Towards COP-28: Indonesia Needs to Speak Out for Concrete Action in Addressing the Climate Crisis

Jakarta, November 2, 2023 -The United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP-28) is scheduled to take place in Dubai, United Arab Emirates (UAE) from November 30 to December 12, 2023. Guntur, a policy analyst from the Coordinating Ministry for Maritime Affairs and Investment, has stated that the COP-28 meeting will include the first-ever global stocktake (GST) to evaluate the progress made in implementing the Paris Agreement.

 

“The GST is a crucial turning point for taking climate action in this critical decade, where the global community is aware that the implementation of the Paris Agreement is currently off track. For this reason, collaboration between various parties is needed in course-correcting efforts and improving solutions that are reflected in the results of the negotiations as well as in the COP28 Presidential Actions Agenda,” he explained at the Pijar Foundation Policy Playground event on Thursday (2/11/2023).

 

Guntur mentioned that COP28 is focused on several issues to fulfill the pillars of the Paris Agreement, particularly related to energy transition, especially renewable energy. Indonesia also continues to prepare the pavilion as soft diplomacy or diplomacy with a socio-cultural approach. This is also an effort to convey to the world the concrete steps and concrete actions that Indonesia has taken in reducing emissions and addressing climate change. In addition, Indonesia took the theme of climate action to be held in the Indonesian pavilion during the implementation of COP28. 

 

Arief Rosadi, Coordinator of Climate Diplomacy Institute for Essential Services Reform (IESR), said the climate crisis harms the world. Based on the UNFCCC report in 2022, global emissions will increase by almost 14% throughout this decade. The UNFCCC’s 2023 data shows that current policies will result in a temperature rise of 2.8°C by the end of the century.

 

“For this reason, Indonesia must take real action to address the climate crisis, and collective efforts are needed to address and deal with it by emphasizing the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). There are currently various opportunities for young people to participate in international conventions despite possible challenges, such as closed processes and limited financial, regulatory, and logistical support. Citing data from the Yale Program on Climate Change Communication, most Indonesians feel morally obligated to protect the environment,” Arief said. 

 

Based on the agenda, Arief said, the delegation of the Republic of Indonesia (RI) will pay more attention to three global crises. These three crises, also known as the triple planetary crisis, include climate change, pollution, and biodiversity loss. These are significant global challenges that require bilateral and multilateral collaboration and cooperation to ensure that the Earth remains habitable for the future.

How Important is it to Allocate State Funds to Early Retirement of Coal-Fired Power Plants?

Jakarta, October 24, 2023 – Accelerating the early retirement of coal-fired power plants (CFPPs) and establishing renewable energy-based power plants is crucial to achieving our energy transition targets. The government has released financing guidelines outlined in the Regulation of the Minister of Finance (PMK) Number 103 of 2023 to facilitate this process. This regulation aims to provide fiscal support for the energy transition in the electricity sector. It was put into effect on October 13, 2023. According to this regulation, the energy transition platform’s funding can come from the State Budget (APBN) and other legally recognized sources.

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, has expressed appreciation for a recent regulation. However, the issuance of the regulation was not unexpected, as the Energy Transition Mechanism (ETM) was established last year, with PT SMI appointed as the ETM Country Platform Manager by the Indonesian government. Additionally, the ETM framework stipulated that the state budget would provide the funding for the early retirement of coal-fired power plants.

“I think the PMK confirms it legally. Legally, this is possible, so it must be budgeted in the APBN. Referring to the PMK, there is also a clause stating that it is following the ability of the APBN. Matters regarding budget priorities and funding sources and others,” said Fabby Tumiwa at the “Energy Corner” event on CNBC Indonesia on Tuesday (24/10/2023).

Furthermore, Fabby Tumiwa emphasized the significance of early retirement of coal-fired power plants due to the threat of climate change. Indonesia is the seventh largest emitter in the world, releasing 1.24 Gt CO2e in 2022. Therefore, Indonesia needs to participate in reducing emissions. The energy sector is one of Indonesia’s significant emissions sources, with the majority coming from CFPP. Fabby hopes that by phasing out CFPP, Indonesia can contribute to the commitment to reduce emissions.

“Funding from APBN sources is required to make the termination of CFPP operation financially feasible. We aim to minimize debt, and using APBN funds can help keep the debt low and make the transaction more visible. However, funding for the retirement of a single CFPP is not limited to just APBN; other options are available depending on the transaction type. The inclusion of APBN funds can help reduce the cost of early retirement of coal-fired power plants,” said Fabby Tumiwa.

