Coal Funding Discontinued, Southeast Asian Countries Must Plan the Energy Transition Measures

press release

Jakarta, 1 August 2022 –Climate mitigation actions by encouraging the use of renewable energy have led countries that fund coal-fired power plants (CFPP) to shift their investment to renewable energy. This transformation will bring implications and challenges that need to be worked on by the countries that have been the destination for fossil energy investment in Southeast Asia.

China, Japan, and South Korea are the top three countries that fund fossil energy projects in Southeast Asia. As much as 123 GW CFPP operated outside China gained financial support or even Engineering, Procurement, and Construction (EPC) support from China. Those fossil energy projects were developed within the last two decades. In September 2021, President Xi pledged to support the developing countries that carry out an energy transition to renewable energy. He also said that China would no longer fund CFPP overseas. Ever since it was declared, as much as 12,8 GW of coal that had been planned to develop was canceled.

Moreover, several companies and domestic financial institutions in China also ended funding coal projects, such as the Bank of China (BOC) which gave up on funding coal mining and new CFPP overseas, except for the projects that had signed the loan agreement, or Tsingshan Holding Group, a major player in the industrial zone overseas, especially in the steel industry, announced that it would not establish new CFPP abroad.

Isabella Suarez, an analyst, at the Center for Research on Energy and Clean Air at the webinar ‘The State of Southeast Asia Energy Transition’ held by the Institute for Essential Services Reform (IESR), explained that for the first time, President Xi’s statement was formulated within China domestic policy. Besides, there is also a progressing narrative to develop together the green development implementation within Belt and Road Initiatives framework.

According to Isabella, what China needs to do to ensure the implementation of its promise is to determine the period and its achievement target. 

“On the other hand, the countries that have received fossil energy project funding need to begin the cancellation of CFPP development and infrastructure & network efficiency, and implement the green development within Belt and Road Initiatives,” said Isabella.

Aside from China and Japan, Dongjae Oh, Program Lead for Climate Finance Solutions for Our Climate (SFOC) explained that South Korea has also become the third largest country in the world that funds CFPP projects. As much as 87% (USD 8,6 million) of the coal downstream funding from South Korea was allocated to Southeast Asia (2011-2020).

In April 2022, the South Korean President declared to stop the new funding for CFPP projects overseas. However, according to Dongjae, South Korea still relied on other fossil energy such as oil and gas.

“If we compare the coal funding that only reaches USD 10 million, oil and gas funding can reach USD 127 million within 10 years,” said Dongjae.

Indonesia becomes one of the largest beneficiaries of oil and gas industries from South Korea. This investment will make the Southeast Asia region shift its energy into oil and gas.

Dongjae added that if it is the case, the Southeast Asia region will fail to achieve the Paris Agreement target as the gas emits a significant amount of greenhouse gas emissions. Besides, sustaining fossil energy using CCS will only increase the energy price.

“The South Korean government and Southeast Asia have to cooperate in intensifying the termination of coal operations and accelerate the transition into renewable energy. On the other side, South Korea must stop coal and gas funding or investment, considering renewable energy prices are getting cheaper,” Dongjae asserted.

Lisa Wijayani, Program Manager Green Economy IESR said that the funding ending in fossil energy from China and South Korea was a concrete step to supporting energy transition globally.

“Indonesia is supposed to benefit from this chance to expand renewable energy development. A clear policy of green taxonomy and green investments should be able to attract investors to shift their funding into the green sector such as renewable energy,” she said. ***

The Webinar “The State of Southeast Asia’s Energy Transition” is available on the IESR Indonesia YouTube channel.

Jejakkarbonku.id Facilitates Individual Contributions to Reduce Emissions

press release

Jakarta, August 5, 2022 – The Institute for Essential Services Reform (IESR) has officially launched a tool for calculating individuals’ emissions/carbon footprints called “Jejakkarbonku.id”. This website-based carbon calculator application was developed by IESR to improve similar tools that IESR has had since 2012. This update on Jejakkarbonku.id is expected to help individuals calculate the number of emissions from daily activities more comprehensively, as well as provide recommendations on how to reduce individual emissions.

