian Green Taxonomy Edition 1.0 into the Taxonomy for Indonesian Sustainable Finance (TKBI) in February 2024. TKBI classifies economic activities that balance economic, environmental, and social aspects. On the other hand, the Ministry of Environment and Forestry (KLHK) has the Company Performance Rating Program in Environmental Management (PROPER) to assess the environmental management performance of companies. PROPER assessments include the highest and lowest levels of environmental management. Companies with the lowest assessment twice can be prosecuted and revoked business licenses.

Farah Vianda, Coordinator of Sustainable Financing at the Institute for Essential Services Reform (IESR), explained that incorporating PROPER requirements into TKBI requirements will hopefully improve the implementation of TKBI at the industry level. This can also motivate business actors who still lack knowledge related to TKBI.

“With many energy and mining sectors involved in PROPER, this can improve the environmental compliance of these companies. PROPER is one of the important indicators in determining whether business activities have entered the green category. In TKBI, it is still done by self-assessment by financial institutions, and KLHK assesses PROPER and has followed certain steps,” said Farah in the Ailesh Beyond Compliance Webinar: Navigating TKBI Through PROPER on Thursday (25/4/2024).

However, Farah added that, in general, the implementation of PROPER has not been binding or mandatory so far. According to Farah, many companies register only to get the highest rating from PROPER to improve their reputation, especially in attracting green funding sources.

“Under these conditions, there is no significant connection between PROPER and TKBI. TKBI only serves as a reference and has not become a compulsory criterion for business classification. Therefore, in this scenario, PROPER has not served as a strong enough incentive to encourage the widespread implementation of TKBI,” said Farah.

Making the Global Stocktaking Process More Relevant to Southeast Asia

Jakarta, 25 April 2024 – Global efforts to halt climate change by reducing emissions are entering a phase of global consolidation. Since 2023, the Independent Global Stocktake (iGST), a consortium of civil society actors gathered to support the first Global Stocktake in order to assess the progress of the Paris Agreement (2015).

In a webinar entitled Navigating the Outcomes of the First Global Stocktake in Southeast Asia, Arief Rosadi, Climate Diplomacy Coordinator of the Institute for Essential Services Reform (IESR) stated that the results of the first GST had not had much influence on the energy transition process in the Southeast Asia region.

“The most important thing about this GST process is that it must be able to be translated into more ambitious climate policies. Energy transition is the low hanging fruit for Southeast Asia, increasing renewable energy targets and climate ambitions will not only contribute to reducing emissions but provide a positive signal to encourage transformation towards a low carbon economy in the region,” said Arief.

Arief emphasized that efforts to double energy efficiency and triple renewable by 2030 (Double Down,Triple Up Initiative) are crucial stages for encouraging the energy transition in the Southeast Asia region. He also added that the next two year period is a crucial moment for Southeast Asia considering that ASEAN is currently preparing ASEAN Post Vision 2025 and the latest APAEC (ASEAN Plan of Action on Energy Cooperation) energy policy document. The first GST point regarding doubling and tripling of renewable energy efficiency needs to be reflected in both documents.

At the planning, implementation and policy evaluation levels, the role of experts or independent research institutions is important to provide alternative views and input for policy makers. It is necessary to ensure that there is meaningful participation by all parties involved and potentially affected by the policy.

Danize Lukban, climate policy analyst at the Institute for Climate and Sustainable Cities (ICSC), reminded the importance of (climate) policies based on scientific data in this transition process.

“In the policy planning process (iGST derivative), the role of climate experts and institutions conducting research is crucial to provide alternative views and input for policy makers,” she said.

ASEAN as a consolidated body of countries in Southeast Asia is expected to become a consolidation forum for its member countries to produce more ambitious and collaborative climate action within the scope of the Southeast Asia region.