According to Fabby Tumiwa, terminating the operations of CFPP is a process that requires proper planning. The guidelines for the early retirement of coal power plants have been outlined in Presidential Regulation (Perpres) 112 of 2022. Fabby emphasized that not all CFPPs will be retired early, as some will end their contract period or economic lifespan.

“When deciding which CFPPs to retire early, several factors should be considered. These include high emissions, low efficiency levels, and an age of over 15 years. If a plant is younger than 15, it may take a long time to see a return on investment, and negotiations may be necessary. It is also important to note that retiring CFPP requires blended finance from various funding sources, not just the state budget. This funding should be structured to make the CFPP financially and technically feasible to stop its operation early,” said Fabby.

Besides the state budget, said Fabby, Indonesia still has funding commitments from developed countries, such as the G7, through the Just Energy Transition Partnership (JETP) framework. However, it is unclear how these commitments will be realized. One obstacle discussed in the JETP is the difference between the market value and book value of PT Perusahaan Listrik Negara (PLN) assets. This issue involves many things, and regulatory changes will be necessary to address it. Moreover, G7 countries are currently focusing on renewable energy funding. Fabby assessed that these two things can be combined to increase renewable energy generation capacity and investment. For instance, if CFPP’s economic age is reduced from 30 to 20 years, 10 years can be dedicated to renewable energy generation. Unfortunately, there is no such regulation in Indonesia. If the government regulates this, Indonesia can benefit from lower costs due to early retirement and increased renewable energy generation capacity.

Early Retirement of Coal Plants a Crucial Step Toward NZE

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

Jakarta, October 20, 2023 – Climate change has become a significant global issue in the 21st century. Reducing greenhouse gas (GHG) emissions and achieving Net Zero Emission (NZE) have become essential objectives. To achieve NZE, switching from fossil fuel-based energy sources like coal to clean and sustainable energy sources is crucial. Therefore, a necessary step towards achieving NZE is the early termination of coal-fired power plants (CFPP).

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, mentioned that the Indonesian government has shown greater ambition in transitioning towards clean energy in the last two years. This is evident from the issuance of Presidential Regulation (Perpres) 112/2022, which mandates the Ministry of Energy and Mineral Resources (MEMR) to create a roadmap for decommissioning coal-fired power plants (CFPP). This roadmap must be approved by the Ministry of Finance and Ministry of State-Owned Enterprises. According to Fabby, coal power plants will cease operations by 2050 if we look at these provisions.

“The government is working on a new national energy policy (KEN), intended to replace the existing national energy policy outlined in PP No 79 of 2014. This new policy will serve as a roadmap for the country’s transition towards sustainable and renewable energy sources, particularly in the electricity sector. PT Perusahaan Listrik Negara (PLN) is also developing a new general plan for electricity supply that aligns with the roadmap for energy transition and aims to achieve net-zero emissions by 2050,” explained Fabby at the “Market Review” event broadcast by IDX Channel on Friday (20/10/2023).

Fabby emphasized that the energy transition’s success depends on the availability of proper investment or funding. To accelerate the energy transition, three important steps are required. First, the development of renewable energy should be accelerated. Second, supporting infrastructure such as distribution, transmission, and energy storage should be built to ensure the reliability of the energy system. Third, the operation of CFPP should be terminated early. All these steps are necessary for Indonesia to achieve its national target of having a 34% renewable energy portion by 2030.

“Achieving the target of a high renewable energy mix will be challenging if the capacity of coal-fired power plants in the electricity system is not reduced. An energy transition is necessary to attain the Net Zero Emissions (NZE) goal in the electricity sector by 2050.,” Fabby said.

Fabby said the issuance of Minister of Finance Regulation (PMK) Number 103 of 2023 provides a framework for fiscal support in the electricity sector to accelerate Indonesia’s energy transition. The regulation can also serve as a basis for allocating state budget funds to support the early termination of CFPP operations. This is a significant step, given that Indonesia has launched the Energy Transition Mechanism (ETM) Country Platform, which aims to promote a just and affordable transition in the energy sector. The initial funding for the ETM came from the Asian Development Bank (ADB) and the Climate Investment Fund.

“The platform is currently being utilized to organize the funding for the early retirement of two power plants, namely the privately-owned Cirebon CFPP and PT PLN’s Pelabuhan Ratu CFPP. If both are successfully retired, they will be decommissioned in 2035. According to IESR’s calculations, around 8-9 GW of capacity of coal-fired power plants will need to cease operation. This is noteworthy since there is no plan to end operations before 2030, even though we should. One of the funding sources for the project comes from the state budget, as outlined in the ETM. The issuance of PMK serves as the legal basis for the initiative,” said Fabby.

