Reflection on Indonesian Leadership in ASEAN 2023

Jakarta, 20 October 2023 – The transfer of the ASEAN leadership baton to Laos marks the end of Indonesia’s leadership in the ASEAN region. A number of milestones such as cooperation with external non-ASEAN parties, as well as several opportunities for cooperation between ASEAN member countries are a good note. However, this good record has not been matched by an increasing commitment to curbing the rate of climate change, the impacts of which are increasingly being felt.

In a Public Discussion entitled “Reflecting on Indonesia’s Leadership in ASEAN 2023: Towards a Regional Frontrunner in Climate and Energy Transition Issues”, Wira Agung Swadana, Green Economy Program Manager of the Institute for Essential Services Reform (IESR), stated that during Indonesia’s leadership period, cooperation or action was agreed upon by ASEAN member countries are still mainly infrastructural.

“The results of the 2023 ASEAN Summit and other energy and climate-related meetings can be seen that there is still a lack of focus on renewable energy issues. “For example, there is no joint commitment to increase the development of a cleaner solar energy or hydropower ecosystem,” said Wira.

Apart from the ecosystem for renewable energy, Wira also said that several issues had ‘eluded’ the attention of ASEAN high-ranking officials, such as the issue of critical minerals and low-carbon and sustainable electric transportation.

Executive Director of the Indonesia Research Institute for Decarbonization (IRID), Moekti Handajani (Kuki) Soejachmoen, explained the phenomenon of the high contribution of emissions from the energy sector in ASEAN countries.

“Energy is an engine for development, so if development still uses energy procurement patterns with a business-as-usual scheme (high fossil-ed), emissions will definitely increase significantly. On the one hand, all ASEAN member countries need to carry out development but must control their emissions,” explained Kuki.

Kuki then added that the role of technology is needed to enable development to continue and keep the amount of emissions released low. The use of this technology will have financial consequences.

By looking at this problem, Kuki emphasized that it is important for ASEAN as a regional unit to develop a comprehensive strategy to achieve the NDC targets for each country and encourage the achievement of Net Zero Emissions. From this strategy, mitigation actions can be grouped that can be carried out alone, those that require international financial support, those whose emission reduction units can be sold and those that require additional purchase of emission reduction units.

IESR Energy and Climate Diplomacy Coordinator, Arief Rosadi, highlighted ASEAN’s tendency to seem slow in taking strategic diplomatic positions, thus creating various gaps such as institutional gaps, ambition gaps, implementation gaps and participation gaps. According to him, Indonesia can use its position to strengthen its climate and energy diplomacy and contribute to narrowing gaps in ASEAN.

“Increasing climate ambition in strengthening Indonesia’s climate and energy diplomacy strategy is a modality for Indonesia to encourage the same thing in other countries at regional, bilateral and multilateral levels. Apart from that, fixing the gap can be done by encouraging the resolution of the gap at the regional level in ASEAN’s internal processes,” added Arief.

Energy Conservation Actions Still Become Homework for Indonesia’s Decarbonization

Jakarta, 12 October 2023 – Energy conservation is one of the decarbonization efforts that can be carried out with minimal costs and relatively less effort than building new power plants. Unfortunately, this effort is still the second priority in Indonesia’s decarbonization agenda.

In order to encourage the acceleration of energy conservation actions, the government issued Government Regulation no. 33 of 2023 which regulates energy conservation in various sectors. Tavip Rubiyanto, Head of ESDM Subdivision, Directorate of Synchronization of Regional Government Affairs I, Directorate General of Regional Development, Ministry of Home Affairs, explained that Indonesia’s energy needs will continue to increase along with the increase in population and per capita economic growth.

According to him, the Indonesian government has made an international commitment to limit the release of greenhouse gasses and continue to increase renewable energy capacity. However, this plan is still hampered by the large initial investment.

“In PP 33/2023, we give a mandate to local governments, business entities, communities and the private sector to take part in energy conservation actions,” said Tavip in a focused group discussion held by the Institute for Essential Services Reform (IESR) on Thursday, October 12th 2023.

Tavip added that the regulation of authority for regional governments is expected to provide sufficient space for regional governments to propose and implement energy conservation programs.