Facing the Escalation of the Iran-Israel Conflict: Challenges and Solutions for Indonesia’s Energy Stability

Direktur Eksekutif Institute for Essential Services Reform (IESR), Fabby Tumiwa

Jakarta, April 24, 2024 – The escalation of the conflict between Iran and Israel has created tensions that could destabilize the global economy, including in Indonesia. The significant issues of concern are likely supply disruptions and an increase in oil prices, particularly since the Strait of Hormuz in Iran is a crucial trade route for global oil exports. These concerns were shared by Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), during the KBR Public Space Talk Show on Wednesday, April 24, 2024, titled “World Oil Prices Rise: What’s Up Electric Vehicles?

“For this reason, we need to be aware of the dynamics of fossil energy prices by reducing the risk of crude oil imports and finding ways to diversify energy imports. Furthermore, the depreciation of the rupiah exchange rate vis-a-vis the US dollar is a significant factor that may impact the cost of producing fuel oil (BBM) in Indonesia,” Fabby said.

Reflecting on this, Fabby emphasized that the Indonesian government should be more aggressive in encouraging renewable energy development to substitute fuel. For example, diesel power plants in Disadvantaged, Frontier, and Outermost (3T) areas can be replaced with renewable energy plants. Indonesia can also increase the use of biofuels (BBN) by paying attention to environmental sustainability in its production. 

“Indonesia has abundant sources of biofuels, including palm oil, jatropha, sampling, kemiri sunan, and microalgae. The country is currently working on developing bioethanol as a fuel mixture with gasoline. If Indonesia succeeds in this endeavor, it will help to decrease the need for fuel imports,” Fabby said. 

However, Fabby said several challenges are faced in developing renewable energy. First, the interest factor from certain circles. Second, various inconsistencies in policies and regulations make businesses hesitate to invest in renewable energy. For example, renewable energy is constrained in the electricity sector because only PLN can buy electricity from Independent Power Producer (IPP), and the IPP cannot sell it to consumers. Third, the business aspect of renewable energy by considering risk. 

“Overcoming the challenges of transitioning to renewable energy requires a strong political will from governments and other involved parties to prioritize and develop renewable energy more aggressively. This transition is crucial to achieving the net-zero emission (NZE) target set in the Paris Agreement by 2060, or even earlier,” Fabby said. 

Engaging More People in the Emission Reduction Effort

Jakarta, 22 April 2024 – Energy transition has gained traction and momentum in the past years. Countries have pledged to reduce emissions as well as accelerate their energy transition agenda to keep the global temperature rise on the 1.5-degree Celsius level. Indonesia pledged to achieve net zero emissions status in 2060 or earlier. This commitment is 10 years later than the Paris Agreement target in 2050. 

Irwan Sarifudin, Coordinator for Clean Energy Hub IESR, during the SEA Morning Show on 22 April 2024, said that the IESR’s study Deep Decarbonization shows that Indonesia technically can achieve zero emissions in the energy sector in 2050.

“This choice (to be NZE in 2050) is technically possible and economically viable for Indonesia,” Irwan said.

Irwan also explained that to push the government agenda in accelerating energy transition targets, multi-sector collaboration is essential. One of the initiatives launched by IESR is Generasi Energi Bersih (Gen-B), a youth community focused on personal emissions reduction. 

Maya Lynn, GEN-B Coordinator explained that the community encourages each individual to contribute to emission reduction efforts. Gen-B utilizes tools such as jejakkarbonku.id to calculate individual carbon footprints.

“Jejakkarbonku.id has already been customized to suit the Indonesian context, so the transportation options and food choices are developed according to the Indonesian habit and custom,” she said.

To further engage more people, the GEN-B community will keep encouraging the community members and will also be involved in the Community Funded Offset Project (CFOP) which is a carbon offsetting activity by providing renewable energy installation or mangrove planting. The CFOP itself is planned to be in several locations in Indonesia.

Carefully Designing Indonesia’s Energy Policy Framework

Jakarta, March 28, 2024 – The National Energy Council (DEN) plans to adjust the renewable energy mix target. Currently in the draft Government Regulation on National Energy Policy (RPP KEN), DEN plans to reduce the national renewable energy mix target to 17-19 percent by 2025. Previously, the renewable energy mix target was 23 percent by 2025.

The Institute for Essential Services Reform (IESR) considers this a step back from the Indonesian government’s commitment to overseeing the energy transition.

