Just Energy Transition: Corporate Responsibility for Post Mining Environment and Economic Recovery

Jakarta,  24 January 2024 – Energy has become our primary need. Therefore, transitioning from fossil to renewables will impact the livelihood of every community. Institute for Essential Services Reform (IESR) believes in an inclusive and just energy transition for Indonesia, that will involve every single community in the process. 

Coal and mining industry had been the biggest economic contributor for coal producing regions. However, many have predicted the energy trends for coal will soon decrease and will also impact coal demands from Indonesia. 

“Coal and mining sectors do contribute to regional economic growth, especially through the revenue shared fund. Nevertheless, this sector also contributes to the negative impacts, not only to our environment, but also to the people. Coal corporations should be involved in a just transition, both in coal producing regions and other regions,” said Wira in his opening remarks in The Just Transition Dialogue: Identifying the private sector role within social and economic development, Jakarta (24/01).

According to Wira, corporations should play their role to reduce the negative impacts through reclamation, post mining activities and community development to ensure the continuity of economic activities after the coal mines have been closed. 

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal presented reclamation activities that took place since the exploration and production phase. In addion to that, post mining activities have been submitted since the production phase. He further explained several reclamation techniques, including land utilization, revegetation and land maintenance.  

“There are several activities to rehabilitate voids from mining activities, including slope stabilzation, mine void security, rehabilitation of water quality, water management and the maintenance of mine void,” said Sulistiyo.

Thriving to be one of the post mining activities case study, Yulfaizon, the General Manager of PT Bukit Asam Ombilin Mining Unit shared their experience to ensure the mining region can be useful for the environment and communities. Ombilin mine was the oldest mine in Indonesia, operating since 1892 during the Dutch Colonization and was retired in 2016.

Yulfaizon shared several post mining activities that were conducted by PT Bukit Asam, including: development of Sawahlunto Zoo, Establishing a research site of underground coal mining, and Lobang Mbah Soero Museum.

Driving the Energy Transition from the Sub-National Level

Semarang, 19 December 2023 – The annual Climate Summit (Summit) held in Dubai in November – December 2023 resulted in a number of global agreements, one of which was an agreement by 118 countries to transition and abandon fossil fuels. This agreement was born partly due to pressure from countries experiencing the impacts of climate change. 2023 was recorded as the hottest year in history.

In his opening speech for the Central Java Renewable Energy Acceleration Forum, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that the simplest thing to ensure the energy transition occurs is to add renewable energy capacity to the energy mix. To massively add renewable energy capacity requires significant investment costs and comprehensive enabling conditions.

“The complex and expensive energy transition can only occur if there are enabling conditions, including rules and regulations, support for public and private partnerships, community initiatives, and investment. Currently, to achieve the RUED target, regional funding capacity is still insufficient, so it is necessary to encourage investment,” said Fabby.

Head of the Central Java Province Energy and Mineral Resources Service, Boedyo Dharmawan, said that his party had contributed to achieving the target of 23% of the national renewable energy mix by 2025.

“In 2023, Central Java Province achieved a regional renewable energy mix of 21.2%. We will continue to encourage this capacity addition in the coming years. Apart from that, we also encourage energy conservation practices through energy and water saving movements, in government agencies and also in business entities, including energy audits,” he said.

Tavip Rubiyanto, Middle Expert Policy Analyst on Energy Substances and Mineral Resources, Directorate of SUPD I, Directorate General of Regional Development, Ministry of Home Affairs, highlighted the role of the entire OPD sector in matters of managing renewable energy in the regions.

“From the start, the ESDM Service had to coordinate with related agencies such as Environment, Transportation and Planning Services. So that RUED can be integrated into the RPJMD. “It does take effort to convince and provide understanding for Bappeda to support this EBT target, but that is what must be done,” said Tavip.

In terms of investment trends, Indonesia is becoming a global investment destination even though currently there are still several investment challenges. This was conveyed by Purwo Wiyatmanto, Head of Sub-Directorate for Promotion Strategy Analyst/ Middle Expert Investment Management, Ministry of Investment/BKPM.

