Civil Society Recommendations for the Development of Indonesia’s Second NDC

press release

Jakarta, February 2, 2024 – Indonesia, under the coordination of the Ministry of Environment and Forestry (MoEF), has initiated the drafting process for its Second National Determined Contribution (SNDC) aimed at emissions reductions by 2030 and 2035. The MoEF intends to submit the SNDC to the UNFCCC in 2024.

The Institute for Essential Services Reform (IESR) along with several civil society organizations have requested for revisions in the SNDC, proposing updated scenarios and targets aligned with the objective of limiting global warming to below 2 degrees Celsius. They advocate for striving to achieve the ambitious goal of 1.5 degrees Celsius, as set forth by the Paris Agreement and reinforced by the Global Stocktake decision at COP 28.

IESR also urges the government to engage public participation in the preparation process of the SNDC. Furthermore, it is essential for the government to adhere to the principles outlined in Article 4, Line 13 of the Paris Agreement and the provisions of the COP series during SNDC preparation.

Currently, the government continues to utilize the business-as-usual (BAU) scenario for calculating emission reductions. However, civil society deems this scenario irrelevant as a basis for emission calculations. Indonesia must transition to a more accurate calculation system that references relative emissions in a given year, considering a realistic trajectory of global and Indonesian economic growth.

“While the emission reduction target in the Enhanced NDC (ENDC) appears to be increasing, it still does not align with the goal of limiting temperature rise to 1.5 degrees Celsius. Presently, the ENDC target only aims for a 31-43 percent reduction below BAU. If using the BAU calculation method employed thus far for setting emission reduction targets in the NDC, Indonesia’s target should be at least a 60 percent reduction from BAU for unconditional efforts and a 62 percent reduction from BAU for conditional efforts with international assistance. These figures do not include emission reductions from the agriculture, forestry, and land sectors,” remarked IESR Executive Director Fabby Tumiwa.

According to the analysis conducted by IESR, using 2022 emissions as the benchmark for target setting, Indonesia must establish an unconditional emissions reduction goal of 26 percent, equivalent to 859 MtCO2e by 2030, and a conditional reduction target of 28 percent, amounting to 829 MtCO2e with international assistance. These targets are crucial for contributing to the objective of limiting temperature rise to 1.5 degrees Celsius.

In addition to increasing emission reduction targets, Indonesia must also diminish the reliance on fossil energy sources such as coal and gas within its energy system. Based on calculations from the Climate Action Tracker (CAT), the coal component in Indonesia’s electricity system should be reduced to 7 to 16 percent by 2030, with the phasing-out of PLTU operations before 2040. Similarly, gas usage needs to be curtailed to 8 to 10 percent by 2030, with phasing-out operations by 2050.

Deon Arinaldo, IESR’s Energy Transformation Program Manager, emphasized that the reduction in the fossil energy mix should be accompanied by an increase in the share of renewable energy, ranging from 55 to 82 percent by 2030. However, it is worth noting that the target listed in the ENDC pertains to the installed capacity of renewable energy rather than the actual mix. IESR contends that solely focusing on installed capacity does not adequately reflect the relationship with emission reduction objectives.

“With the clarity of the renewable energy mix target in the electricity sector, it becomes possible to anticipate and even calculate the emission intensity of the electricity sector by 2030 to achieve the SDNC target. Furthermore, a significant presence of renewable energy will offer a clearer roadmap for electricity planning, specifying the types of renewable energy that should be prioritized to bridge the existing gap. With only 7 years remaining, it’s evident that solar and wind power plants, known for their shorter construction periods, should take precedence in development efforts to meet the mix target. Additionally, interventions are necessary for fossil fuel power plants, emphasizing the importance of reducing the reliance on fossil energy through various strategies such as terminating the operation of PLTU or reducing its utilization,” stated Deon.

Furthermore, IESR and other civil society organizations criticize the ENDC document for neglecting to incorporate the principle of climate justice. Civil society advocates for the SNDC preparation process to be more inclusive, ensuring climate protection for vulnerable groups and transparency throughout.

Wira Swadana, IESR Green Economy Program Manager, emphasized that the government must ensure fair distribution of the burden of emission reduction.

“Entities responsible for the highest emissions must shoulder a larger portion of the emission reduction efforts. Furthermore, the formulation of the SNDC should prioritize the principle of climate justice, which aims to mitigate both short-term and long-term risks while ensuring fair distribution of benefits, burdens, and risks, particularly for marginalized communities,” remarked Wira.

IESR and other civil society groups have outlined six recommendations for the preparation of the SNDC. First, the government should adhere to the principles of the Paris Agreement as outlined in Article 4, Line 13, and the guidelines set forth by the COP. Second, there should be a focus on integrating measurement, reporting, and verification (MRV) systems tailored for developing country parties. Third, the government should abandon the use of the BAU scenario as the basis for emission reduction calculations and instead adopt a method based on relative emissions in a given year, which takes into account more precise global and Indonesian economic growth projections. Fourth, climate targets should be established in alignment with the Paris Agreement. Fifth, there should be transparent and publicly accessible monitoring and evaluation mechanisms put in place. Sixth, principles of climate justice should be incorporated and implemented throughout the process. These recommendations for the preparation of the Second NDC have been submitted to relevant ministries and institutions.