Indonesia is included in the top 10 countries with the largest emissions in the world. IESR views that individual awareness of calculating their carbon emissions and adopting a low-emissions lifestyle will contribute to the achievement of emission reduction targets under the Paris Agreement. Based on the IPCC AR6 WG3 report, the global carbon budget (carbon emission quota) only has 300-500 Gton CO2e (>50% confidence level), meaning that with global annual carbon emissions reaching 59 Gton CO, only 5-9 years left before the increase the global average temperature of 1.5 degrees Celsius has been exceeded.

Fabby Tumiwa, Executive Director of IESR, said that apart from technological advances in reducing greenhouse gas emissions, there is also a need for systemic changes in human behavior.

The civil movement to reduce personal emissions is expected to encourage the government to increase its emission reduction targets. Because, if referring to the figures currently set, it is not enough to keep global warming at 1.5 degrees level.

Farah Vianda, Green Economy Program Officer IESR, said that several data updates on this carbon calculator have been made to provide a more detailed calculation of greenhouse gas emissions. She mentioned that the Jejakkarbonku.id carbon calculator provides a calculation of emissions from 3 sectors i.e household, food and transportation. IESR still maintains the competitive features to encourage a stronger emission reduction spirit. The highest rating means that the emissions produced are getting smaller.

“Every human activity can produce greenhouse gas emissions. The contribution of each individual to reduce GHG emissions is needed to overcome the climate crisis. The more emissions produced, the more the earth’s surface temperature and the frequency of occurrence of natural disasters will increase. The IPCC estimates that global emissions must be halved by 2030, one of which is by making a massive energy transition. Based on these problems, we offer a carbon calculator to calculate emissions and find ways to reduce emissions individually,” said Farah.

Fatmah, a Lecturer in the School of Environmental Science at the University of Indonesia revealed that public awareness of the carbon footprint will trigger a change in attitudes to reduce emissions.

“Carbon footprint education needs to be given to the community. There are many behaviors that can be educated in the community. This application is very good and can be done in collaboration with academics to provide carbon footprint education not only to the younger generation but also to other generations,” she concluded, who was also present on the same occasion.

IESR: Indonesia Needs Economic Transformation in Coal-Produced Regions

press release

Jakarta, 11 July 2022 – The demand for coal as a long-term energy source is predicted to decrease significantly. This trend is affected by stronger climate commitment from coal-imported countries to shift into renewable energy. Institute for Essential Services Reform (IESR) in its study even said that if the government’s commitment to reducing emissions was following the Paris Agreement to achieve net-zero emission by 2050, then in 2045, coal would no longer be utilized in Indonesia’s energy system. It demands the government’s commitment to preparing the economic transformation and employment for regions whose income is dominated by the coal sector.

Fabby Tumiwa, Executive Director of IESR said that the enhancement of emissions target in Nationally Determined Contribution (NDC) from countries that utilize coal, such as China, Japan, South Korea, United States, Europe Union, South Africa, and other countries, will affect the reduction to fossil energy projects’ funding. Referring to the Paris Agreement, if whole countries adopt a more aggressive coal phase-out, then in 2030, coal production will drop by 20%, 30% in 2040, and 90% in 2050.

“This production reduction should be anticipated due to the impact on employment and will also affect the national and coal-produced regions’ income. This threat is quite serious considering coal-produced regions do not have many choices for their economic alternative while carrying out post-coal mining economic transformation will take a long time. Now is the time to make a transformation and prepare the foundation to conduct post-coal mining and post-coal power plant economic transformation. The failure to succeed in economic transformation will not only cause a higher unemployment rate but also the decline in economic competitiveness,” said Fabby.

He added that coal-produced regions need to be supported with a particular national policy. IESR even recommended this issue should be prioritized and included in forming RPJMN 2024-2029.

Julius Christian, the author of the IESR study titled Redefining Future Jobs: The implication of the coal phase-out to the employment sector and economic transformation in Indonesia’s coal regions urged the central and coal-produced regions in Indonesia to anticipate the possibility of income reduction and employment opportunities for the workers from the coal sector.

“Collaboration between the central and regional government will be an important note in preparing the long-term economic strategy to realize a more diverse economic structure and no longer depend on coal,” Julius explained.

In 2020, there were approximately 250.000 workers who directly worked in the mining sector. These workers, in general, are aged under 50 years old. Therefore they still could be prepared with various types of training to shift to other employment sectors. Besides, the government also needs to prepare the allowance and social safety net to anticipate the rapid decline in coal demand.