“Investment in the new renewable energy sector is also increasing in demand. The increasing need for energy is also accompanied by an increasing share of renewable energy. Indonesia’s new renewable energy share of around 14.5% (below the ASEAN average) is a challenge in itself, but this is also an opportunity for growth,” he said.

From an industrial perspective, there is actually a need for clean electricity produced by sustainable energy sources. This need becomes stronger if an industry enters the global brand supply chain. Rudi Cahyono, Energy Carbon Manager, PT Selalu Cinta Indonesia (SCI) said this pressure was because his party was included in the supply chain of the footwear industry which is marketed globally.

“We are committed to using 100% renewable energy by 2030 as a consequence of our entry into the global supply chain. By 2024, the target is that we can reduce our carbon footprint by 99%,” said Rudi.

Sakina Rosellasari, Head of the Central Java Province One Stop Investment and Integrated Services Service (PMPTSP), added that her agency continues to actively promote projects that are ready to be developed by investors.

“Central Java is open to green investment, not only labor intensive, but also green economic management,” he said.

Apart from investment on an industrial scale, the use of renewable energy at the community level also needs to continue to be encouraged. Yanto, Head of Banyuroto Village (one of the Energy Independent Villages), Magelang Regency, stated that there is a lot of renewable energy potential on a small scale that can be utilized on a communal scale with the support of the local government.

“Future plans, we, the village government, are trying to increase the amount of biogas in the community, around 100 biogas digesters at least in the next 5 years and budget it in the (village fund) APBDes and are ready to collaborate with related agencies, campuses and other parties,” he said.

With 34 biogas digesters spread throughout almost the entire Banyuroto Village area, this digester has helped the welfare of the community since 2007, starting from cooking needs (reducing household cost), lighting without converters and zero waste from the results of the biogas process (solid and liquid fertilizer, bioslurry).

In 2023, the national government will make a number of important notes in the development of renewable energy. The revision of the National Energy Policy (KEN) document and the inauguration of the Cirata Floating PLTS are among the major points in the energy transition process this year.

Adimas Pradityo, Business and Commerce Development Manager, PLN Nusantara Power said that in 2024 there will be PLTS development in Central Java with a capacity of 140 MW in several locations including Batang and Pemalang. Adimas also shared PLN Nusantara Power’s experience in developing the Cirata floating PLTS.

“(One of) the challenges is explaining the PLTS concept to regulators. We really have a bottom up approach in licensing the development of the Cirata Floating PLTS,” he said.

IETO 2024: Reviewing Progress in the Energy Transition in Indonesia

Jakarta, 15 December 2023 – In the last three years, there has been a number of advances in the energy transition in Indonesia. Since 2020, the Indonesian government has begun to include the energy transition agenda in the government’s agenda.

At the launch of the annual flagship report Indonesia Energy Transition Outlook 2024, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) emphasized that this progress is important.

“In the last 3 years, Indonesia has attempted to consolidate renewable energy incentive policies. The results are not yet widely visible, but the energy transition issue is increasingly being discussed, has become an important issue, and is on the government agenda. The next stage, with a consolidated policy, Indonesia’s energy transition steps can be faster.”

Fabby added that in compiling the IETO 2024 report, the IESR team used four frameworks to analyze the development of the energy transition in Indonesia including (1) policy and regulatory framework, (2) funding and investment support, (3) implementation of technology, and (4) social impact and public support.

On the same occasion, Dadan Kusdiana, Secretary General of the Ministry of Energy and Mineral Resources (MEMR), stated that the consolidation carried out by the government at this time was not only carried out from a regulatory perspective, but was also carried out from a techno-economic one.

“In our opinion, one of the keys to the success of NZE (net zero emissions) in the power generation sector is the existence of a super grid that connects the islands in Indonesia,” said Dadan.