Draft Government Regulation on National Energy Policy (RPP KEN) Slashes NRE Target to 19 Percent in 2025

press release

Jakarta, January 31, 2024 – The National Energy Council (DEN) is working on updating Government Regulation (PP) Number 79 of 2014 concerning the National Energy Policy with a new draft policy (RPP KEN) that is being discussed with the DPR. DEN schedules the RPP KEN to be completed by June 2024. The new and renewable energy (NRE) targets summarized in the RPP KEN are based on the assumption of an economic growth rate of 4-5 percent to adjust post-COVID and equalize nuclear energy as renewable energy. As a result, the Draft Government Regulation on National Energy Policy (RPP KEN) set the NRE mix target in 2025 down from the previous 23 percent to 17-19 percent. Meanwhile, the NRE target in 2050 increases from 30 percent to 58-61 percent and at 70-72 percent in 2060.

The Institute for Essential Services Reform (IESR) views that the reduction in the renewable energy mix target to 17-19 percent in 2025 and 19-21 percent in 2030 implies a weak commitment to energy transition and a strong interest in maintaining fossil energy. IESR believes that the years 2025 to 2030 should be an important milestone to take off the energy transition in Indonesia with the achievement of renewable energy targets of more than 40 percent and peak energy sector emissions in 2030. Achieving an ambitious renewable energy mix in this decade is important in order to align Indonesia’s GHG emissions with the Paris Agreement target to limit the increase in average global temperature to below 1.5 degrees Celsius.

Meanwhile, delays in boosting the renewable energy mix to 38-40 percent by 2040 will prevent Indonesia from reaping greater benefits from renewable energy development, including cheaper and more competitive electricity prices in the long term, lower electricity emissions on the grid that attract investment, the development of a domestic renewable energy manufacturing industry and supply chain and the creation of greater renewable energy employment opportunities. The low renewable energy mix towards 2030 could also reduce the attractiveness of foreign investment to Indonesia, as industries and multinational companies are now keen to ensure their energy needs are supplied from a low-emission electricity system. 

Fabby Tumiwa, the Executive Director of IESR, said that the setting of low renewable energy mix targets in 2025 and 2030 is not in line with the renewable energy mix target in the Just Energy Transition Partnership (JETP) agreement which aims for 44 percent by 2030.

“The JETP has agreed on a renewable energy mix target of above 34 percent in 2030, and this target is in line with the RUKN plan discussed at the same time as the Comprehensive Investment and Policy Plan (CIPP) last year. The renewable energy mix target proposed by DEN has cast doubt on the credibility of Indonesia’s energy transition policy direction by investors and the international community.  Instead of lowering the target for realistic reasons, DEN should be more progressive in making the energy transition. As an institution led by the President, DEN can dismantle barriers to coordination, overlapping policies and priorities to make renewable energy and energy efficiency accelerate,” said Fabby Tumiwa.

IESR views that the strategies in the RPP KEN, such as the operation of a 250 MW nuclear power plant in 2032 and the use of CCS/CCUS in power plants still operating in 2060, have not been based on technical and economic feasibility in Indonesia to date. NPP with a small capacity of 300 MWe, small modular reactor, is still not available technology that is proven safe and economical. Indonesia itself still has to build institutional infrastructure (NEPIO), regulatory readiness, safety standards, as well as the availability of proven SMR technology, as well as public approval, before starting to build nuclear power plants. 

The application of CCS/CCUS in CFPP is still an expensive and ineffective solution to capture carbon, even though this technology has been developed for decades. Examples of CCS projects at Boundary Dam in Canada and also at Petranova power plant in the US show technical problems to meet the carbon capture target and the economics are not feasible.

Deon Arinaldo, the Program Manager of Energy Transformation, IESR, mentioned that Indonesia will be burdened with the cost of implementing CCS in CFPP which is expensive, operational costs that are prone to volatility and unsustainable. Meanwhile, the construction of nuclear power plants is anticlimactic amidst the decline in the world’s nuclear power plant capacity after the nuclear tragedy in Fukushima.

“In this decade, Indonesia’s GHG emission mitigation strategy in the energy sector should be focused on the development of renewable energy and energy storage technologies that have been proven to provide energy at a cost competitive with coal-fired power plants that can still be subsidized. Solar energy and wind energy in terms of construction time can be done quickly, so the homework that needs to be improved is how to prepare a pipeline of projects that are ready to be invested in and the procurement process at PLN,” Deon explained.

The Decline of Indonesia’s Climate Policy and Action Rating in 2023

Delima Ramadhani, Climate Policy Project Coordinator, IESR presents the results of the CAT assessment of Indonesia’s climate policies, targets and actions

Jakarta, January 31, 2024 – According to the Climate Action Tracker (CAT) report, the climate policies, actions, and targets outlined in Indonesia’s 2023 Nationally Determined Contribution (NDC) document as “critically insufficient” to limit global temperatures  to below 1.5 degrees Celsius. This represents a decline from 2022 when Indonesia was rated as “highly insufficient.”

The Institute for Essential Services Reform (IESR), a collaborator with CAT, has disclosed that Indonesia, rated as “critically insufficient” under the Enhanced NDC target, could potentially release greenhouse gas emissions of 1,800 million tons of carbon dioxide equivalent for the unconditional target and 1,700 million tons of carbon dioxide equivalent for the conditional target by 2030. This estimation excludes emissions from the forestry and land sectors.

Fabby Tumiwa, Executive Director of IESR, attributed Indonesia’s downgrade to “critically insufficient” to the escalating use of coal in downstream mining. He stressed that the lowest CAT rating implies that the existing climate targets and policies would result in global emissions surges surpassing 4 degrees Celsius.

“Indonesia requires concrete and measurable actions to transition from fossil energy and expedite the shift to renewable energy in the coming decade,” Fabby stated during his remarks at the launch of the Climate Action Tracker Assessment Indonesia and Climate Transparency Implementation Check reports, organized by IESR on January 30. 