Fabby stated three things should be considered to carry out early retirement of coal-fired power plants. First, the reliability of the electricity supply is not disrupted. Second, when CFPPs are terminated, it contributes significantly to greenhouse gas (GHG) emissions. Third, when CFPPs are retired, the system has a replacement capacity from renewable energy. 

“To avoid expensive termination costs, it may be worth considering retiring a coal-fired power plant (CFPP) once it has reached 20 years of age. This is especially important because CFPP technology is still subcritical, meaning the emission intensity is very high. Furthermore, these power plants are operated in an electricity system with sufficient power supply, leading to overcapacity,” said Fabby.

Indonesia’s Electricity Challenges, How to Overcome Excess Electricity Supply?

Fabby Tumiwa di Kompas Bisnis dengan topik ‘PLN Kelebihan Listrik, Negara Jangan Sampai Rugi’ pada Rabu (11/10/2023)

Jakarta, 11 October 2023 – Indonesia, one of the world’s largest developing countries, faces challenges in its electricity sector. The State Electricity Company (PLN), responsible for electricity supply, is now struggling with an oversupply. Several factors have contributed, including announcing the 35-gigawatt coal-fired power plant (CFPP) megaproject 2015. During the Kompas Bisnis program on Wednesday (11/10/2023), Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), emphasized this issue with the topic ‘PLN having excess electricity, the country should not suffer losses.’ 

Fabby Tumiwa mentioned that PLN, the Indonesian state-owned electricity company, has a 10-year plan that includes electricity projections and generating capacity that must be built. Looking back at the electricity supply in Indonesia, Fabby noted that before 2014, there was a deficit in the electricity supply due to the growth rate outpacing the development of electricity infrastructure. To address this, a 35 thousand gigawatts (GW) program was initiated in 2015 with a target of economic demand reaching 7% based on the national medium-term development plan (RPJMN). As a result, electricity demand is projected to grow by around 8%.

“Since 2015, our economy has experienced an average growth of around 5%, failing to reach 7%. Similarly, the growth in electricity generation did not exceed 5% annually until 2019. This is a cause for concern because even though the 35 GW program has been implemented, the projections for its success are not very precise,” said Fabby Tumiwa.

Fabby emphasized that the oversupply of electricity in Indonesia is a burden for PLN due to the take-or-pay scheme in their contracts. This means that PLN has to pay for electricity regardless of whether it is used by independent power producers (IPPs). However, the supply side of the issue is being resolved by cutting more than 13 GW of generating capacity in the 2021-2030 general plan for electricity supply (RUPTL). To prevent similar cases, IESR has recommended halting the development of around 3 GW of capacity currently in the pipeline.

Fabby Tumiwa
Fabby Tumiwa on Kompas Bisnis with topic ‘PLN Kelebihan Listrik, Negara Jangan Sampai Rugi’ on Wednesday (11/10/2023)

“According to PLN, every 1 GW PLN can lose around Rp 3 trillion. However, each power plant has a different contract. Unfortunately, there is no other way to absorb excess electricity; we must increase electricity demand. The demand for electricity increase in 2022 seems to have started to be high, around 5.5%. However, we need to catch up with growth above 7% through electricity demand from households and industries,” said Fabby. 

Fabby explained that the excess electricity is largest in Sumatra and Java, absorbing more than 90% of electricity consumption nationally. Mainly in Java, the electrification ratio averages 100%. However, there is a gap in the electrification ratio in eastern parts of Indonesia, such as NTT, NTB, and Papua.

“Currently, the electrification ratio outside Java is not 100%, while there is excess electricity in Java. The main problem is the cost of generating capacity and constructing electricity networks in remote areas. For instance, providing electricity access to a single house in the 3T area costs Rp10 million to Rp100 million. However, the purchasing power of households in these areas is quite low,” Fabby said.

Navigating Indonesia’s Carbon Market: Challenges, Opportunities, and the Road Ahead

The rapid progress of carbon pricing in Indonesia has reached important milestones. Presidential Regulation (Perpres) 98/2021 on the Carbon Economic Value, or Nilai Ekonomi Karbon (NEK), has served as the cornerstone for building the infrastructure and framework for its implementation. The birth of the NEK regulation is a response to the Article 6 Paris Agreement, which allows parties to trade carbon in order to lower emissions. Some instruments are offered under the regulation, consisting of carbon trading, result-based payment, and carbon tax, which was twice delayed and is expected to be launched in 2025. Among all the instruments, carbon trading is identified as a mature instrument with a cap-and-trade mechanism that enables institutions to claim their high-intensive emission by buying credits from other activities that provide carbon stocks.