Indonesia’s decarbonization achievements during 2023 are considered less than encouraging, where in this one year the addition of renewable energy capacity only increased by around 1 GW, far from the 2021-2030 RUPTL target which set 3.4 GW target in the same period.

Alvin Sisdwinugraha, IESR Electricity Sector Analyst, said that Indonesia needs to immediately improve to pursue its decarbonization target, especially in developing renewable energy projects.

“The government can implement a number of strategies including reviewing the project preparation phase, increasing project attractiveness, improving the domestic renewable energy supply chain, and immediately improving electricity network infrastructure,” he said

Alvin also highlighted the biomass development strategy, which is closely related to the availability of land for the feedstock. Considering the limited availability of land, he said. It would be good if the use of biomass is focused on hard-to-abate sectors.

Apart from the electricity sector, other sectors that consume energy are industry and buildings. The industrial sector is the trigger for a significant increase in energy consumption in Indonesia, or around 81%. In 2022, there will be the addition of 5 commercial smelter units, which could have an impact on the potential to double energy consumption by 2023.

Fathin Sabbiha Wismadi, Energy Efficiency Analyst in Buildings, IESR, said that the existence of binding regulations would be an acceleration of energy efficiency.

“We have 6 things that can contribute to reducing energy intensity in Indonesia, first, electrification. Second, energy efficiency, third, regulations regarding energy consumption and energy efficiency, fourth, ecosystem and infrastructure such as charging locations, fifth, incentives and sixth, increase awareness of the Indonesian people,” said Fathin.

From the supply side, at the sub-national level, a number of provinces in Indonesia have completed General Regional Energy Plans (RUED). Anindita Hapsari, Agricultural Analyst, Forestry, Land Use and Climate Change IESR highlights the need for assistance in each region in accelerating the adoption of renewable energy.

“The capabilities of each region are different, requiring assistance in the form of regulations and schemes, both financial and non-financial,” said Anin.

Availability of financing is one of the issues that hinders the acceleration of renewable energy. One reason is that the perception of renewable energy investment is still relatively low. Martha Jessica, IESR Socioeconomic Analyst conveyed that investment in renewable energy generation is still considered a high-risk investment.

“The realization of investment in renewables is also still low. The trend is very far from ideal, in which this year and last year did not reach the target, namely the investment target of USD 1.8 billion in 2023, but last semester only around 30% was achieved,” she said.

The electricity sector is the leading sector in Indonesia’s decarbonization agenda, because it already has a decarbonization roadmap. However, targets in the electricity sector are still not easy to achieve.

His Muhammad Bintang, Energy Storage and Battery Technology Analyst, IESR, said there are at least three things that need to be encouraged to ensure the electricity sector decarbonization target is achieved.

“First, we need to build a clean energy ecosystem, secondly physical and non-physical infrastructure, and prioritize interventions that have been proved,” he said.

The Modal Share of Indonesia’s Transportation Requires Strong Push from the Government

Dekarbonisasi sektor transportasi Indonesia

Jakarta, 5 December 2023 – Since 2021 the transportation sector in Indonesia has been ranked as the second highest emitter, displacing industry. Many emissions from the transportation sector are caused by burning fuel, which is the main energy source for vehicles. With projected economic growth and development plans, it is predicted that emissions from the Indonesia’s transportation sector will continue to increase. As an effort to strengthen climate change mitigation actions, decarbonization of the transportation sector is important.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) in the webinar entitled “Dissemination of Indonesia’s Transportation Decarbonization Roadmap”, (5/12) emphasized that to ensure each climate change mitigation actions are in line with the Paris Agreement, emission reduction targets must be calculated not just based on percentages but also taking into account alignment with Paris targets.

“IESR carries out modeling to find policies and steps that can be taken to increase Indonesia’s climate change mitigation actions, especially in the transportation sector,” said Fabby.

The draft transportation decarbonization roadmap focuses on two scales, namely the national and regional scales (Jabodetabek).

IESR sustainable mobility analyst, Rahmi Puspita Sari added that the increase in private vehicle ownership, especially motorbikes, has been one of the factors causing increased emissions from the transportation sector.