Throughout the 2022-2023 period, the Indonesian government has made progress in climate mitigation actions, notably by promoting the development of renewable energy through Presidential Regulation (Perpres) No. 112/2022 concerning the Acceleration of Renewable Energy Development for Electricity Supply. Additionally, the government has made positive commitments to achieving the 2030 net zero and FOLU net sink targets. Ambitious policies are needed to realize them.

The rise in emissions in 2022 amounts to approximately 200 million tons of carbon dioxide equivalent, with increased coal consumption being a contributing factor. Emissions from captive power plants, those operated by utility companies outside of PLN, are anticipated to contribute to a further increase of around 100 million tons by 2030. Indonesia’s current climate policy would result in the country reaching an emissions level of 1,487-1,628 MtCO2e (excluding the forest and land sector) by 2030.

Moreover, Indonesia has committed to the Just Energy Transition Partnership (JETP), aiming for a renewable energy mix exceeding 34% by 2030. However, it is noted that the JETP falls short of aligning Indonesia with the targets set in the Paris Agreement.

Delima Ramadhani, Climate Policy Project Coordinator at IESR, explained that to meet the Paris Agreement standards, emissions from the electricity sector must decrease to 140-150 million tons of carbon dioxide equivalent by 2030, ultimately reaching zero emissions by 2040.

“Indonesia needs to adopt key reforms as outlined in the comprehensive investment planning and policy (CIPP) document of the Just Energy Transition Partnership (JETP) and formulate and implement an ambitious decarbonization pathway for off-grid (captive) power plants,” explained Delima.

Considering the significance of the electricity sector and its potential for strategic decarbonization, IESR also assessed the implementation of the National Electricity General Plan (RUKN) policy. This policy serves as Indonesia’s primary reference for domestic electricity development and can be utilized for monitoring and evaluating renewable energy progress. Akbar Bagaskara, IESR’s Electricity System Analyst, explained that the overall assessment of the RUKN is “medium,” indicating that while it has a clear legal basis, namely MEMR Regulation No. 143/2019, there are numerous implementation challenges, including the consistent failure to achieve the annual renewable energy mix target.

“Indonesia’s challenges in meeting the annual targets for the renewable energy mix should prompt the government to conduct a thorough evaluation and address this issue with a sense of urgency. It is crucial for the government to formulate progressive strategies and innovations aligned with the Paris Agreement,” stated Akbar.

He elaborated on several actions the government should take to enhance the implementation of renewable energy development in Indonesia. Firstly, there is a need to increase the presence of supportive laws to foster a more conducive environment. Secondly, clear and comprehensive instruments should be provided, covering the entire spectrum from planning and procurement to reporting processes, especially for entities beyond PLN. Thirdly, a new revenue model for PLN should be established. Lastly, there is a necessity to refine PLN’s sustainable finance framework to attract a broader range of financing sources.

Galvanizing Mining Business Actors for a Just Energy Transition

From left to right Wira Swadana, Green Economy Program Manager, Yulfaizon, General Manager, PT Bukit Asam Tbk Ombilin Mining Unit, Farah Vianda, Sustainable Financing Coordinator, and Y. Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal

 

Jakarta, January 25, 2024 – Mitigating the impact of the declining demand for coal in Indonesia is crucial, particularly in regions heavily dependent on coal production, amidst the global push for a robust energy transition. The Institute for Essential Services Reform (IESR) emphasizes that companies and business entities within the coal industry can play a pivotal role in revitalizing post-mining areas and facilitating economic development within communities once coal operations cease.

Wira Swadana, the Green Energy Program Manager at IESR, asserts that a just energy transition must actively involve various stakeholders, with a special focus on companies and business actors.

“While private entities and coal industry actors are often perceived as adversaries due to the negative impacts on mining areas, in the context of an inclusive and just transition, these mining companies assume a significant responsibility for post-mining endeavors and preparing communities for socio-economic activities, steering them away from a reliance on mining,” Wira explained during the Just Transition Dialogue: Identifying the Role of the Private Sector in Socio-Economic Empowerment of Communities (24/1/2024), an event organized by IESR.

Wira Swadana emphasized the need for business actors to fulfill their responsibilities in land reclamation and post-mining activities, as mandated by Law No.3/2020. He underscored that the government must actively oversee the implementation and take decisive action against mining companies neglecting their obligations in reclamation and post-mining endeavors.

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal, elucidated the distinction between mining reclamation and post-mining activities. Functionally, reclamation involves enhancing the quality of the environment and ecosystem to restore their intended functionality. On the other hand, post-mining activities focus on the comprehensive restoration of the natural environment and social functions, tailored to the specific conditions of the mining area.

“Reclamation becomes obligatory during the exploration stage, and as production operations commence, a post-mining plan is formulated after meeting the economic and technical feasibility criteria,” Sulistiyohadi explained. He noted that both reclamation and post-mining plans require guarantees for their respective activities.

Moreover, PT Bukit Asam Tbk Ombilin Mining Unit has carried out reclamation and post-mining processes. The post-mining activities are concentrated on establishing a sustainable economy by repurposing the former mining area for various purposes, including the creation of an animal protection zone, zones for crop and livestock cultivation, and utilization for tourism, sports, education, and cultural activities.

Yulfaizon, General Manager at PT Bukit Asam Tbk Ombilin Mining Unit, expressed optimism that the completed post-mining activities at the Ombilin mine will serve as a national exemplar. These efforts align with Sawahlunto’s vision and mission, aiming to transform the former mine into a center for study, job training, and a noteworthy destination in the Sawahlunto region.

The West Java Energy Exploration: Echoing the Spirit of Energy Transition

press release

Jakarta, January 23, 2024 – The Institute for Essential Services Reform (IESR), through the Energy Transition Academy in collaboration with the West Java Energy and Mineral Resources Agency (ESDM) and the Society of Renewable Energy University of Indonesia (SRE UI) has been held The West Java Energy Exploration on January 23-26, 2024. The initiative is to support and promote the implementation of renewable energy in West Java Province to become an example for other regions in Indonesia.