To strengthen the implementation of carbon trading under Law 4/2023 on the Development and Strengthening of the Financial Sector, the Financial Services Authority (OJK) is tasked with establishing and overseeing carbon trading in the carbon market. In just 7 months, the OJK issued regulations on carbon trading through carbon exchanges and officially launched the carbon market on September 26, 2023. This means that financing is one of the solutions to bridge the gap in achieving climate targets and plays a crucial role in raising awareness of the devastation of climate change, especially for the business sector.

Prior to this, Indonesia has been familiar with the Voluntary Carbon Market (VCM) since the past few decades before deciding to establish a mandatory carbon market to meet Nationally Determined Contribution (NDC) targets for specific sectors. For example, the Sumatera Merang Peatland projects has successfully sold 3 million carbon credits to big companies and the Indonesia Climate Exchange (ICX), a trading platform, was created to build an ecosystem for the private sector with the voluntary scheme.

Earlier this year, power generation was chosen as the first subsector to implement mandatory carbon trading due to its easily identifiable emissions calculations, based on and strengthened by the Ministry of Energy and Mineral Resources Regulation 16/2022 on Procedures for Implementing Carbon Economic Value in the Power Generation Subsector. This was initiated in a pilot program in 2021 before being launched in February 2023.

In the first compliance carbon trading phase, 99 CFPP which covers 86% of coal power plants in Indonesia participating in cap and trade schemes. Each CFPP has a maximum allowance or emission quota that is set based on the previous performance and unit criteria. For those who emit less than the allowance, they are able to trade the remaining quota to other companies that exceed the maximum cap. When the CFPP emission is above the given quota, they must reduce the emission by buying quota from other CFPP or purchase carbon credits.

The success of this pilot program, while requiring some improvements, has encouraged other sectors to consider carbon trading and expand its implementation beyond the energy sector, pending the release of the carbon trading roadmap currently under discussion at the Coordinating Ministry of Investment and Maritime Affairs.

With the establishment of the carbon market, the trading products to be sold and traded are carbon quotas from the compliant sector, called PTBAE-PU, and carbon credits, or SPE-GRK. PTBAE-PU could only be sold and bought by the mandatory sector that has the maximum cap on emitting emissions, while credits may be supplied from various projects, for instance peat restoration and renewable energy projects, where all participants are able to purchase the credits to avoid the emission.

To participate in the carbon exchange, all entities, whether producers of emissions or not, must obtain a permit from the National Standard Registry (SRN), a platform managed by the Ministry of Environment and Forestry as a national database for emissions and validate credibility of products and participants involved in the carbon exchange. With high hopes, careful emission monitoring and evaluation could be easily integrated across sectors in one platform and increase accountability and data transparency that is being shown to the public.

The launch of the carbon exchange just one month after the OJK issued its regulations has raised several questions, one of which is whether Indonesia is adequately prepared to manage it. In the absence of a comprehensive market ecosystem, careful planning and implementation by the government, particularly the regulator and relevant ministries, is needed. Although enthusiasm has been shown by 13 transactions with a total volume of 459,914 metric tons of CO2 equivalent at a unit price of around USD 4.51, dominated by state-owned enterprises on the first day of the launch, lessons from several emissions trading systems (ETS), such as China’s, show that it takes a considerable amount of time, almost a decade, to build a strong and mature market ecosystem. Validation, credibility, and data transparency are fundamental aspects that should be carefully monitored by various stakeholders, including the OJK, the Ministry of Environment and Forestry, the Ministry of Energy and Mineral Resources, and others. Market integration between power sector carbon trading and the upcoming compliance sector with the recently released carbon market must be implemented to achieve one common system and pricing mechanism, since voluntary parties dominate the current market.

The existence of a carbon market provides an opportunity for companies to raise finance through carbon trading within the market. However, this should be closely scrutinized in terms of the requirements for companies to enter the market, such as taking action to reduce emissions, maintaining comprehensive emissions inventories, and having strategies for future emissions reductions. It is important to avoid the interpretation that the carbon market is simply a strategy to reduce emissions by buying as many carbon credits as possible. There should be an institution capable of conducting accurate and comprehensive checks and verifications of the PTBAE and SPE-GRK being traded, as well as verifying valid and internationally recognized calculation methodologies to avoid double counting and ensure accountability for projects generating PTBAE and SPE-GRK. In addition, there should be a careful monitoring system of the use of carbon market funds. The government has mentioned that the funds will be managed by the Environmental Funds Agency (BPDLH), but it is not clearly stated how the mechanism works yet.