“With various types of demand growth and the choice of mode still being private transport, this has an impact on greenhouse gas (GHG) emissions in the transportation sector. “Most of the GHG emissions come from passenger transportation (73%), and followed by land transportation (27%),” said Rahmi.

Fauzan Ahmad, member of the Tasrif Modeling Team, who participated in modeling the transportation decarbonization road map, explained one of the main findings from this simulation, namely that in the Avoid, Shift, Improve (ASI) scheme, which is quite common for transportation management, there is potential for reducing emissions up to 18% by avoiding travel by implementing a work from home (WFH) system.

“Actually, only 8% of the total workers can work from home, of this 8% potential, currently only around 1% of workers work from home. If this potential is maximized, we can reduce emissions even more by the number of trips avoided,” said Fauzan.

Fauzan also added that the choice to review transportation patterns in Jabodetabek was because Jabodetabek was considered as a unified area that interacts with each other.

Arij Ashari Nur Iman, a modeler from the Tasrif Modeling Team, added that with the current condition of the transportation system, the most effective solution for decarbonizing the transportation sector is to divide passenger loads into various modes (mode share).

“Electric vehicles will have a big impact on the goal of reducing emissions, but two conditions must be achieved to have an impact on a national scale, namely increasing the sales share of electric vehicles and creating a policy framework that supports the discard rate of ICE vehicles. Modal shifting to public transportation will be a sustainable solution in the context of fuel and resource use, but requires large initial investment,” explained Arij.

Professor of civil engineering at Gadjah Mada University (UGM), Agus Taufik Mulyono, stated that the Indonesian government still does not have the courage to create (transportation) policies that encourage share modes.

“This share mode issue must be regulated by the government in law, currently there is no law. This study is good, because when more advanced modes of sharing are deemed difficult, then both are still road transportation, but shared between spaces,” he said.

Agus also reminded of implementation challenges if the recommendations of this study were adopted in the form of policies or regulations.

In line with Agus, Alloysius Joko Purwanto, Research and Development Commission, Jakarta City Transportation Council also highlighted the use of public transportation which should be further encouraged.

“Current policies have the potential to cause contradictions, such as the electric vehicle incentive policy, which on one hand has the potential to increase private vehicle ownership rates and has the potential to increase traffic jams because the discard rate for ICE vehicles is still low,” said Joko.

The use of biofuels is also included in the transportation decarbonization roadmap modeling. Edi Wibowo, Director of Bioenergy, Ministry of Energy and Mineral Resources, said that the results of this study are broadly in line with Indonesia’s energy transition road map which will generally add renewable energy capacity to power plants and other sectors will also follow to shift to a more efficient system like such as biofuel.

“We (at the Ministry of Energy and Mineral Resources) continue to develop biofuels, currently we are testing the application of Biodiesel B40 and if the process goes smoothly in 2026 it will start to be used. This (development) effort is a form of real support for Indonesia’s energy transition plan,” said Edi.

Gonggomtua E. Sitanggang, Director, ITDP Indonesia emphasized the importance of public communication to raise awareness among the public. When the public has sufficient awareness and knowledge about the importance of a low-emission transportation system, it will be easier to involve and mobilize them to slowly reduce their dependence on the use of private vehicles.

“Apart from that, it is also important to look at the relationship between the national government and regional governments. What needs to be underlined is our laws and regulations relating to regional autonomy (otonomi daerah), where the one who has the budget and authority is the regional government, while transportation has not yet become one of the KPIs (key performance indicators) for regional leaders. As a result, the budget for the transportation sector is very minimal,” said Gonggom.

Promoting Massive Use of Solar Energy in Jambi

Jambi, 28 November 2023 – In the General National Energy Plan (RUEN) document, Indonesia targets 23% renewable energy mix by 2025. Until 2023, Indonesia has only achieved 12.5% renewable energy in its energy mix. In the Jambi Government Forum organized by the Institute for Essential Services Reform (IESR) in collaboration with the Jambi Province Energy and Mineral Resources Office (ESDM) (28/11), Yunus Saefulhak, Head of the Energy Policy and Hearing Facilitation Bureau stated that the National Energy Council (DEN) predicts that in 2025 Indonesia will only reach 17-19 percent of renewable energy in the national energy mix.