“Coal workers are one of the most impacted groups from this coal decline. However, currently, the workers have not realized the risk they will be facing and have not been included in all energy transition discourse,” added Julius.

Ronald Suryadi, a researcher at IESR who is also writing the report Redefining Future Job, also said that economic transformation needs to be addressed for Indonesia’s provinces that its Gross Regional Domestic Product (GRDP) is mainly gained from the coal sector, such as North Kalimantan that produces 48% national coal supply, South Kalimantan (32%), South Sumatra (9%), North Kalimantan (3%), and Central Kalimantan (3%).

“A gradual economic transformation is not only needed to mitigate the resulting impact, but also to achieve an economic structure that can keep up with the current development in the future,” said Ronald.

IESR pushes for an inclusive planning and strategy formulation process by involving the affected groups, especially the workers and the community around mining areas. The purpose is that economic transformation will be carried out sustainably and correspond to people’s needs. For instance, economic transformation in the coal area can be carried out by modernizing the agricultural sector. Besides, the government also needs to strengthen the existing main industries with a high multiplier effect, such as the food and chemical industries. In addition, the preparation to establish an economy that is centralized on services can be implemented by building infrastructure, restoring the environment, and intensifying human resources.

The IESR study ‘Redefining Future Jobs’ can be downloaded at https://s.id/FutureJobs. ***

Profit and Revenue from Coal to Accelerate Energy Transition

Jakarta, 30 June 2022 –  As the largest contributor to greenhouse gas (GHG) emissions, coal-fired power plants (CFPP) need to be retired before 2050 and completely substituted with renewable energy. The dominance of CFPP in Indonesia in the electricity sector, amounting to 66% of the electricity mix, should be gradually reduced. Government can use the momentum of rising coal reference prices (HBA) to USD 342/ton in June 2022 by preparing an energy transition mechanism.

The Institute for Essential Services Reform (IESR) views the government and PLN’s plan to maintain CFPP by utilizing clean coal technology, such as supercritical and ultra-supercritical steam power plants, as unacceptable relative to other means to reduce global emissions, such as renewable energy technologies. The direct emission range of CFPP in Indonesia is 800-1200 kgCO2e/MWh, depending on the existing technology. Even the operation of the best CFPP ultra-supercritical technology still produces direct emissions of >700 kgCO2e/MWh, higher than other fossil generators such as gas. It also does not have a significant impact on reducing the national grid emission factor, which is already at ~900kgCO2e/MWh. A strategy using Carbon Capture and Storage/Carbon Capture, Utilization, and Storage (CCS/CCUS) technology will also not significantly reduce GHG emissions and instead have an expensive investment with a low success rate.

“PLN needs to calculate technology options in making the energy transition. CCS/CCUS technology to this day is still quite expensive. The IEA estimates this carbon capture technology to cost $120 per tonne of CO2 or $0.12/kg. The utilization of CCS/CCUS technology will significantly increase the cost of steam power generation, approximately $0.08 – 0.1/kWh. Considering this cost, it is more affordable to close the CFPP early and replace it with solar power plants plus utility-scale batteries. It has a more competitive economy than the CFPP with CCS/CCUS,” explained Fabby Tumiwa, Executive Director of IESR. 

Furthermore, highlighting the use of CCS in two steam power plants at PetraNova and the Boundary Dam in the US, which have not been able to reduce carbon emissions as originally designed, IESR believes that the reliability of using CCS in steam power plants has not been proven. In addition, the life cycle emissions of CFPP with CCS are still relatively large due to the increase in the use of coal to support CCS operations in CFPP. tested

To meet domestic needs only, the government often implements Domestic Market Obligations (DMO) that have dilemmatic consequences.

“Coal supply to the domestic market is limited to a maximum price of USD 70/ton. On the other hand, the renewable energy tariff policy still refers to the Minister of Energy and Mineral Resources Regulation 50/2017 which limits the buying and selling rate of renewable energy to 85% of the Basic Cost of Electricity Supply (BPP). Here, one of the obstacles in the energy transition is the forcing of renewable energy to be cheaper than BPP whose value is dominated by coal power plants with the support of the USD 70/ton DMO regulation,” said Deon Arinaldo, Program Manager of Energy Transformation at IESR.