Renowned for its tropical forests and abundant renewable energy potential, most of Indonesia’s carbon credits come from natural resources. Indonesia’s FOLU sector could potentially absorb 25.18 billion tons of carbon from rainforests, mangrove conservation could absorb around 33 billion tons of carbon, and peatland could absorb almost 55 billion tons of carbon. With the advent of the carbon market, significant forest, mangrove, and renewable energy projects are expected to grow rapidly. It is crucial to assess and verify each project holistically and monitor its implementation to avoid ‘greenwashing’ practices that claim significant carbon sequestration and reduction without following established procedures.

It is also important to maintain a balance between supply and demand in the market in order to maintain market enthusiasm and ensure smooth transactions. Given the early experience of the European Union Emissions Trading Scheme (EU ETS), where an oversupply led to carbon prices approaching zero in 2007, precautions should be taken to prevent carbon prices from becoming uncompetitive. In addition, the carbon market will soon allow companies outside Indonesia to participate in carbon trading, which could lead to carbon leakage if prices are not competitive and domestic companies do not benefit from the incentives provided by the carbon market.

The Ministry of Energy and Mineral Resources (ESDM), which regulates quotas and allowances in the electricity sector, must limit the emissions allowed by each company that owns power plants. With a planned maximum quota of 85% in 2024, it is expected to encourage each operator to develop emission reduction strategies. At present, quotas are still based on emission intensity and the average emissions of the previous year, which can lead to higher allocations in the following year. Regular monitoring is therefore required to reduce the emission quotas for each power plant.

Carbon markets also open the opportunity to widely inform the green taxonomy principles, especially to financial institutions, investors, and project owners. It could enable the identification of whether a project can be traded in the carbon market and falls within the green taxonomy classification. This can enhance transparency in assessments and trust while assisting investors and financial institutions in mobilizing funding for sustainable projects. However, further institutional coordination and agreements are also necessary for this.

Although the carbon market in Indonesia is still relatively new, its effective implementation is expected to drive changes in industrial behavior, particularly in the power generation sub-sector and the energy sector as a whole. Information dissemination to a wider audience is important to attract more buyers and traders to participate in carbon exchange beyond energy sectors. In this nascent stage, an incentive from the government is required since to pass the ‘green’ criteria, extra processes are needed which creates additional cost and potentially becomes a burden, making the carbon market unattractive. The market also creates opportunities for Indonesia to fulfill the need of climate financing, while pushing the launch of carbon tax is important as the complement tool. Regular monitoring and evaluation is necessary to keep all the activities on the right track while further enhancements and developments are necessary to make the market eligible at the international level.

Moving to Clean Energy to Tackle Air Pollution in Jabodetabek

Jakarta, October 6, 2023 – Air pollution has been a significant issue faced by the residents of Jakarta, Bogor, Depok, Tangerang, and Banten (collectively known as Jabodetabek) for quite some time now. These unfavorable circumstances require urgent attention and action because environmental pollution in Jakarta can portray Indonesia’s development as harming the environment. Program Manager of Energy Transformation, Institute for Essential Services Reform (IESR), Deon Arinaldo, mentioned that air pollution impacts human health, causing respiratory diseases, reproductive disorders, cancer, and premature death. According to Deon, who cited data from Our World in Data, fossil energy, particularly coal, is the largest source of air pollution and can lead to premature death. This is indicated by the number of deaths per unit of electricity generated. These deaths include those caused by air pollution and the likelihood of accidents occurring in the supply chain.

“Oil, as well as coal, are not environmentally friendly energy sources. Biomass is a cleaner alternative but has negative impacts when burned, such as producing more particulate matter (PM). On the other hand, wind and solar energy have significantly lower chances of causing air pollution because they mostly rely on infrastructure development,” explained Deon at an Indonesian Ulema Council (MUI) event entitled “Energy Hijrah Movement and Air Pollution Control Discourse” on Friday (6/ 10/2023).

Deon stated that the energy system in Indonesia is still dominated by fossil energy. It is crucial to begin the energy transformation process systematically and as soon as possible in all sectors. According to data from the Ministry of Energy and Mineral Resources (ESDM), Indonesia has a potential of approximately 3,686 GW for renewable energy. By utilizing the abundance of renewable energy, it can be used as the primary source of capital for the energy transition. However, we have yet to optimize this potential fully.

“In the national electricity plan (RUKN), coal-fired power plant capacity will peak in 2030 and decrease according to the planned operating period (natural retirement). Presidential Decree 112/2022 regulates a moratorium on new CFPPs, with exceptions for those already in the pipeline or related to PSN/downstream. Additionally, new CFPPs have a limited operating life until 2050.” said Deon.