Coordinator of the Technical Guidance and Energy Conservation Cooperation Group, Ministry of Energy and Mineral Resources, Hendro Gunawan, explained that it is important for an entity to carry out energy management.

“For the private and industrial sectors, we have even reached certification such as ISO 50001 (industrial management) because apart from improving branding, it is also a kind of requirement to continue to exist in the industry,” said Hendro.

Regarding the basis for implementing energy management which is still voluntary, Iwan Prijanto, chairperson of the Green Building Council Indonesia (GBCI), emphasized the importance of incentive schemes for building owners who will carry out green building certification. Especially for office building owners as the highest contributors to greenhouse gas emissions.

“I actually feel sad, because the first building was certified in 2011, and additions are very slow. “The absence of incentives or disincentives for building owners is one of the reasons for the slow growth of green buildings,” explained Iwan.

Dyah Perwitasari, Junior Planner at the Ministry of Bappenas, who was present at the discussion, also highlighted the standards for successful energy conservation that need to be considered together.

“Apart from achieving standards that we need to think about again, communication or outreach about energy savings to the public is also very important, for example energy saving label indicators on electronic devices used in the household,” he said.

Arrange a Strategy to Get Around the Impact of Coal Power Plant Shutdown

Jakarta, 27 September 2023 – Indonesia’s increase in climate commitments in the Enhanced Nationally Determined Contribution (E-NDC) brings a number of implications, including plans to stop coal-fired power plant operations early to reduce emissions. This plan has several impacts, including a decrease in the income of coal-producing regions as well as national income, the potential for massive layoffs, as well as other socio-economic impacts.

In a hybrid seminar, entitled “Sunset CFPP and the Coal Industry: Reviewing Multisectoral Direction & Impact in a Just Energy Transition” (27/9), Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) explained that the energy transition agenda for both Indonesia and the destination countries for Indonesian coal exports will have an impact on a number of aspects in Indonesia.

“There are three factors that can be seen from the energy transition in coal producing areas: the link between the local economy and coal, the readiness of existing human resources, and alternative economic options that can be developed in that area, and how mitigation plans can be prepared,” said Fabby.

In the presentation material delivered by Ilham Surya, IESR Environmental Policy Analyst, it was explained that the role of the coal industry in the economy of coal-producing regions is quite significant.

“The GRDP contribution is between 50% and 70% in Muara Enim and Paser, but the multiplier effect is not that big,” said Ilham.

Within the scope of national policy, the Ministry of PPM/Bappenas is currently preparing a Long Term Development Plan (RPJP), one of the points  is economic transformation.

“The energy transition is part of the green economic transformation, so in the latest draft of RPJP, what we meant by transition is not only seen from the energy sector,” explained Nizhar Marizi, Director of Energy, Mineral and Mining Resources, Bappenas.

Grita Anindarini, Deputy Director for Programs, Indonesia Center for Environmental Law (ICEL), emphasized the important role of the policy framework and implementation of various existing regulations.

“A just energy transition requires a very big policy transformation on employment, environment, energy, and financing. Currently there are several policy regulations regarding the energy transition, but their implementation still faces various obstacles,” explained Grita.

Haris Retno Susmiyati, Lecturer at the Faculty of Law, Mulawarman University, admits that economic dependence on coal commodities is not a good thing. She said that in 2015, when coal prices fell drastically, the economy of East Kalimantan also slumped.

“By regulation, the company’s obligation to pay royalties to the government is only 13.5% of that figure. The regional government only gets 5%, so it is not the coal producing regions that actually enjoy the profits from coal,” said Retno.

Having a similar context to East Kalimantan, Jambi province is also starting to prepare for transition. Ahmad Subhan, Head of Economy and Natural Resources, Bappeda Jambi, said that even though it is not the main coal producing area, the contribution of the coal sector to GRDP is quite significant.

“Coal is indeed significant for supporting the economy, but if there are substitutes that are more relevant to regional conditions, they can be explored further. For this transition, we in Jambi province are supportive but not drastic. We are also waiting for substitutions for economic transformation,” said Ahmad.

Energy Transition in the Midst of Coal Mining Siege

Samarinda, 7 September 2023 – The energy transition is an unavoidable inevitability. Current world trends show that the earth is getting hotter and to limit the rise in earth’s temperature, structured solutions are needed, including the energy transition, which involves various sectors and multi-stakeholders.