The coal DMO policy has created an uneven playing field for renewable energy. If the government does not implement the DMO, the price of electricity generation from coal power plants can reach 14-16 cents/kWh if the coal price of 324 USD/ton is continued. This means that without the support of regulations, electricity generation from renewable energy is already cheaper than coal-fired power plants. DMO policies distort the economics of energy generation because they are not based on actual costs. Moreover, it provides a disincentive for companies to accelerate renewable energy that is cheaper and profitable in the long term.

Deon said that the economics of energy generation is calculated from the investment and operating costs that are averaged over the lifetime. When comparing fossil energy and renewable energy, the investment price of renewable energy is expensive at the beginning, but the investment costs will show a predictable downward trend and accelerate with the right policy support. In contrast to fossil energy, which is highly dependent on operational costs, the volatility is very high.

“It is necessary to watch the impact on the cost of electricity generation so that the DMO tariff cannot be revoked because CFPP is already dominant in the electricity system. Preferably, profits and non-tax revenue (PNBP) from the coal mining sector can be partially diverted to encourage the energy transition by gradually reducing the dependence of the electricity system on CFPP and fostering the development of renewable energy. An effective mechanism to take advantage of this will require coordination from the Ministry of Finance, MEMR, and the Ministry of SOEs as well as relevant stakeholders such as PLN and the coal industry,” explained Deon.

Flexible Power Plant Operation to Enable High Renewable Energy Penetration

press release

Jakarta, 15 June 2022 –  The dominance of coal-fired power plants (CFPP) in Indonesia’s electricity system is one of the causes of the below optimal utilization of the abundant technical potential of renewable energy. Around 70% of electricity generation in Indonesia still comes from CFPP, where most of CFPP units are under 10 (ten) years old. Moreover, the growth in electricity demand is not as high as projected, thus causing more electricity supply. This condition closes the opportunity for massive integration of renewable energy generation in this decade which is even greater due to the transition of the electricity system towards net-zero emission.

The Institute for Essential Services Reform (IESR), in its study entitled The Flexible Thermal Power Plants analyzed that as a temporary measure, it is necessary to retrofit the coal power plant to be operated flexibly. This will shift the role of the CFPP, which originally functioned purely as a baseload, to be able to adjust the output according to the intermittent renewable energy, thereby helping the stability of the electricity network. This option can be implemented before the CFPP is permanently phased out. It means that flexible power plants will be discontinued after the supply of renewable energy can meet demand and the interruption can be overcome with other options, such as the interconnection of the electricity grid, management of electricity demand through market mechanisms, and alternative energy storage such as batteries, hydrogen gas turbines.

“Based on the IESR study, for Indonesia’s electricity system to be in line with the Paris Agreement targets, by 2030 around 47% of electrical energy in Indonesia must come from renewable energy plants. The challenge is that the over the capacity of PLN’s power plants which reaches 5 GW, makes the renewable energy mix in the system unable to be increased without reducing the capacity of the CFPP through early retirement or reducing the capacity factor of the CFPP by carrying out flexible operating modes. The government and PLN’s plans to retire 5 GW of CFPP and replace 3.7 GW with renewable energy generators give little hope. This step needs to be complemented by a more flexible CFPP operation to increase the use of renewable energy,” said Fabby Tumiwa, Executive Director of IESR.

IESR views the flexible operation of the CFPP as something that can be technically done by Indonesia. CFPP in Indonesia is dominated by sub-critical CFPP so that it can replicate the practice of flexible operation of CFPP in other countries, which is generally also applied in sub-critical CFPP.

In addition, CFPPs in Indonesia are generally young (0-22 years old), with an average age of 9 years. About 55% are outside Java-Madura-Bali (Jamali), and the island of Sumatra, and about 34% are in Jamali and Sumatra. Retrofitting a young CFPP to operate flexibly can be a better choice because it does not require an expensive investment, even without cost, compared to modifying an old CFPP. Thus, IESR encourages the government to map power plants by age group to prepare a flexible PLTU operation plan. The plan needs to be integrated with a larger renewable energy mix target.

Not only that, the current oversupply of electricity should be an opportunity to operate the CFPP flexibly. According to the latest PLN RUPTL, the ideal reserve margin for the Jamali system is around 35% (PLN, 2021). Meanwhile, the Jamali system’s reserve margin has even reached 46.8%.