 

Deon highlighted various strategies to mitigate air pollution generated by CFPPs. These strategies include implementing energy-efficient and energy-saving practices, halting the construction of CFPPs and replacing them with clean energy sources, speeding up the closure of existing CFPPs, and enforcing stricter standards for CFPP emissions. Additionally, installing air pollution control devices and monitoring the pollution levels would also help reduce air pollution.

Secretary of the Directorate General of Environmental Pollution and Damage Control (PPKL) KLHK, Tulus Laksono, said that a task force is currently performing strict supervision in various sectors, including industries, which are known to be a significant source of pollution. This task force’s primary responsibility is to identify pollution sources and conduct direct monitoring in the field, provide regional supervision, and ensure coordination. Tulus further added that currently, seven industries are under supervision, 34 are facing administrative sanctions, and eight are being subject to sanctions in Jakarta.

 

“A major cause of air pollution in Jabodetabek is motor vehicle exhaust, which accounts for 44% of the pollution, followed by coal-fired power plants (CFPPs) at 34%, and the remaining pollution comes from the industrial sector. The Ministry of Environment and Forestry has opened an emissions testing service for motor vehicle owners since August 17, 2023, to address this issue. The emissions testing service aims to monitor and control exhaust emissions. On average, around 100-150 motorized vehicles undergo emissions tests at the KLHK office daily, but unfortunately, around 20% per day do not pass the emissions test,” explained Tulus.

Apart from that, Tulus explained, the task force also monitored open burning in 57 locations spread across Jakarta, Depok, South Tangerang, Tangerang Regency, as well as Bogor Regency and City. The activities include burning rubbish, gardens, cables, and charcoal. Prior to the action, monitoring was carried out through 15 air quality monitoring stations spread across the Jabodetabek area. The Ministry of Environment and Forestry has urged several companies to transition from fossil fuels to renewable energy sources to combat air pollution, as per Tulus. Companies like Pertamina Geothermal Energy and Star Energy will work on developing geothermal energy with a capacity of 5,553 GW. In comparison, PLN Nusantara will focus on wind energy with a capacity of 600 GW. Additionally, PT Bukit Asam and PLN Nusantara will work together towards a capacity of 4,930 GW.

“There are still several industries in Jakarta that use coal for their boilers, resulting in approximately 15,741 tons of coal burned each month. However, efforts are being made to encourage an energy transition towards cleaner sources. The DKI Transportation Agency has been working with these industries to promote this transition, and small businesses that still use firewood or coal will be urged to switch to cleaner energy alternatives,” explained Tulus.

Realizing Energy Democratization through Solar Energy

Jakarta, 5 October 2023 – Energy is a basic human need not only to support daily activities but more importantly to increase productive activities. Solar energy is a renewable energy source that can realize energy democratization.

Solar energy fulfills several aspects for the democratization of energy such as the availability of resources throughout the year, and the flexibility of the scale of installation. For a nobler goal, by installing solar panels, users contribute to reducing emissions from the energy sector. These various reasons show that motivations for using solar PV can vary.

This is in line with the findings of a market survey conducted by the Institute for Essential Services Reform (IESR), one of which explored respondents’ motivations for using solar PV. Marlistya Citraningrum, IESR Sustainable Energy Access Program Manager, in the Seminar ‘Solar Energy Policy and Action Plan as a Form of NRE Commitment towards Indonesia’, Thursday 5 October 2023, explained that motivations can vary from one region to another.

“MSMEs in Central Java choose rooftop PV because they are interested in the savings so that their electricity bill money can be allocated to other things. Meanwhile, business people in Bali have a high awareness of maintaining harmony with nature. “Apart from that, they will get positive branding as an environmentally friendly business entity,” said Marlistya.

To increase public interest in using solar energy, several things need to be done by stakeholders, including the government, in creating an ecosystem that supports the growth of renewable energy.

Three things that must be pursued to encourage participation by more parties are first, regulations that are clear and supportive and well communicated so that the public gets information about rooftop PV regulations easily and without confusion. Second, there are examples of users and easy access to service providers; third, provide incentives and increase access to financing.

In the same forum, Dedi Rustandi, Intermediate Expert Planner Coordinator for NRE at the Ministry of Bappenas stated that solar energy achievements were still below RUPTL target.

“There are a number of main causes, including the pandemic which has prevented electricity demand from growing significantly, there is uncertainty in the investment climate for the business, as well as delays in project procurement (related to governance),” said Dedi.

Dedi admitted that there are still a number of inefficient policies, resulting in the use of solar energy not being optimal in Indonesia.