“The province’s role in pursuing predetermined renewable energy targets is important, in accordance with the potential in each region,” said Yunus.

Yunus added that Jambi does have quite a lot of fossil resources, but it can still seize various opportunities to develop renewable energy, such as the use of rooftop PV on government buildings.

Anjas Bandarso, Energy Policy Analyst from the Directorate General of Regional Development, Ministry of Home Affairs, in the same forum highlighted the limited authority of regional governments for energy matters.

“Whatever the sub-national government does, as long as there is no authority given to the regional government, it will just be a story. So the central government is looking for ways in which regions can develop new, renewable energy. “This can be realized with Presidential Decree 11/2023 concerning additional concurrent authority for regional governments,” said Anjas.

Nanang Kristanto, Sub-Coordinator for RUEN Implementation Monitoring, National Energy Council, added that whatever target is the government’s priority, whether for Net Zero Emission (NZE) or achieving renewable energy mix figures, local governments have an important role.

“Regional governments have an important role in pushing the energy transition agenda by maximizing energy transition derivative activities in their regions, funding support, preparing human resources to maintain decentralized generating installations, as well as socializing new renewable energy in districts and even sub-districts,” said Nanang.

Apart from having natural products such as oil palm plantations and coal producers, Jambi also has large renewable energy potential. Jambi Province is targeting a renewable energy mix of 24% by 2025, and this target is optimistic that it will be achieved because currently the Merangin-Kerinci hydroelectric power plant with a capacity of 350 MW is being built.

Jambi also has quite large solar energy potential, reaching 281.5 GW based on land suitability. Marlistya Citraningrum, Sustainable Energy Access Program Manager, IESR stated that solar energy could be an option that allows various parties to contribute to the availability of clean electricity.

“Installing rooftop PVs has a number of benefits, such as being a means of mutual cooperation in achieving energy mix targets and reducing emissions, providing clean electricity sources in various regions, opening up business/employment opportunities for local residents, as well as increasing the competitiveness of the solar industry/business in Indonesia,” he said.

Marlistya added that the public wants incentives for rooftop PVs users, which could be in the form of ease of licensing, or facilitation of financing by the government.

Digging Deeper into the Impact of the Energy Transition on Coal Producing Regions

Jakarta, 21 November 2023 – Indonesia is one of the largest coal exporting countries in the world. Coal production in Indonesia is concentrated in four provinces, namely East Kalimantan, Central Kalimantan, North Kalimantan and South Sumatra. The coal or mining sector is a significant component of the local economy of these coal producing regions.

The global energy transition agenda means that every country has the potential to reduce coal demand. This will be the main threat to coal-producing provinces if it is not addressed strategically.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in the Media Dialogue: Just Transition in Coal Producing Regions in Indonesia stated that the trend of decreasing coal production will be felt starting in 2025 based on IESR projections.

“Starting from this hypothesis, we try to look at four aspects of the energy transition in coal producing areas, namely the employment sector, local communities who are economically dependent on the mining industry, regional income and expenditure budget (APBD) revenues, and the regional economy as a whole,” said Fabby.

For this reason, Fabby emphasized the importance of preparing coal producing regions to make the transition because there will be a significant economic impact if the transition process is not prepared now.

Syahnaz Nur Firdausi, IESR climate and energy analyst, explained that one of the main findings of this study was the significant contribution of the mining sector to regional income.

“The mining sector’s contribution to GRDP is 50% in Muara Enim and 70% in Paser. However, this large contribution is not directly proportional to the added value to labor wages or other multiplier effects. In other words, the profits from the mining sector are mostly enjoyed by companies, not the surrounding community,” said Syahnaz.