West Java Province was selected as the location for The Energy Exploration (Jelajah Energi) because it has abundant potential for renewable energy sources that can be utilized effectively and sustainably to achieve the net zero emission target by 2060 or earlier. Furthermore, the renewable energy mix in West Java has already reached 25.81% as of 2023, which exceeds the target of 20% set in the Regional Energy General Plan (RUED) for 2025.

Head of the Energy and Mineral Resources Agency (ESDM) of West Java Province, Ai Saadiyah Dwidaningsih, said that the province has renewable energy potential consisting of solar, biomass, geothermal, water, and wind energy of around 192 GW. Despite achieving a high renewable energy mix in 2023, only about 2% of the potential (around 3.41 GW) has been utilized. 

“There are several challenges to the implementation of the energy transition in West Java, including the limited authority of energy affairs in the regions, both provincial and district/city, the oversupply condition of the Java Madura Bali power plant, as well as the concept of renewable energy and energy conservation, is also not widely recognized by the public,” said Ai Saadiyah Dwidaningsih in her remarks at The West Java Energy Exploration. 

Reflecting on these challenges, Ai Saadiyah Dwidaningsih emphasized the importance of cross-sector collaboration in efforts to campaign for energy transition. For this reason, West Java Province has established a Regional Energy Forum. This forum is a forum to discuss strategic issues in the field of energy resources from various perspectives to provide input for policies by the Regional Energy General Plan (RUED) and national energy policies.

“We continue to encourage cross-sector collaboration to echo the energy transition. We see that the energy transition is important because the condition of our earth has entered the era of global boiling, no longer global warming. Without taking concrete steps to reduce emissions, the situation will only deteriorate further,” said Ai Saadiyah Dwidaningsih.

Deon Arinaldo, Energy Transformation Program Manager, IESR, explained that the West Java Energy Exploration is expected to increase public understanding of the benefits and potential of renewable energy. He believes that a wider audience can be reached by visiting areas that utilize renewable energy and sharing stories of successful initiatives from the community, industry, and government. This approach will inspire and encourage independent initiatives from various actors, including the general public, to promote sustainable energy transformation in Indonesia.

“Renewable energy is accessible to everyone and should be utilized. Therefore, we encourage all parties to collaborate in the energy transition. This collaboration should begin with understanding renewable energy and its benefits for the environment and economy. With this knowledge, it is hoped that the community can fully support the implementation of clean energy-based solutions,” said Deon Arinaldo. 

Deon mentioned that to increase public knowledge, IESR has provided an energy transition learning platform called the Energy Transition Academy that can be accessed openly by the public.

 

“Various easily digestible energy transition classes are available at the Energy Transition Academy. Even in the future, there may be various stories of good practices in using renewable energy, including the experience of the West Java Energy Exploration, documented there,” added Deon.

The West Java Energy Exploration team plans to visit nine strategic locations to see the positive impact of utilizing renewable energy. The destinations include PLTSa TPST Bantar Gebang, Cirata Floating Solar PV, Cirata Hydroelectric Power Plant, Gunung Halu MicroHydro, Cofiring and Solar PV PT Kahatex Majalaya, Surya Energi Indonesia, Geothermal Power Plants Kamojang, Biogas & Solar PV Producer Cooperative Karya Nugraha Jaya, and Cirebon Mangrove Ecotourism.

Pursuing the Target of a 23% Renewable Energy Mix in 2025 Requires an Acceleration Strategy and Political Commitment

press release

Jakarta, January 15, 2024 – The realization of new renewable energy in 2023 was only 13.1% of the target of 17.9% to reach 23% by 2025. Minister of Energy and Mineral Resources, Arifin Tasrif, when presenting the Achievements of the Energy and Mineral Resources Sector in 2023 & Work Program in 2024 put forward eight strategies, including the construction of 10.6 GW of new renewable energy plants, the construction of 3.6 GW of rooftop solar power plants, the implementation of the 13.9 million kL B35 program, and biomass co-firing of 10.2 million tons in 2025 to achieve the target. 

The Institute for Essential Services Reform (IESR) views the progress made in renewable energy by 2023 starkly contrasting the ongoing increase in fossil fuel production and usage. This trend goes against the essence of the energy transition towards net-zero emissions that the government has been advocating since 2021.

IESR assesses that the low achievement of the renewable energy target mix is systemic, caused by various factors, including the delay in the auction of renewable energy plants by PLN since 2019, constraints on the execution of projects that have been contracted due to bankability, the increase in financial interest rates in the last two years, and the COVID-19 pandemic. 

Some renewable energy projects, especially hydropower and geothermal power plants that are the mainstay of the government, such as Batang Toru Hydropower Plant, Baturaden Geothermal Power Plant, and Rajabasa Geothermal Power Plant, which have been delayed in completion, are suspected of contributing to the low achievement of the renewable energy mix in 2023. Likewise, the protracted process of revising Permen of ESDM No. 26/2021 has hampered the implementation of rooftop solar power plants. Therefore, the 3.6 GW rooftop solar power plant PSN needs to be fixed.

The government plans to pursue the development of large-scale renewable energy plants, including floating solar power plants and wind farms. A rooftop PV roadmap has also been prepared with a target of 900 MW in 2023 and 1800 MW in 2024. However, according to Fabby, the unfinished rooftop PV regulation has caused rooftop PV adoption to drop in the residential and business sectors by 20% and 6%, respectively. As a result, based on IESR’s analysis, by the second quarter of 2023, the cumulative installed capacity of rooftop PV only reached 100 MW, far below the target of 900 MW by 2023.