Raditya Wiranegara, IESR Research Manager, in a hearing with the National Energy Board expressed his concern behind the setting of the renewable energy mix target.

“IESR has previously conducted modeling that has been published in our annual report, Indonesia Energy Transition Outlook (IETO). Our modeling results show differences with the modeling results that form the basis for the formulation of the KEN RPP. This is especially evident in the final energy growth, where in the modeling for IETO we used Bappenas’ GDP growth assumption for Indonesia Emas 2045,” Radit said.

This was clarified by Retno Gumilang Dewi, ITB’s modeling team, who assisted DEN in the modeling, that the figures currently circulating are adjusted figures.

“The model we produced can be said to be an ideal model. The modeling was then brought for FGD (focused group discussion) and received various inputs, so it was adjusted,” said Retno Gumilang.

Fabby Tumiwa, Executive Director of IESR on the same occasion said that in preparing a country’s energy planning, it is important to ensure the choice of technology that is most relevant and tested with the latest technological developments.

“This step is important and crucial to avoid being locked-in by high-carbon technologies,” Fabby said.

Fabby added that if we are already trapped in the choice of high-carbon technology, it will require even greater investment to get out of the high-carbon technology. IESR also encourages the achievement of renewable energy targets that have been set in the RUPTL and national strategic projects as a driver of the growth of the domestic renewable energy industry.

Nusa Penida: From Natural Beauty to Energy Independence

Alvin Putra Sisdwinugraha, Analis Sistem Ketenagalistrikan dan Energi Terbarukan

Jakarta, March 28, 2024 – Nusa Penida, a beautiful island in the southeast of Bali, Indonesia, is undergoing extensive transformation to adopt renewable energy sources. With its stunning natural beauty, Nusa Penida will transform into an island that relies entirely on renewable energy sources. Given the challenges posed by global climate change, it is crucial to take measures to reduce carbon emissions and promote environmental sustainability.

Alvin Putra Sisdwinugraha, an Electricity System and Renewable Energy Analyst at the Institute for Essential Services Reform (IESR), has explained that Nusa Penida was selected as an island with 100% renewable energy for three primary reasons. Firstly, the island has an abundance of renewable energy potential. Secondly, its geographical location is separated from mainland Bali. And thirdly, the development of green tourism provides economic potential.

“To achieve 100% renewable energy in Nusa Penida, three stages of implementation can be carried out over the next six years (starting from 2024). The first stage, from 2024 to 2027, will focus on maximizing the potential of rooftop power plants (PLTS) to reduce diesel consumption during the day. Currently, the Nusa Penida electricity system is still reliant on diesel power plants (PLTD), which will be gradually phased out as the implementation progresses,” said Alvin in the X Space entitled Towards Nusa Penida 100% Renewable Energy

The second phase, continued Alvin, began to place PLTD as a backup plan in 2027-2029 and explore other renewable energy sources, such as biomass. According to Alvin, Gamal plants in Nusa Penida can become a source of biomass power plants (PLTBm). The final stage will focus on optimizing other renewable energy plants like biodiesel and ocean currents and building pumped hydro energy storage in 2029-2030.

“It is possible to create an island that runs entirely on renewable energy sources, and this can be achieved through a step-by-step process. For instance, we can start with small-scale projects such as Nusa Penida Island by 2030. We also encourage the decarbonization of Bali’s electricity system to make Bali a sustainable and eco-friendly destination for all,” Alvin said. 

Ida Ayu Dwi Giriantari, the Center of Excellence Community Based Renewable Energy (CORE) Chairperson at Udayana University, mentioned that Nusa Penida was previously known for seaweed farming before its development as a tourist destination. The Ministry of Marine Affairs and Fisheries (KKP) has designated a seaweed cultivation zone covering approximately 464 hectares, and this area can produce up to nine kiloliters of seaweed daily. However, out of the 20,000 hectares of land or water suitable for seaweed planting, only 70 hectares are currently in use.