Society and communities are one of the key actors in the energy transition who can initiate the development of renewable energy to answer their energy needs. 

The Institute for Essential Services Reform (IESR) in collaboration with the Clean Affordable and Secure Energy for Southeast Asia (CASE) project and the Department of Energy and Mineral Resources (ESDM) of East Kalimantan Province held the ‘Jelajah Energi Kaltim’ activity to see directly and closer to the development of various initiatives for using renewable energy in East Kalimantan Province.

This series of activity began with a workshop, followed by visits to a number of places. On the first day of the visit, the group saw PV installation at the Pertamina Hulu Mahakam office, TPAS Manggar, and Kariangau Coal plants in Teluk Balikpapan.

The “Jelajah Energi Kaltim” trip continued on the second day starting with a visit to Mulawarman Village to see how the community uses livestock manure to make biogas. The biogas in Mulawarman village is home-sized biogas digester aid from the East Kalimantan Province Energy and Mineral Resources Service.

Mulawarman Village is in Tenggarong Seberang District, Kutai Kertanegara Regency, East Kalimantan. Coal mines surround Mulawarman Village. This condition made the residents of Mulawarman village ask to be relocated.

The East Kalimantan Regional Government is starting to pay attention to Mulawarman village to help the economy of Mulawarman village residents, one of which is by developing livestock groups and providing assistance with biogas installations.

In 2021, the East Kalimantan ESDM Service provided biogas installation assistance to stock farmer group (which had been surveyed) in the village, totaling 20 farmers. This means that people do not have to pay monthly fees for using this biogas.

People who use biogas immediately feel positive impacts, such as savings in costs for cooking fuel. Zaenal Abidin, a resident of Mulawarman Village, who is also a beneficiary of the biogas installation assistance, said that previously, to meet their cooking needs, their family could use up to 4 pieces of 3 kg LPG in one month. Now, he can cut his LPG needs to just 1 piece of 3 kg LPG.

“For everyday cooking (biogas, ed.) is enough. But if there are social events such as recitations, we still have to use LPG gas,” said Zaenal Abidin.

Zaenal also added that the cooking process using biogas fuel takes a little longer than using LPG. This biogas installation assistance is also accompanied by the transfer of knowledge about technology to the stock farmers. So that they can detect technical obstacles that could potentially arise from using this home biogas installation.

The Group continued their journey to Menamang Kanan Village, Muara Kaman District, Kutai Kartanegara Regency. The journey to Menamang Kanan Village takes almost 3 hours with heavy dusty road conditions which result in very limited visibility.

In the past year, residents of Menamang Kanan Village have succeeded in enjoying electricity from a centralized PV installation assisted by the East Kalimantan Energy and Mineral Office with a capacity of 87 kWp. This solar PV supplies basic electricity needs for 600 families in Menamang Kanan Village.

Previously, the residents of Menamang Kanan Village depended on the electricity supply from the diesel generator provided by one of the company’s CSR programs operating around the village. For the operation of this diesel generator, 70 liters of fuel is needed every day to provide electricity for 4 hours.

Zapir, Village Secretary of Menamang Kanan, explained that although electricity from solar PV has increased access to electricity in Menamang Kanan Village, its utilization is still limited to lighting and basic electronic equipment.

“So, it’s just for lighting, and maximumly a fan. It’s still not possible for TVs or refrigerators,” said Zapir.

Zapir hopes that the capacity of this communal solar PV can be increased in the future so that village residents can use electricity for productive activities that have the potential to bring economic value. Not limited to just lighting.

Improving Indonesia’s Energy Transition Strategy

Jakarta, 13 September 2023 – The energy transition is increasingly inevitable as global climate commitments strengthen. The energy sector is one of the sectors highlighted because of its intense emissions. More or less the same thing also happened in Indonesia. The Indonesian Government’s commitment to achieving net zero emission status is accompanied by a set of strategies and plans, one of which is intervention in the energy sector, especially the power generation.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform, explained that the electricity sector is a low-hanging fruit sector or a sector that is quite easy to decarbonize.