“The government still has two years to pursue the 23 percent renewable energy mix target, but political commitment, PLN support, and extraordinary steps must be needed. There are several ways, including accelerating the execution of projects that have been contracted, especially from Independent Power Producers (IPP). In addition, the government should urge PLN to conduct regular auctions of large-scale power plants this year and simplify the negotiation of Power Purchase Agreements (PPAs) to execute these projects this year. To pursue the target of 10.6 GW in two years, the government must rely on floating, ground-mounted, and 3.6 GW of rooftop solar PV installed capacity. Therefore, the implementation of the revised Permen No. 26/2021 should no longer be delayed,” explained the Executive Director of IESR, Fabby Tumiwa.

Regarding renewable energy investment, from a target of USD 1.8 billion, only USD 1.5 billion was achieved. Meanwhile, in 2024, the government targets USD 2.6 billion. This amount is still far from the need for renewable energy funding of USD 25 billion annually until 2030 to achieve NZE by 2060. To accelerate renewable energy investment growth, the government needs to help prepare renewable energy projects that can be implemented and are feasible to finance.

Fabby suspects that structural problems have caused the renewable energy investment target never to be achieved during the era of President Jokowi’s administration. In contrast, in the world, renewable energy investment has increased and surpassed fossil energy investment in the last five years. For this reason, Fabby proposes a severe evaluation of this issue so that the government can quickly improve the enabling environment for enhancing the renewable energy investment climate, one of which is a review of coal subsidies through the DMO scheme and domestic coal pricing obligations for coal-fired power plant’s (CFPPs) of National Electricity Company (PLN).

Accelerated renewable energy development is necessary to achieve the high mix target in 2030, as stated by the JETP target, and to support Indonesia’s low-carbon development. Contrary to popular belief, renewable energy electricity prices are much cheaper and competitive with fossil fuels.

“From this MEMR achievement report, the minister of energy and mineral resources has acknowledged that renewable energy costs and integration costs for solar and wind power plants can already be competitive with new power plants. There should be no more hesitation in supporting the acceleration of renewable energy. It is necessary to pay attention to gaps and delays in renewable energy development from upstream to downstream and try to build a strategy. This includes the identification and development of early renewable energy project candidates, the process of entering candidates into PLN’s planning, how the renewable energy procurement process in PLN, as well as a clear risk allocation between PLN and IPP for renewable energy developed by the private sector,” said Deon Arinaldo, Program Manager of Energy Transformation, IESR.

In contrast to the low achievement of the renewable energy mix, the MEMR said there was a reduction in GHG emissions in the energy sector in 2023 of 127.67 million tons of carbon dioxide from the target of 116 million tons.

“The achievement of energy sector emission reduction exceeding the target should be appreciated. However, it should also be noted that the energy sector emission reduction target is based on Indonesia’s enhanced NDC target, which, unfortunately, is not yet compatible with the 1.5 C pathway according to the Paris Agreement. The government needs to explore new strategies involving other energy sectors such as the energy consumption sector in the industrial, transportation, and building sectors and even those interconnected between sectors (sector coupling),” said Deon.

According to IESR, Indonesia’s electricity emission intensity is still high compared to other countries in the region. This could hamper investment interest from multinational industries that require low-emission electricity and easy access to renewable energy.

“The government must try to reduce the intensity of GHG emissions in the electricity system by reducing fossil energy generation and increasing renewable energy generation. One option is the early retirement of PLN power plants over 30 years old by 2025, which can also encourage the acceleration of renewable energy generation,” Fabby said.

Increase Collaboration and Investment for Renewable Energy Utilization in Central Java

 

 Fabby Tumiwa, Direktur Eksekutif IESR dalam acara Forum Akselerasi Energi Terbarukan Jawa Tengah (19/12).
Fabby Tumiwa, Direktur Eksekutif IESR dalam acara Forum Akselerasi Energi Terbarukan Jawa Tengah (19/12)

Semarang, December 19, 2023 – The Central Java Provincial Government is seeking to encourage collaboration and synergy to accelerate the energy transition and achieve the target of a 21.32% renewable energy mix in the region by 2025, as set in its Regional Energy General Plan (RUED). However, the renewable energy mix in the region only reached 15.76% in 2022, according to data from the Central Java Energy and Mineral Resources Agency (ESDM). With only two years left to achieve the target, the Central Java Provincial Government must pursue the remaining 5.56% of the renewable energy mix.

The Institute for Essential Services Reform (IESR) has been collaborating with Central Java since 2019 to speed up the implementation of renewable energy in the region. To accelerate the transition towards renewable energy and attain the RUED target, it is necessary to establish supportive conditions such as regulations, community initiatives, public-private partnerships, and foster investment. IESR believes that the regional funding capability must be enhanced to achieve the RUED target and attract more renewable energy investment.

“Central Java has a vast potential for renewable energy, including 194 GW of solar energy and 3.5 MW of wind energy. To accelerate the utilization of these resources, several measures need to be taken, such as disseminating information and building capacity related to renewable energy development, promoting investment ecosystems that prioritize green funding, and setting up monitoring, reporting, and evaluation platforms to encourage public participation,” said Fabby Tumiwa, Executive Director of IESR at the Central Java Renewable Energy Acceleration Forum (19/12).  

During the same event, IESR announced a partnership with the Central Java Province Investment and One Stop Integrated Service (DPMPTSP) Office to promote green investment, especially in renewable energy in Central Java.

