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.

Renewable Energy Must Reign Supreme in Southeast Asia

Jakarta, March 27, 2024-Southeast Asia is a world’s fifth-largest economy region in 2022. However, this economic growth comes with a concerning projection: greenhouse gas (GHG) emissions in the region are expected to soar by 60 percent by 2050. Curbing these emissions is pivotal for global efforts to combat climate change. Unfortunately, current endeavors to promote renewable energy in Southeast Asia fall short of aligning with the Paris Agreement, which aims to limit global warming to below 1.5 degrees Celsius.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), stated at the Revision 2024 International Conference in Tokyo (14/3) that ASEAN countries have set a target to achieve a renewable energy mix of 23 percent by 2025. However, he emphasized that this target doesn’t align with the Paris Agreement’s objectives.

“To align with the Paris Agreement, the renewable energy mix needs to account for 55 percent, with variable renewable energy (VRE) contributing 42 percent. Except for Vietnam, Cambodia, and the Philippines, others have yet to reach 5 percent VRE penetration. The good news is that in 2023, ASEAN countries will have over 28 GW of operating utility solar and wind capacity, a 20 percent increase in operating capacity since last year. Currently, they make up 9 percent of ASEAN countries’ total electricity capacity. But in order for ASEAN countries to meet the goal, they need to install more renewable energy,” Fabby remarked.

Fabby further highlighted the relatively abundant renewable energy resources in Southeast Asia, which are estimated to be 40-50 times greater than the region’s current energy needs. He suggested that utilizing floating solar power plants could be a strategic move towards decarbonizing the energy system. He elaborated on the technical potential, with reservoirs boasting 134 to 278 GW and natural water surfaces such as rivers, lakes, and seas holding 343 to 768 GW. However, he stressed the importance of conducting detailed calculations of the technical, market, and economic potential, as well as site-specific assessments to develop floating solar power plants.

Additionally, he highlighted the need for Southeast Asian countries to adopt more ambitious policies, provide robust budget support and incentives, and enact policies that attract investment. The average annual investment in renewable energy capacity should be increased by five times to USD 73 billion per year.

Fabby emphasized that Southeast Asian countries must elevate their ambitions to meet the Paris Agreement targets. As an immediate step, ASEAN should aim for a 23 percent renewable energy mix by 2025 and 40 percent by 2030.

“Various studies have shown that decarbonizing the energy system with renewable energy in Southeast Asia is feasible; however, current policies and actions are insufficient to achieve significant decarbonization by 2050. While renewable energy resources are abundant and ample, substantial investment is needed. Each country must reform policies and manage risks associated with renewable energy projects to attract and mobilize investors further,” Fabby added.

He also cautioned against perpetuating a narrative that prioritizes fossil energy as a baseload generator under the guise of maintaining energy security, while sidelining renewable energy. Such a narrative, he argued, is counterproductive and contradicts the spirit of the Paris Agreement.

Reviewing Indonesia’s Renewable Energy Investment Needs

Investasi energi terbarukan

Jakarta, March 8th, 2024 – Indonesia’s energy transition commitment officially began three years ago when the State Electricity Company (PLN) issued the 2021-2030 Electricity Supply Business Plan (RUPTL) which targets increasing renewable energy capacity as one of the prerequisites for achieving net zero Indonesia’s emissions in 2060, specifically the electricity sector in 2050.

During the Market Review session, Friday 8 March 2024, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that the development of renewable energy is a necessity. The government, through a number of policies such as RUPTL 2021, and Presidential Decree 112/2022 has announced additional renewable energy capacity as well as a commitment to no longer build new PLTUs except those already in the contract process.

“These commitments must be translated to executable technical and economic plans. Therefore, the RUKN and RUPTL revision process which is currently underway is very important,” said Fabby.

In the 2024 – 2040 RUPTL, PLN plans to increase its renewable energy generation capacity by up to 80 GW. This plan will have the consequence of a significant increase in renewable energy from currently around 9 GW to 70 GW.

Fabby added that this enthusiasm and ambition needs to be monitored by the public considering that the government’s record for increasing renewable energy capacity is always below the target. In pursuing the target of a 23 percent renewable energy mix by 2025, Indonesia has not shown the expected progress. Until 2023, the renewable energy mix will only be 13 percent. This makes the remaining two years a challenge for accelerating renewable energy.

The required cost for building renewable energy plants, which reaches USD 152 billion (equivalent to 2,300 trillion rupiah) by 2040, is in the spotlight. This figure is considered a realistic figure by Fabby, considering that this figure represents investment needs including the need for building renewable energy plants as well as building transmission and distribution networks.

“The figure of USD 152 billion is a realistic figure at this time. We also have to understand that technology continues to develop, it is very possible that in the future this investment need will gradually decrease according to technological developments,” explained Fabby.

Fabby highlighted the government’s intention to involve the private sector more. To invite greater private investment, regulatory improvements are needed, including the National Energy Policy in line with the electricity sector’s net zero emission target in 2050, a review of electricity purchase prices from renewable energy generators, and a review of the current electricity tariffs.