“A successful transition in the electricity sector will accelerate the transition in other sectors such as industry and transportation,” explained Fabby in a webinar entitled “Preparing for Indonesia’s Energy Transition & Anticipating Its Implications and Launching the Indonesia Energy Transition Dialogue”.

The Energy Transformation Program Manager, Institute for Essential Services Reform, Deon Arinaldo, added that the electricity sector has a solid enough supporting infrastructure to make the transition.

“The electricity sector provides wide-open access to decarbonization opportunities. “The technology is already available, there is potential for international funding such as JETP, there is already a supporting policy framework such as Presidential Decree 112/2022,” said Deon.

This is in line with the strategy prepared by the Ministry of Energy and Mineral Resources (ESDM). Gigih Udi Atmo, Director of Energy Conservation, Ministry of Energy and Mineral Resources stated that the government’s priority is also the electricity sector.

“In the road map that we have drawn up, the power sector will have zero emissions before 2060, between 2057-2058. The rest is from the hard-to-abate sectors, such as industry and transportation,” he said.

The existence of the will and policy support for the transition is a good thing, but this is not enough by Adam Adiwinata, ASEAN Energy Transition Outlook Consultant, IRENA.

“The effectiveness and consistency of policies must be considered so that the energy transition occurs massively and accelerates. “Indonesia must be agile in looking at a policy, whether the policy can be improved or implemented to support the energy transition in Indonesia,” explained Adam.

A consistent policy framework is one of the enabling environment points to encourage massive penetration of renewable energy. This was stated by economist Faisal Basri, who is also a member of the Indonesia Clean Energy Forum.

“Often, Indonesia’s enabling environment makes it difficult to obtain funding. Policies that are prone to change make institutions or countries hesitate to give money to Indonesia,” said Faisal.

Faisal also added that commitments such as the implementation of a carbon tax which continue to be postponed show Indonesia’s weak commitment to the energy transition.

New Hope in Menamang Kanan

Samarinda, 7 September 2023 – Menamang Kanan Village is located in Muara Kaman District, Kutai Kartanegara Regency. It takes around 4 hours to travel from the city of Samarinda via road to reach this village. Until 2022, the people of Menamang Kanan rely on diesel generators from a company’s CSR (Corporate Social Responsibilities) program to fulfill their access to electricity. Diesel will light up and be a source of lighting for residents for 4 hours every day.

The hope of having longer and better quality access to electricity is slowly starting to come to light in 2022. Through the East Kalimantan Regional Revenue and Expenditure Budget (APBD), Menamang Kanan village received centralized solar PV installation of 87 kWp. Electricity from this PV is distributed to 600 families.

Even though we already have other energy sources, unfortunately the quality of electricity produced is only sufficient for lighting and basic electronics.

“Because we only produce 700 watts/day and it has to be used communally, so it can only be used for lights and fans at most, It can’t be used for TV or cooking rice, let alone the refrigerator,” explained Zapir, Menamang Kanan Village Secretary.

Zapir added that the people of Menamang Kanan hope to increase the electricity capacity they receive so that people can use electricity for other, more productive activities. Not limited to lighting.

The Institute for Essential Services Reform (IESR) believes that the quality of electricity received by society needs to improve because if the electricity they receive is of low quality, society will not be able to carry out productive activities that can improve the economy. Decentralized power plants such as solar PV need to increase massively to supply electricity in rural areas.

Regional governments can utilize their authority in developing renewable energy as regulated in Presidential Decree Number 11 of 2023, in order to improve the quality of people’s access to electricity.

“This additional authority certainly needs to be followed by local government initiatives to design programs that also address the need to provide energy access, especially with local renewable energy. This principle of energy decentralization enables independent energy efforts with the involvement of many parties and is expected to improve community welfare with sustainable energy access,” explained Marlistya Citraningrum, Sustainable Energy Access Program Manager, Institute for Essential Services Reform (IESR) in the webinar “Energy Transition in Equity National Electrification”.

Decentralization of energy by utilizing renewable energy sources will open up opportunities for wider and participatory exploration of utilization so as to facilitate access to electricity and increase the reliability of its quality.

Synergistic Movement is Crucial for East Kalimantan’s Energy Transition

Balikpapan, September 5, 2023 – The Institute for Essential Services Reform (IESR) is collaborating with the Clean, Affordable and Secure Energy in Southeast Asia (CASE) program and the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province to organize a series of East Kalimantan Energy Exploration events—the first workshop of this series held on Tuesday, September 5, 2023.