IESR meresmikan kerja sama dengan Dinas Penanaman Modal dan Pelayanan Terpadu Satu Pintu (DPMPTSP) Provinsi Jawa Tengah untuk mendorong investasi hijau dan khususnya energi terbarukan di Jawa Tengah

Sakina Rosellasari, the Head of Investment and One-Stop Integrated Service (DPMPTSP) in Central Java Province, has recently announced that her office has been actively promoting green investment in the region. To achieve this, they have taken several measures, such as compiling a list of investment-ready projects (known as Investment Project Ready to Offer or IPRO) that focus on circular economy projects such as waste treatment, mini-hydro, sustainable product processing, and waste processing into refused derived fuel (RDF). The DPMPTSP has also created promotional videos, met with various stakeholders, and signed cooperation agreements to encourage green investment in Central Java.

“The preparation of IPRO is important to attract potential investors and provide confidence that Central Java Province is the right location to invest. The IPRO in Central Java covers three sectors: infrastructure, agriculture, and tourism. Within the infrastructure sector is the construction of the Banjaran and Logawa mini hydro power plants in Banyumas Regency and the Tegal city B3 medical waste treatment and industrial development,” Sakina said.

The central government has issued Presidential Regulation No.11/2023 through the Ministry of Home Affairs. This regulation empowers local governments to manage and provide biomass, biogas, and new renewable energy. District and city governments have been granted the authority to support renewable energy development through Kepmendagri 900.1.15.5-1317 of 2023. Some examples of the district and city governments’ authority include waste management, provision of road equipment on district/city roads, empowerment of small fishermen in district/city areas, and provision of electrical/lighting installation components in office buildings.

Tavip Rubiyanto, an Associate Expert Policy Analyst for Energy and Mineral Resources Substance at the Directorate SUPD I of the Directorate General of Regional Development for the Ministry of Home Affairs, states that the development of renewable energy by regions is crucial to achieving the national renewable energy mix target of 23% by 2025.

Tavip explained that the rules regarding the discretion of regional authority in the management of new renewable energy will be effective from 2024. He hoped the regions would start budgeting to achieve these targets. Matters related to regional authority will be financed through the APBD.

To achieve the renewable energy targets at the regional level, Boedyo Dharmawan, Head of the Energy and Mineral Resources Office of Central Java Province, emphasized the need for cooperation between sectors. Coordination between the ESDM, environment, transportation, and planning agencies must be strengthened.

Boedyo Dharmawan also shared Central Java’s achievements in renewable energy, exceeding the annual target of 2022. These achievements include PLTS with a total capacity of around 25 MW, 6 MW micro hydropower plants (PLTMH), 31 MW mini hydro power plants (PLTM), and 322 MW hydropower plants (PLTA).

“Not only in terms of regulation, the government is also committed at the implementation level. To succeed in the energy transition towards the renewable energy era, the provincial government is also trying to control greenhouse gas emissions through the battery-based electric motor vehicle program,” said Boedyo.

Community initiatives that adopt renewable energy can significantly contribute to increasing the renewable energy mix in the region. This initiative can play an essential role in advancing the community’s welfare. Yanto, Head of Banyuroto Village, Sawangan District, Magelang Regency, and an Energy Independent Village, recognizes this fact.

Yanto explained that with a population of 930 cows and the assistance of various parties from the government, community, and non-governmental organizations, his village had developed around 34 biogas processing units from 2023 to 2027. This biogas helps to save the kitchen needs of 44 households in his village. Additionally, biogas can be used to fuel lighting lamps (petromak). The solid and liquid waste from cow dung is also helpful for organic fertilizer, which can fertilize agricultural soil.

Policy Breakthroughs Will Accelerate the Takeoff of Indonesia’s Energy Transition

press release

Jakarta, December 15, 2023 – The Institute for Essential Services Reform (IESR) assesses that the energy transition is already in full swing in 2023, and it is ready to take off if the government can create the necessary supporting conditions.

IESR comprehensively discusses the development of the energy transition and opportunities to accelerate the energy transition in Indonesia in its main report, Indonesia Energy Transition Outlook (IETO) 2024. 

The IETO 2024 report found that fossil energy supply still dominates despite government targets and commitments to energy transition and higher targets for greenhouse gas emissions mitigation; in the power sector, the total capacity of on-grid and captive coal plants is around 44 GW and is projected to increase to 73 GW by 2030. This will increase GHG emissions to around 414 million tons of carbon dioxide equivalent (MtCO2e) by 2030.

Fabby Tumiwa, Executive Director of IESR, said that the government needs to limit the development permit of captive power plants after 2025 and mandate the owners of industrial estates to optimize the usage of renewable energy and reduce emissions from operating power plants. The target is to reach the peak emissions in the electricity sector by 2030 and achieve net-zero emissions by 2060 or earlier.  

IETO noted no significant increase in renewable energy capacity and contribution to the renewable energy mix. Renewable energy capacity and contribution to the mix only reached 1 GW in 2023, failing to meet the 3.4 GW target set in the 2021-2030 RUPTL.

Fabby explained that a shared vision among the President and policymakers is crucial for Indonesia’s energy transition to be successful. A shared understanding will determine political commitment and a cost-effective roadmap to sustainability.

 

Fabby emphasized that the energy transition in Indonesia is progressing slowly due to weak political leadership, insufficient capacity of actors, and the burden of past policies. Therefore, Fabby mentioned the importance of implementing a ‘no-regret policy’ that guarantees overall socio-economic benefits regardless of the changes that may occur, as well as public budget reforms and PLN reforms to accelerate the energy transition process.

“Indonesia needs a coherent roadmap to achieve NZE 2060 or sooner. The electricity sector has made significant strides, but the transportation and industrial sectors are still developing. The government must also involve the public to create a just transition. With Indonesia’s values and history, the energy transition should be done with gotong-royong,” he said.