Air Pollution: Economic Impacts and Steps Towards Clean Air

Direktur Eksekutif IESR, Fabby Tumiwa

Jakarta, October 5, 2023 – Air pollution is a major environmental challenge society faces today. With increased industrial activity, population growth, and human mobility, air pollutants have drastically increased, causing severe impacts on human health and ecosystems. The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, emphasized that air pollution is a significant issue that also has an economic impact. For instance, when someone falls sick and cannot work, they lose the opportunity to earn money. Similarly, when the same person has to visit the doctor, they lose a lot of money. 

“Air pollution significantly impacts the economy at a national level.  In Jakarta, we have tracked the days with clear blue skies over the past decade. However, there has yet to be a comprehensive study on the national level. The government must conduct such a study to determine the economic impact of air pollution, including the loss of productive days due to illnesses caused by exposure to pollutants. By taking proactive measures, we can work towards cleaner air and a healthier workforce, thereby ensuring a positive impact on our economy,” explained Fabby Tumiwa in a Special Stage program entitled Synergistic Efforts in Overcoming Air Pollution, which was broadcast on TV One on Thursday (5/10/2023).

Quoting data from the Ministry of Environment and Forestry (KLHK), Fabby said three sources mainly cause air pollution in Jakarta. Vehicles account for 44%, Coal-fired power plants (CFPP) located around Jakarta account for 34%, and the remaining percentage comes from household burning and other activities. These sources produce different types of pollutants, with transportation being the largest source of PM2.5 and PM10. Agricultural activities and open burning also contribute significantly to PM. Furthermore, sulfur dioxide (SO2) is produced by 93% of power plants.

“Air pollution is a serious issue that needs to be tackled effectively. It is important to understand the different pollutants that contribute to air pollution. However, it is equally important to address the root cause of the problem, such as the smoke emitted from vehicle exhausts. This means that we need to reduce the amount of pollutants released into the air by reducing the use of fossil fuels. Encouraging people to use public and eco-friendly modes of transportation like bicycles can help achieve this goal. Besides that, the fuel quality also plays a crucial role in reducing air pollution. Fuel with higher quality emits fewer pollutants, which needs to be adopted as the standard. Unfortunately, Indonesia’s fuel quality is still below the EURO 4 standard,” said Fabby Tumiwa.

A researcher from the Faculty of Medicine, University of Indonesia (FK UI), Erlina Burhan, mentioned that there has been an increase in cases of acute respiratory infections or ISPA in the Jabodetabek area, which is believed to be caused by high levels of PM 2.5 pollutants. Erlina, who works at Persahabatan Hospital, has observed a growth of about 20% in the number of patients treated for ISPA, which could even increase by 30% during specific periods. Therefore, Erlina Burhan stresses the importance of clean air quality as it directly affects people’s lives.

“We have no control over the air we breathe. If the air contains pollutants, it can harm our health. Although our respiratory system has a natural filtration system to prevent harmful particles from entering our lungs, there are tiny particles that are too small to be filtered. These small particles can directly enter our respiratory tract and cause harm,” explained Erlina Burhan.

Erlina Burhan has appealed to people to take their health seriously, especially regarding air pollution. She suggests checking the air quality index before engaging in outdoor activities. If the index shows red, it is advisable to avoid outdoor activities. Erlina Burhan recommends a comprehensive approach to dealing with air pollution. This approach should not be limited to a single sector, such as transportation, conducting emission tests, or promoting the use of electric vehicles. Instead, it should involve concrete policies collaborating with all parties to overcome air pollution.

“Although many regulations have been implemented, their implementation seems lacking. For instance, smoking regulations have been in effect for a long time, yet individuals are still observed smoking in public areas. This highlights that monitoring and evaluation of regulations are not functioning effectively,” said Erlina Burhan.

Socialization of Energy Transition Issues with South Sumatra Journalists

Indonesia and other countries signed the Paris Agreement in 2015 in an effort to reduce greenhouse gas emissions and protect our Earth. This agreement has established a strong foundation for fighting climate change, with one of the main focuses being the energy transition, which refers to the transition from using fossil energy, which is limited and damages the environment, to renewable energy which is clean and environmentally friendly. Indonesia has a big responsibility to lead this change. In facing global climate change, energy transition is the key to ensuring the sustainability of Indonesia’s natural resources and economy.

In connection with this, the Institute for Essential Services Reform (IESR) held a Media Briefing event entitled “Energy Transition and IESR Study in Muara Enim Regency” on September 26, 2023. The Media Briefing event was attended by 18 journalists from various printed and online media in South Sumatra. IESR gave a presentation on the results of a study in Muara Enim Regency to provide a comprehensive picture of the impact of the energy transition in social and economic sectors.