Martha Jessica, social and economic analyst at IESR, added that there is a gap in understanding between the community, local government and mining companies. Mining companies are aware of the trend to switch to renewable energy, and they are indeed planning to transition.

“There needs to be communication between companies, local governments and communities regarding the company’s transition plans and new business models so that local governments and communities can prepare,” said Martha.

The findings of the IESR study were agreed by representatives of the Muara Enim and Paser regional governments. Head of Muara Enim Regional Planning Agencies, Mat Kasrun, stated that his regional economic growth was exclusive.

“Economic growth in Muara Enim is around 8.3% in 2023, but the extreme poverty rate is still at 2.9%. This means that high economic growth is only enjoyed by a handful of people,” he said.

Conditions in Paser district are more or less similar where the contribution of the mining sector to regional income is very huge. Rusdian Noor, Secretary of Regional Planning Agencies for Paser district, stated that his region needs special assistance to face this era of energy transition.

“75% of Paser district’s income in 2022 contributed by the mining and agricultural sectors, and much of the GRDP spending allocation is for infrastructure development. If we immediately switch to clean energy and the mine is no longer operating, we will no longer be able to carry out development. Thus, we need special assistance so that with this transition, we don’t lose (economic, ed) power,” said Rusdian.

Reynaldo G. Sembiring, Executive Director of the Indonesian Center for Environmental Law (ICEL), responded to this study by underlining the limited authority of regional governments in energy matters. For this reason, a comprehensive approach is needed to ensure the transition process runs fair and smooth.

“A just transition is a transition that supports ecosystem recovery and repair. This energy transition could be a momentum for policy harmonization between the national and sub-national government,” he said.

Nikasi Ginting, Secretary General of the DPP FPE Confederation of All Indonesian Trade Unions, highlighted the gap in the number of workers needed from this energy transition.

“An example of what happened in Sidrap in 2013, when the wind power plant construction process required up to 4,480 workers, but when it was completed and during the operational phase, only hundreds of workers were needed. The fate of those thousands of workers must be a common concern,” she concluded.

The complete report of “Just Transition in Coal Producing Regions in Indonesia” can be downloaded here.

Reflection on Regional Government Authority for Energy Transition at the 2023 Regional Energy Forum

Jakarta, 7 November 2023 – The role of regional governments in accelerating the energy transition is expected to become increasingly significant. The Ministry of Home Affairs as the parent body that facilitates regional governments is trying to facilitate this need by issuing Presidential Regulation (Perpres) No. 11 of 2023 concerning additional concurrent government affairs in the energy and mineral resources sector in the renewable energy sub-sector.

It is hoped that the existence of a legal umbrella for regional governments will provide additional authority for regional governments and will have a linear impact on accelerating the energy transition.

Sri Retnowati, Young Expert Policy Analyst at the Directorate of Synchronization of Regional Government Affairs I, Ministry of Home Affairs, emphasized that with the issuance of Presidential Decree 11 of 2023, it is hoped that regional governments will have more freedom in taking program initiatives.

“Limited authority is closely tied to budget limitations, so through policy instruments, we give more authority to regions,” said Retno.

Retno added that there are still complaints that Presidential Regulation No. 11/2023 is still not effective, especially regarding fiscal capacity that cannot yet be used. Retno revealed that this made several regions choose not to immediately implement Presidential Decree 11/2023.

Ariansyah, Representative of the South Sumatra ESDM Service, explained the division of authority for industrial licensing. If all industrial permits are gathered in the central government, it will be difficult for local governments to monitor and take firm action against industrial players who do not support the government’s agenda, such as using less efficient energy or not implementing energy conservation practices.

Highlighting the formulation of the Draft Government Regulation on National Energy Policy (RPP KEN) which is currently being worked on by the National Energy Council, Ariansyah views the need for provisions regarding energy conservation to support the achievement of regional energy mix.

“In the draft of the new RPP KEN we see that the energy conservation point has been removed. If this applies, South Sumatra’s renewable energy mix will decrease, because South Sumatra’s renewable energy mix, which currently reaches 23%, is mostly contributed by industries that we ask to carry out conservation. energy,” said Ariansyah.