“Nusa Penida, a community that was once focused on traditional industries, has shifted its economic orientation to the tourism sector. Seaweed has emerged as a promising source of bioenergy, including biogas, bioethanol, and biodiesel. To fully utilize this potential, proper management of seaweed farming is necessary. Seaweed farmers in Nusa Penida must be aware of the renewable energy potential of seaweed and take appropriate steps to manage their farms effectively,” said Ida Ayu. 

In reflecting on the impacts of the COVID-19 pandemic, Ida Ayu mentioned that many destinations within the tourism industry suffered significant losses. As such, there has been a growing need for sustainable economic resilience, and one viable option is cultivating seaweed. Currently, there are several conditions where the harvested seaweed, for example, has only been processed into laundry soap, bath soap, crackers, drinks, and so on. Even more, farmers sell it directly after harvest.

“When people realize the economic value that can be gained from seaweed farming, it is more likely to be adopted. Besides seaweed, Jatropha curcas also has the potential to be used as an energy source. Based on my research, approximately 20% of the total 4,000 hectares of land on Nusa Penida Island can be utilized for growing Jatropha curcas,” said Ida Ayu. 

Ida Ayu provided a pertinent example wherein a 25% allotment of land, approximately 1,000 hectares, dedicated to Jatropha cultivation can yield a biodiesel output between 540-680 liters per hectare. Jatropha is a shrub-like plant found in tropical regions. Its seeds contain oil, which can be processed into biodiesel.

 

Download Potential Mapping Presentation for Nusa Penida 100% Renewable Energy

GEN-B: Mangroves Showcase Determination to Reduce Personal Emissions

Jakarta, March 27, 2024– A procession of individuals in moss green attire filled the streets around Gambir, Central Jakarta. Their attire bore the insignia of Generasi Energi Bersih (GEN-B) or Clean Energy Generation, and some carried placards encouraging onlookers to curb their personal emissions. With youthful faces, approximately 350 individuals gathered to address emissions contributing to the global climate crisis.

Supported by the Institute for Essential Services Reform (IESR), Generasi Energi Bersih (GEN-B) South Jakarta in collaboration with GEN-B Jakarta, and Pertamina University’s Heuri Cosmos Research and Scientific Work Student Activity Unit, rallied the youth of Jakarta. Engaging in a leisurely march, they endeavored to reduce emissions by planting mangroves, departing from Gambir and converging on the mangrove ecotourism area at Pantai Indah Kapuk (4/3).

Fabby Tumiwa, Executive Director of IESR participated in the mangrove planting initiative. He stated that GEN-B initiated the activity, utilizing jejakkarbon.id to calculate daily emissions. GEN-B members then pooled funds and donations for carbon offsetting, including mangrove planting.

“Mangrove planting embodies the tangible concern of our youth, acknowledging their daily activities’ contribution to greenhouse gas emissions. In addition to awareness, they offset emissions through simple actions like turning off lights and minimizing waste. Planting mangroves aims to absorb emissions from the atmosphere,” explained Fabby.

Fabby expressed hope for similar initiatives nationwide, as GEN-B has expanded to nine cities across the country, including Bandung, Yogyakarta, Bali, and Bogor.

“Embracing emission reduction can be a shared ethos among GEN-B members. They serve as information sources and inspiration, fostering a generation aware of emission reduction to avert a climate crisis,” Fabby emphasized.

Riko Andriawan, Chairman of GEN-B South Jakarta, noted that planting 350 mangrove seedlings could significantly aid emission absorption.

“Emission reduction doesn’t require extravagance; it begins with self-awareness. Simple steps like using public transport, minimizing disposable plastics, and conserving electricity can contribute. Younger generations must grasp global warming and emission reduction concepts,” stated Riko.

Maya Lynn, GEN-B Indonesia Chairperson, underscored that the foremost challenge arises from individual actions.

“Awareness of our carbon footprint must start within. Websites like jejakkarbonku.id allow us to quantify our emissions, fostering consciousness about our environmental impact.”

Nur Azizah, representing Research and Scientific Work  Student Activity Unit Heuri Cosmos Universitas Pertamina, lauded the collaboration with GEN-B South Jakarta as a commendable opportunity. Their advocacy for renewable energy and emission reduction through research found tangible expression in mangrove planting, contributing to a greener planet.