Representative of the IESR Sustainable Energy Access program, Reananda Permono, explained that the Media Briefing activity was held to increase the insight of journalists in South Sumatra regarding the energy transition issue. Apart from that, IESR wants to bring journalists closer to competent sources regarding renewable energy issues by presenting four panelists from various backgrounds, namely the provincial government (ESDM Sumsel), district government (Bappeda Muara Enim), academics (Unsri), and CSO (HaKI).

“The energy transition cannot happen alone, but also needs to involve the active participation of society and various parties, such as journalists. By conveying accurate information, voicing diverse perspectives, and maintaining accountability, they help shape society’s views on energy and provide the necessary encouragement for stakeholders to move towards a cleaner and more sustainable future,” explained Reananda.

Social and Economic Analyst from IESR, Martha Jessica Mendrofa, explained that the global energy transition carried out by countries that import coal from Indonesia, such as China, India and Vietnam, will have an impact on the national economy since more than 70% of Indonesian coal production is exported. The economy of South Sumatra, with the second highest coal reserves in Indonesia at 9,345.57 million tons, will also be affected considering that the coal and lignite mining sector contributes 15.78% of the province’s GRDP in 2022. In this regard, IESR has conducted a study of the impact of the energy transition and economy in Muara Enim during 2021-2023. Muara Enim was the target of the study because it has become the top two coal producers in South Sumatra in the last five years, with production of more than 20 million tons per year.

“Based on IESR analysis, the mining sector in Muara Enim Regency does not have the highest multiplier impact in terms of income and employment, whereas the service, trade and agriculture sectors still have a higher impact on the economy. “Apart from that, the coal industry does not provide high added value to labor wages because companies capture a larger portion of income, the ratio is around 20% versus 78%,” he explained.

Head of the Energy Division of the South Sumatra Energy and Mineral Resources (ESDM) Department Dr. Aryansyah explained that the world energy transition trend would have an impact on domestic conditions. For this reason, his party has done several things to perpetuate the energy transition, such as issuing a special regional regulation for the development of the renewable energy sector, a gubernatorial regulation on electric-based vehicles, and a study of renewable energy in all districts/cities of South Sumatra.

“Currently, South Sumatra is an energy reservoir. We have an electricity surplus of 1,000 MW and that electricity is exported to other provinces such as Jambi and Bengkulu. There must be a generating source to replace that. We are ready for the energy transition. “For example, we have a mini hydro power plant for Pagar Alam’s electricity supply,” explained Aryansyah.

Representative of the Muara Enim Regency Bappeda, Fajrin Ulinnuha, said that his party had prepared the Muara Enim Industrial Area (KITE), to face the reduction in coal production in the future, the development of which had reached 80% as of June 2023. This industrial area covers the CPO (crude palm oil) business. or palm oil) and the coal downstream industry. Muara Enim also has a PLTP (Geothermal Power Plant) owned by Supreme and Pertamina.

“We need to ensure the availability of access to clean energy for all groups, especially in the electrification sector because the majority of electricity sources come from coal. Sources of funding are also an important issue as the energy transition continues.

There are many new projects, so large funds are needed. “Regional governments also need research and technology support from other institutions, as well as training for reliable human resources to be ready to face the energy transition,” said Fajrin.

Sriwijaya University development economics lecturer Dr. Muhammad Subardin reminded that the goal of development is to reduce unemployment and poverty. So, it is necessary to ascertain whether an industrial sector can lift the economy of a region or not. Subardin introduced the term Dutch Disease, where areas with high natural wealth tend to have low economic levels. Through his own research, Subardin succeeded in proving this condition in South Sumatra by comparing the economic conditions in “mineral districts” and “non-mineral districts”.

“I identified eight mineral districts in South Sumatra, including Muara Enim. Almost the entire Muara Enim area is included in the coal concession area. Based on research I conducted, it is proven that the economic level of mineral districts is no better than non-mineral districts in South Sumatra. “This proves that the mining industry cannot improve the welfare of a region because this industry is capital intensive, not labor intensive,” explained Subardin.

Executive Director of the Kita Forest Association Institute (HaKI) Deddy Permana stated that apart from economic problems, knowledge and information gaps are important in energy transition activities. This is where journalists can play a role in disseminating information to the wider community.

“There is often a gap in information between local communities and the elite because people only know the conditions that occur on the ground. For example, companies actually understand this energy transition trend because some of them are already focused on developing businesses outside of coal. “Another problem is that sometimes CSR funds are not channeled to posts that can support energy transition activities,” explained Deddy.