Yunus Saefulhak, Head of the Energy Policy and Conference Facilitation Bureau, National Energy Council (DEN) on the same occasion said that the big goal of the revised energy policy in Indonesia is to increase energy security while providing energy at affordable prices.

“Apart from that, (the revised KEN-ed) also aims to meet rational energy needs to achieve high human and economic development index targets as a developed country and realize decarbonization and energy transition to reach peak emissions before 2045 and NZE in 2060, said Yunus.

Capacity Building for Sub National Government in the Era of Just Transition

Jakarta, 26 October 2023 – The energy transition currently being discussed will have a significant impact on the use of fossil fuels such as coal. Various countries have committed to reducing the use of fossil fuels as one of the key actions in their energy transition. Fossil producing countries such as Indonesia need to be aware of this, because there will be a decrease in demand from the global market.

South Sumatra and East Kalimantan are the largest coal producing areas in Indonesia. Coal has become a key component in the economic growth of both provinces. In 2022, coal will contribute 30-35% to East Kalimantan’s GRDP and 15% in South Sumatra. These two provinces need a special strategy to get rid of economic dependence on coal. Stefan Boessner, a researcher at the Stockholm Environmental Institute (SEI) in the “National Workshop on a Just Transition: Building Government Capacity for a Sustainable Coal Transition in Indonesia” said that economic alternatives are available and can be developed.

“There have been examples of a region successfully diversifying its economy. The government will need capacity building support from the central government,” he said.

Stefan added that the Indonesian government has started to create a policy framework that will become the legal basis for the energy transition in Indonesia, such as a net zero emission target, regulations on the economic value of carbon, as well as a roadmap for early retirement for coal-fired power plants.

In preparing for this transition, development, economic and energy planning are very important. Involvement of various elements that will be affected by the transition become crucial.

Martha Jessica, Social and Economic Analyst at the Institute for Essential Services Reform (IESR) explained that one of the initial findings of the study currently being conducted by IESR is that there is a capacity gap between the central government and regional governments so that this transition planning is not considered optimal.

“To have a proper planning process, various superior/adequate capacities are needed by the government as the initiator (early actor) and catalyst of the energy transition,” said Martha.

Elisa Arond, SEI researcher, added that regional governments can play a crucial role in supporting a just transition agenda. To do all this, of course local governments will need a certain amount of support from the central government.

“They (sub-national governments-ed) need financial support from both the central government and international institutions, inclusive dialogue involving actors with diverse backgrounds, funding strategies, and transparent access to information about mine closure plans,” explained Elisa.

Tavip Rubiyanto, Associate Expert Policy Analyst as Coordinator of Energy and Mineral Resources, Directorate General of Regional Development, Ministry of Home Affairs, explained why currently the energy transition is not yet underway in the regions because regional authority is still limited.

“For this reason, the Ministry of Home Affairs has initiated the preparation of Presidential Decree no. 11 of 2023 to strengthen regional authority in carrying out government affairs in the ESDM sector, especially in the renewable energy sub-sector,” he said.

Brilian Faisal, representative of the South Sumatra Province Planning Office Bappeda, expressed the hope that the concept of a just energy transition must be related to access and infrastructure.

“In our regions we have not yet made derivative regulations from various regulations related to the energy transition because to make them we need to revise the RUED, which most of the authority is mostly in the MEMR sector,” said Brilian.

Wira Agung Swadana, IESR Green Economy Program Manager stated that this workshop was the right moment to prepare the RPJMN and RPJMD which must include the coal transition agenda.

“This transition requires several things such as planning and funding and must be included in the regional development agenda so that it can receive funding from the government,” said Wira.

We Don’t Have a Choice, We Have to Achieve Carbon Neutrality

Jakarta, 25 October 2023 – Industry is the main driver for economic growth and the largest sector to stimulate technology advancement. Industrial-scale economic activity has already transformed the global economy since its peak. Unfortunately, the tremendous economic growth must be paid for by the high greenhouse gas emissions transmitted. 