Director of Electricity, Telecommunications and Information Technology, Ministry of National Development Planning/Bappenas, Rachmat Mardiana, explained that renewable energy development could serve as a new economic driver in the Kalimantan region through the green and blue economy. This can be achieved by utilizing biodiesel, solar power, and other alternative energy sources already spread throughout the province. According to Rachmat, regional governments can support through the General Regional Energy Plan (RUED) under regional authority in developing renewable energy as stated in Law 23/2014 concerning regional governments.

“There are several regional issues in Kalimantan that need to be addressed. These issues include the dominance of fossil energy in electricity production, with only a small amount of renewable electricity generation. In addition, the development of the Indonesian capital city (IKN) requires the provision of renewable electricity. The electricity infrastructure in the region also needs attention as the Kalimantan interconnection system is not yet fully connected, and the extra high voltage transmission has not been connected to evacuate power generated throughout the region,” said Rachmat at the opening of the East Kalimantan Energy Exploration series.

To overcome this regional issue, continued Rachmat, implementing various policy measures that include creating small-scale, isolated grids (referred to as isolated mini-grids), providing eco-friendly and intelligent IKN electricity, developing smart electricity networks, and integrating electricity supplies with industries through the use of primary energy sources, encouraging the use of renewable energy, and developing interconnections between regions.

Direktur Ketenagalistrikan, Telekomunikasi, dan Informatika, Kementerian PPN/Bappenas, Rachmat Mardiana

A workshop session on the energy transition followed the event. Irwan Sarifuddin, the Coordinator of the Clean Energy Hub at IESR, mentioned the importance of a just energy transition. According to Irwan, regional governments need to consider the well-being of workers in coal-fired power plants (CFPPs) and those in supporting areas to transition successfully.

“We must make preparations to ensure that people are not left behind during the transition to energy. In 2022, IESR conducted a study called “Redefining Future Jobs,” which revealed that the profits gained by coal-producing regions are not proportional to the losses experienced by the local population. For example, losses from land degradation and health risks,” explained Irwan.

Agreeing with Irwan, the Energy Transition Advisor from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Indonesia, Yudiandra Yuwono, emphasized that in carrying out the energy transition, it is necessary to ensure the welfare of society. However, the energy transition process has many elements with various systemic constituencies.

“Some of the challenges of the energy transition include technological readiness, policy support, and acceptance by society itself. For this reason, all stakeholders play an important role in the energy transition,” said Yudiandra.

Furthermore, the workshop related to co-firing and biogas from representatives of IESR and the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province has been held. Rahmat Jaya Eka Saputra, The Energy Transformation Staff of IESR, said PLN implemented co-firing technology at 36 CFPP locations out of a target of 35 locations during 2022. The PLN co-firing program produced 575.4 GWh of clean energy and reduced carbon emissions by 570 thousand tons of CO2 by utilizing 542 thousand tons of biomass.

“There are several advantages to using biomass as a co-firing fuel. Emissions can be significantly reduced by replacing a proportion of coal with biomass (usually between 20% and 50%). Additionally, carbon dioxide balancing can be achieved by planting new trees that absorb the carbon dioxide produced by the co-firing process. However, it is important to note that co-firing is considered a “transitional” fuel and cannot be relied upon as a long-term solution for meeting our energy needs,” explained Rahmat.

Sonny Widyagara Nadar, Young Expert Policy Analyst for the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province, stated that the potential for biomass in East Kalimantan is around 936.14 MW and biogas is 150 MW. Thus, in total, the bioenergy potential is around 1,086.14 MW. With this potential, several uses of biomass and biogas have been carried out—for example, rice husks as fertilizer or biomass. There is also the use of biogas from livestock manure.

“There are several challenges in utilizing biogas from livestock manure, namely reaching the farthest areas that experience a shortage of LPG, increasing the scale of biogas for communal livestock, and downstream the use of biogas for community economic use,” explained Sonny.