 

The government has made a political commitment to transition to renewable energy, resulting in increased funding for renewable energy projects both bilaterally and multilaterally. However, despite these efforts, the renewable energy investment target still needs to be met. One of the reasons for this is that there is a need for more bankable projects, and investors are hesitant to invest due to the quality of policies and regulations that do not meet their needs. Despite this, renewable energy utilization has only reached 1 GW in 2023.

IESR believes that to attract investment, it is necessary to review the renewable energy price policy in Perpres No. 112/2022, taking into account technological developments and funding interest rates. Other reforms are also needed to encourage the development of bankable and profitable renewable energy projects for investors. To entice investors, efforts can be made to improve the tariff structure, ensure a fair risk-reward profile for private power producer partners, and consider power-wheeling schemes.

 

“In addition, a solid collaboration between PLN, regulators, project developers, and financiers, both private and government, is needed to prepare a robust project pipeline and increase projects that are eligible for funding,” explained His Muhammad Bintang, The Energy Storage Technology and Battery Materials Analyst at IESR, who is also an IETO author.

On the transportation side, the adoption of electric vehicles is increasing. The number of electric motorcycles is expected to increase 2.4 times by September 2023, from 25,782 units in 2022 to 62,815.

“Despite government incentives and assistance to adopt electric vehicles for the public, other issues become barriers to adopting electric vehicles. For example, on the two-wheeled vehicle side, there are mileage and performance limitations compared to fuel-based two-wheeled vehicles. In contrast, on the electric vehicle side, other issues hinder the adoption of electric vehicles,” said Faris Adnan Padhilah, Electricity System Analyst at IESR.

IESR believes that to attract investment, it is necessary to review the highest renewable energy price policy in Perpres No. 112/2022 by technological developments and funding interest rates, followed by other reforms to encourage the development of bankable and profitable renewable energy projects for investors. Efforts to attract investors can be made by improving the tariff structure, ensuring a fair risk-reward profile for private power producer partners, and considering power-wheeling schemes.

“In addition, a solid collaboration between PLN, regulators, project developers, and financiers, both private and government, is needed to prepare a robust project pipeline and increase projects that are eligible for funding,” explained His Muhammad Bintang, the Energy Storage Technology and Battery Materials Analyst IESR, who is also an IETO author.

On the transportation side, the increase in electric vehicle adoption saw a 2.4-fold increase for electric motorcycles by 2023, from 25,782 units in 2022 to 62,815 in September 2023.

“Despite government incentives and assistance to adopt electric vehicles for the public, other issues become obstacles to adopting electric vehicles. For example, on the two-wheeled vehicle side, there are mileage and performance limitations compared to fuel-based two-wheeled vehicles. In contrast, on the four-wheeled vehicle side, there are higher prices for electric cars, limitations on vehicle types, and the lack of SPKLUs,” explained Faris Adnan Padhilah, IESR Electricity System Analyst.

On the other hand, local governments in Indonesia face challenges in finalizing the Regional Energy General Plan (RUED) and implementing it to meet renewable energy targets. The recent regulation Perpres No. 11/2023 expands the authority of local governments in renewable energy development. However, one of the implementation challenges is the limited local government budget, which needs to be balanced with other priorities.

 

“In addition to the expansion of authority, the provincial government also needs to detail the regional energy plan regulations into various measurable instruments and schemes, for example, the priority of regional financial allocations for renewable energy and specific rules for decarbonization of various sectors (transportation and buildings) in the region. In addition, with the ongoing revision of the national general energy plan (RUEN) document, local governments need to update the provincial RUED in the future to reflect regional ambitions in energy transition better and integrate more ambitious renewable energy targets,” said Martha Jesica, the Social and Economic Analyst, IESR.

Information for the media

Indonesia’s Energy Transition Status in 2023

  • IESR assesses Indonesia’s 2023 energy transition readiness as unchanged from 2022. Of the eight variables measured, the lowest score is political will and commitment, which must still be aligned with the greenhouse gas mitigation needs by the 1.5 C roadmap. 
  • Indonesia’s current energy policy is inadequate to reduce greenhouse gas emissions, will only reduce 20 percent of projected emissions in 2030, and will continue to increase until 2060.
  • Renewable energy development in the electricity sector is slow, characterized by a total additional installed capacity of only 1 GW until 2023, far from the target set in 2021 of 3.4 GW.
  • Coal production is increasing. As of the end of October 2023, coal production has stood at 619 Mt and is expected to surpass 700 Mt in 2023, exceeding the government’s 2023 target of 695 Mt. 
  • Indonesian government policies still favor the fossil industry. The update of the National Electricity General Plan (RUKN) does not include an option for early retirement of coal-fired power plants, even though it is economically feasible and profitable.
  • For low-carbon fuels, green hydrogen development is gaining interest. Thirty-two green hydrogen projects are underway, although most are in the early development stage.
  • In terms of transportation, motorcycles are the largest emitter in 2022, accounting for 36% (54 MtCO2e) of total transportation emissions.
  • Electric vehicle adoption is expected to experience a significant surge in 2023. The number of electric cars adopted increased 2.3 times, from 7,679 units in 2022 to 18,300 units in September 2023. In the same period, the number of electric motors increased 2.4 times, from 25,782 units in 2022 to 62,815 in September 2023.
  • As of the second quarter of 2023, the installed capacity of cumulative rooftop solar PV only reached 100 MW, far below the target of 900 MW by 2023. The slow growth of rooftop solar is mainly due to a decline in solar PV adoption in the residential and business sectors, by 20% and 6%, respectively.
  • By 2023, seven provinces had exceeded the 2025 renewable energy target: North Sumatra, South Sumatra, Bangka Belitung, West Java, Gorontalo, South Sulawesi, and Maluku. Meanwhile, the other 31 provinces are still hampered by fiscal capacity and central policies to achieve the regional renewable energy mix target.
  • Total funding in the new and renewable energy sector reached USD 1.7 billion from the first quarter of 2022 to the third quarter of 2023. These funding commitments generally focus on energy efficiency project preparation and renewable energy development. Perpres 112/2022 has increased funding commitments for renewable energy.
  • Launched in September 2023, the carbon exchange recorded transactions of IDR 29.2 billion. However, after the opening, transactions 
  • Launched in September 2023, the carbon exchange recorded transactions of IDR 29.2 billion. However, after the opening, carbon exchange transactions were quiet. By the end of October 2023, total transactions had only increased by Rp200 million.