For a while, people are trying to figure out a way to minimize the GHG emission from the industrial process. This effort will be a meaningful step in the race to achieve net zero emission in this century as it is mandated by the Paris Agreement.

Deon Arinaldo, Energy Transformation Program Manager at the Institute for Essential Services Reform (IESR) during the Dissemination Workshop of Indonesia Industry Decarbonization Roadmap and Policy Recommendation on Wednesday 25th October 2023 said that IESR is currently looking into five big industries i.e cement, pulp & paper, steel, textile, and ammonia and develop a decarbonization roadmap. 

“We are in the beginning of decarbonizing our industry sector, and we need more collaboration between stakeholders as there are just so many stakeholders involved in the industry sector,” Deon said.

Farid Wijaya, senior analyst IESR later explained that Indonesia has initiated a green industry policy framework, yet it still needs more improvement to make it more robust and contextual. 

“The five industries that we are looking at are highly motivated to decarbonize their business process, but currently there are still challenges such as the cost and policy framework that still need to be improved,” explained Farid.

Realizing that the industrial process requires a vast amount of energy from electricity to decarbonize the industry sector, it is a must to also decarbonize the power sector. 

“(The availability) of policies that support industry to connect to renewable power or develop its own renewable electricity are very important,” said Hongyou Lu, Energy and Environment Technology Researcher, LBNL.

Lu added that industry decarbonization is inevitable but multifaceted and it has potential to grow the local economy, reduce air pollution and make the commodity more competitive in the global trade.

Stephane de la Rue du Can, Energy-Environmental Policy Research Scientist, LBNL then added that there should be a complete package of policy reform to decarbonize the industry sector, including (1) industry GHG reduction targets and planning, (2) innovation, (3) electrification and fuel switching, (4) energy efficiency, (5) material efficiency and circular economy, and (6) workforce and local communities.

Endra Dedy Tamtama, Energy Conservation Monitoring Coordinator, Ministry of Energy and Mineral Resources shares that currently energy efficiency practices done by some industries are those either no cost or low cost. Things related to retrofitting utilities that require significant capital cost are not yet done.

“Because currently there is no fiscal incentive is given to industries once uses an energy efficient infrastructure, any changes that require significant cost, although it will save more energy, has not fully tapped,” Endra said.  

Muhammad Akhsin Muflikhun, Technology Expert of PSE UGM, emphasized the importance of technology readiness to support industry decarbonization such as the utilization of hydrogen.

“Hydrogen has been our focus for energy storage technology. We try to compare hydrogen storage vs. batteries, so far there is still a huge gap in energy efficiency once it is stored in a battery compared to once it is kept in a hydrogen storage system,” he said. 

Sri Gadis Pari Bekti, Functional Intermediate Expert, Ministry of Industry agrees that technology will be a game changer during the industrial decarbonization. The emerging technology such as CCS and CCUS, and hydrogen are expected to be able to fulfill energy needs in the industry.

“As part of our support to industry, we facilitate certification for industry. To some extent, the government can help the capacity building and certification process,” Bekti said.

In order to smoothen the industry decarbonization the availability of green financing is crucial.

PT PLN, as the main energy supplier in Indonesia through their Bioenergy manager, Yudas Agung Santoso, said that currently they are still mapping the energy needs especially from industry as in the near future some big industries such as nickel smelter will come.

“For industry (and those who need) currently, we have a Renewable Energy Certificate (REC) program, in which we dedicate a renewable power generator to supply those who subscribe the certificate so they can get green electricity,” he said.

Nan Zhou, Energy Environmental Policy Senior Scientist, LBNL, in her concluding remark highlighted the importance for Indonesia to take the lesson learnt from other countries who start decarbonizing its industry earlier. 

“We don’t have a choice; we have to achieve carbon neutrality. So, we must do any possible action to make it happen,” Zhou said.