Workshop Jelajah Energi Kalimantan Timur

In the next session, Fadhil Ahmad Qamar, CASE Program Staff of IESR, said that It is possible to transform palm oil mill effluent (POME) into electrical energy, which can be used as an alternative energy source. Fadhil estimates that 14 million hectares of land can produce 146 million tons of POME annually, which can then be processed into 35 million tons of crude palm oil (CPO) and 28.7 million tons of liquid waste. POME is typically treated in open ponds, undergoing anaerobic digestion and generating biogas.

“Using biogas from POME can significantly reduce greenhouse gas (GHG) emissions, such as 26 million tonnes of CO2eq/year if 100 factories utilize it. However, financial and policy support is necessary to create a favorable investment climate to promote biogas from POME,” said Fadhil.

The first day of the East Kalimantan Energy Exploration activities ended with a workshop on preparing articles for the energy transition. During the workshop, Kurniawati Hasjanah, Communications Staff of IESR, highlighted the importance of using critical terms such as energy mix, carbon, and alternative energy in reporting on the energy transition. The coverage of the energy transition mainly focuses on reducing the carbon footprint in energy consumption and promoting the use of alternative energy. Journalists and citizen journalists can benefit from understanding these concepts to provide accurate and informative coverage.

“When journalists cover the energy transition, they usually begin by creating a frame of reference for their reporting. This involves determining the topic, angle, sources, and reference documents to be used, such as the NDC document, Electricity Supply Business Plan (RUPTL) 2021-2030, and Presidential Decree 112/2022. Additionally, a list of videos and photos may be necessary to guide photographers in capturing the necessary coverage,” said Kurniawati Hasjanah.

Exploring the Implementation of Renewable Energy in Industries and Communities of East Kalimantan

Balikpapan, September 6, 2023 – The Institute for Essential Services Reform (IESR) is organizing the Energy Exploration in East Kalimantan Province in collaboration with the Clean Affordable and Secure Energy in Southeast Asia (CASE) program and the East Kalimantan Province Energy and Mineral Resources (ESDM) Service. The main objective of this initiative is to assess the readiness of institutions and regional actors to support Indonesia’s energy transition, identify the potential and community-based innovations that emerge, and study them for replication in other areas. The East Kalimantan Energy Exploration series started with a workshop on Tuesday, September 5, 2023, followed by two consecutive field visits.

On the first day of the field visit, the trip began by visiting the rooftop solar power plant (solar PV) of PT Pertamina Hulu Mahakam (PHM). They have been using a 100 kWp on-grid rooftop solar PV (connected to the PLN network) since 2014 to fulfill their office’s operational electricity requirements.

“430 solar panels and five inverters are installed in this rooftop solar PV system. In a day, energy production from rooftop solar PV can reach 34.4 KWh, whereas the building unit’s electricity needs to reach 21 KWh. Our rooftop solar PV operates from 6.00-18.00 WITA. From emission efficiency, we have been able to reduce CO2 emissions by 861.1 tons of CO2e since the solar PV was installed,” said Responsible for Safety & Environment on Site Balikpapan Based Office, Ruslan Rahim.

Solar PV
Solar PV PT Pertamina Hulu Mahakam

The team recently visited Balikpapan’s Manggar Final Waste Processing Site (TPAS). They learned about the process of decomposing organic waste to produce methane gas, which can be used as a source of cooking gas for daily needs. To decompose the organic waste, it is stacked and compacted in certain areas and left for a while. Eventually, the rotting waste will release liquid and methane gas. This methane gas can be used as an alternative energy source.

“The community around the Balikpapan’s Manggar Final Waste Processing Site can utilize methane gas from this waste, and there are 300 houses with a reach of 7 km from the Manggar TPAS that have received this environmentally friendly energy source. The distribution of methane gas to residents’ homes relies on several pipes connected to gas flow dividers and separators, which reduce the water content in the methane gas,” explained the Head of the Balikpapan’s Manggar Final Waste Processing Site, Muhammad Haryanto.

Rombongan Jelajah Energi Kalimantan Timur mengunjungi TPAS Manggar

The Energy Exploration in East Kalimantan field visit’s first day concluded with a visit to PT PLN Nusantara Power UP Kaltim Teluk to witness the cofiring program at the facility of Balikpapan coal-fired power plants (CFPP). Dhidhik K. Laksono, the Assistant Operations Manager for PT PLN Nusantara Power Generation Unit (Unit Pembangkitan/UP) Kaltim Balikpapan, mentioned that the CFPP facility uses a co-firing mixture of 3% wood chips or chopped wood as part of its total fuel requirement. However, the implementation of co-firing with chopped wood is still facing hurdles in sourcing raw materials.