 

Opportunities and Projections for Energy Transition in Indonesia in 2024

  • Opportunities for increased government commitment to the energy transition will be seen from the results of the National Energy Policy (KEN) update outlining decarbonization targets in the energy sector, followed by the issuance of the National Energy General Plan (RUEN).
  • The government has issued Government Regulation No. 33/2023 on Energy Conservation. Implementing this PP should be binding and mandatorily controlled to drive significant emission reductions in the building sector.
  • The Ministry of Industry plans to create decarbonization roadmaps in 2023 and 2024 for nine high-energy-emitting industrial sectors and incentives for energy transition. This could be an opportunity to build a greener industry.
  • The low renewable energy achievement in 2023 results from delays in various hydropower and geothermal projects such as Batang Toru Hydropower Plant, Baturaden Geothermal Plant, and Rajabasa Geothermal Plant. The government needs to support these projects’ sustainability by minimizing project preparation risks.
  • Electric vehicle adoption is increasing, but there is still range anxiety. This needs to be addressed by increasing the number of charging infrastructure through incentives.
  • The latest regulation, Perpres No. 11/2023, has given local governments more authority in developing renewable energy. However, the regions may face budget limitations, which could hinder their ability to utilize this additional authority fully. As a result, it will be necessary for the national government to provide additional support to ensure the success of renewable energy development in the regions.

IETO 2024: Indonesia Needs to Build Momentum to Reach Peak Energy Sector Emissions in 2030

Jakarta, December 12, 2023 – Indonesia aims to reach peak greenhouse gas (GHG) emissions by 2035 and gradually move towards net zero emission (NZE) by 2060 or earlier. The energy sector in Indonesia is currently a major source of emissions, with nearly 90.4 percent of the country’s domestic energy supply coming from fossil fuels. Therefore, the transition to renewable energy is crucial in reducing emissions.

Unfortunately, the Institute for Essential Services Reform (IESR) observed that the trend of renewable energy development tends to slow down, reaching only 0.97 GW of the 3.4 GW target in the fourth quarter of 2023. This slow progress will make it difficult for Indonesia to reduce its emissions and meet the decarbonization target in the power sector. Moreover, with rapidly increasing emissions from the demand sector, Indonesia is at risk of not reaching its peak emissions. Therefore, it is crucial to have high emission reduction ambition and strong political commitment to achieve the target.

The discussion of Indonesia’s efforts to reach peak emissions in 2030, which has the potential to be a milestone in the transformation to renewable energy on a large scale or to end hopes of achieving the NZE target sooner, is the main topic in IESR’s flagship report entitled Indonesia Energy Transition Outlook (IETO) 2024.

The Executive Director of IESR, Fabby Tumiwa, stated that this year’s IETO 2024 is more comprehensive in monitoring Indonesia’s energy transition development and projection. Tumiwa mentioned that Indonesia has already released a plan.

The IETO 2024 report states that for Indonesia to meet the emission target of 250 MtCO2e/y by 2030, as agreed upon in the Just Energy Transition Partnership (JETP), it must reduce its coal and diesel power plants by 4.29 GW by 2030. Furthermore, Indonesia needs to increase its renewable energy development by at least 30.5 GW by 2030 to achieve this goal.

Pintoko Aji, Renewable Energy Analyst of IESR, said that the high penetration of variable renewable energy (solar and wind power) will make the concept of baseload plants or plants that operate continuously with high capacity irrelevant.

“To incorporate more variable renewable energy (VRE), Indonesia’s electricity system requires a flexible and responsive infrastructure. This means that the power system must be able to adapt to fluctuating loads and respond to the variability of electricity production from VRE sources. To achieve this, it is necessary to thoroughly review contractual restrictions, such as legal contract modifications from take-or-pay to take-and-pay, and to implement flexibility incentives.,” said Pintoko Aji.

IESR encourages the government to show stronger political will and concrete steps to accelerate renewable energy penetration. In addition, the decarbonization strategy must be implemented across all sectors to support each other. IESR believes that the new president who will be elected in the 2024 election must create momentum for the energy transition from the beginning of his leadership.

All discussions on the status and analysis of the energy sector to accelerate the energy transition are summarized in the Indonesia Energy Transition Outlook (IETO) 2024 and published since 2017 with the Indonesia Clean Energy Outlook (ICEO), which then transformed into IETO in 2019.

“In addition to summarizing the course of Indonesia’s energy transition over the past year, this IETO comprehensively projects sectoral policies in each energy sector and contrasts them with long-term targets. This can be an input for policymakers and stakeholders in the electricity, transportation, industry, and building sectors to improve their sectoral emission mitigation targets and implementation levels,” explained Deon Arinaldo, Program Manager of Energy Transformation, IESR.

 

IESR will host the Indonesia Energy Transition Outlook 2024 report launch on December 15, 2023. Don’t miss the chance to register and participate in this momentous event. Visit s.id/IETO2024 to secure your spot today.