“To overcome wood chip supply constraints, we have made several efforts to address them, including proposing to procure a new contract with PT PLN Energi Primer Indonesia, opening opportunities for testing other types of biomass, and encouraging the fulfillment of biomass supply commitments from partners who have collaborated,” explained Dhidhik.

Assessing the Readiness of Coal Producing Regions for Socio-Economic Transformation

Jakarta, 1 September 2023 – In 2022, Indonesia will be the third largest coal producing country in the world. This has had a number of good and bad impacts on Indonesia, especially coal producing areas, such as Paser Regency in East Kalimantan and Muara Enim Regency in South Sumatra. The coal industry sector directly contributes to Gross Regional Domestic Income (GRDP). The contribution of the coal sector to regional income is quite large. In Paser Regency, East Kalimantan, 70% of GRDP comes from the coal sector. The coal sector also contributes to 20% of the East Kalimantan provincial APBD. Meanwhile, in Muara Enim Regency, the coal industry contributes to 50% of the GRDP and 20% of the APBD of South Sumatra Province. 

Julius Christian, Research Manager of the Institute for Essential Services Reform (IESR), explained that the downward trend in global coal use and demand will accelerate in line with the increasing climate commitments of Indonesian coal export destination countries such as China, India and Vietnam. 

“If these countries increase their climate commitments to be compatible with the Paris Agreement targets, there will be a drastic reduction in Indonesian coal. “This will certainly have an economic and social impact on Indonesia’s coal producing regions,” said Julius. 

Economic dependence on this one sector has become a concern for local governments. This was explained at the launch of the IESR Study entitled “Just Transition in Coal Producing Regions” (1/9). IESR Social and Economic Analyst, Martha Jesica, said that coal producing regional governments sometimes do not understand the risks of the energy transition. However, they understand that economic dependence on one sector is not good. 

“As an effort to get out of this dependency, the regional government is supporting the company’s CSR initiatives and starting to identify opportunities for economic diversification,” explained Martha. 

Ilham Surya, IESR Environmental Policy Analyst, added that preparing human resource capacity is an important point in making a just transition. 

“Considering that there will be changes from economic sectors that are familiar to them, such as mining, towards clean energy, there needs to be capacity building which includes education (including) financial literacy and health quality,” he added. 

Differences in education levels are one of the reasons why local communities in coal-producing areas can only access work at the sub-contractor level. In the response session, Dedi Rustandi, Intermediate Expert Planner, Coordinator of Renewable Energy and Energy Conservation at the Ministry of National Development Planning/Bappenas, conveyed the importance of preparing society for the transition. “Energy transition is an inevitability. Now is the right moment to increase public awareness of the energy transition issue. Our coal reserves actually don’t have that much anymore.” 

On the same occasion, Aris Munandar, Young Expert Policy Analyst, Sub-Coordinator 1, Directorate General of Regional Development, Ministry of Home Affairs, added that the energy transition in coal-producing areas is not only related to the ESDM sector. “We will support it through the RPJMD (Regional Medium-Term Development Planning). The regional vision will be very important to include in these strategic documents because 2024 will be a political year. 

“Regional heads must be thorough in seeing what things must be included in the RPJMD,” he added. 

Verania Andria, as Senior Adviser for Renewable Energy Strategic Program UNDP/Chair of JETP Indonesia’s Just Transition Working Group, believes that there are a number of things that need to be considered in the coal transition process, one of which is economic diversification. 

“The important thing to pay attention to in this economic diversification is related to financial sources that must continue to be explored, we cannot just depend on CSR funds from coal companies (as was the study’s findings),” he said. 

The same thing was also expressed by Uka Wikarya, Head of Regional and Energy Resources Policy Research Group, LPEM UI. 

“The quality of human resources really needs to continue to be improved through education and improving the quality of health. “For the economic sector, it is necessary to look for activities or MSMEs that are independent (not dependent for their operations on coal industry activities), so that the interventions carried out can be sustainable,” explained Uka.