“The excess reserve margin in some systems means that some of the power plants in the system do not need to be fully operated, so there is an opportunity for retrofitting which will require the power plant to stop operating for approximately 6 months to a year,” explained Raditya Wiranegara, Senior Researcher, IESR who is also is the author of the Study of Flexible Thermal Power Plants: An Analysis of Operating Coal-Fired Power Plants Flexibly to Enable the High-Level in Variable Renewables in Indonesia’s Power System

This IESR study shows that flexible CFPP operation retrofit can be focused on reducing the minimum load of CFPP, from 50% to 30%, increasing the CFPP’s ability to ramp rate of 2 times the usual load, and speeding up start-up time from 2-10 hours to 1.3-6 hours. The benefit of reducing the CFPP minimum load is to reduce costs due to the start-up/shutdown process, which will become more frequent if the electricity mix from renewable energy is higher. Another reason, apart from producing high emissions, is that if the CFPP frequently does start-up/shutdown, it will have implications for high operating costs because start-up/shutdown requires expensive diesel oil. Furthermore, the flexibility of the CFPP will reduce system costs because the flexible operating costs of the CFPP are cheaper than using power storage. In addition, the flexible operation of the CFPP can provide a wider role for other generators and energy storage, such as batteries and natural gas-fired power plants.

Reflecting on the experiences of Germany and India, which had earlier retrofitted steam power plants that were more flexible, IESR submitted recommendations to the Indonesian government covering the following 3 categories, namely policies and contracts, market, as well as technical and stakeholder involvement.

In terms of the regulatory framework, the government needs to restructure the terms of a flexible Power Purchasing Agreement (PPA) for CFPP. This includes revising the Electricity Purchase Agreement (PPA), which currently places the CFPP as the base load.

“For flexible operations to be implemented, a revision of the PPA, which still has a long tenor, 30 years, and requires generators to operate at a high capacity factor, 80 to 85%, needs to be done. On the other hand, the revised PPA should encourage generators to operate flexibly by negotiating clauses in the Take or Pay (ToP) scheme. This negotiation should consider reducing the ratio of 80% in the calculation of the ToP scheme, as well as encouraging generator operators to participate in the ancillary services and capacity market. By participating in these two markets, it is hoped that the losses from decreasing the ratio in the ToP scheme can be covered,” said Raditya.

Meanwhile, for a market mechanism that allows for greater development of renewable energy, the government needs to build a supply mechanism to determine the price of renewable energy that is more competitive. For this market to work, there must be an independent body set up to regulate the newly formed market and its supply mechanism.

Technically, the government must identify CFPP units for flexible CFPP pilot projects such as subcritical CFPPs that are less than 5 years old, with capacities between 100 MW and 600 MW. In addition, you can choose a CFPP located in the Sulawesi system for this pilot project.

“The power plant in this system is dominated by young units. In addition, the trend of using renewable energy in this system is quite optimistic. By 2030 it is estimated that half of the generation in this system will come from renewable energy based on the electricity system planning to model using PLEXOS that is being carried out by IESR. It is hoped that this project will assist in determining economic viability and identifying initial capital investment as well as operational and maintenance costs,” concluded Raditya.

IESR also encourages capacity building for policymakers, regulators, and electricity operators to run CFPP flexibly. It is useful to provide them with the knowledge they need to prepare market regulations and reform existing electric power markets.***

The Aspirations of the Communities for the NERE Bill

Jakarta, 19 May 2022 – Decarbonization of the energy sector as one of the largest emitters in Indonesia needs to be carried out to achieve the net-zero target in 2060 or sooner. Thus, Indonesia should prepare supporting policies for development of renewable energy. However, based on the draft of the New Energy and Renewable Energy Bill (NERE) has entered the harmonization stage in the Indonesian House of Representatives, various organizations representing certain community groups view that the draft NERE bill deviates from its goal of encouraging the sustainable use of renewable energy.

Institute for Essential Services Reform (IESR), Bersihkan Indonesia, Koalisi Perempuan Indonesia (KPI), Masyarakat Energi Terbarukan Indonesia (METI), Adidaya Initiative, Yayasan Lembaga Konsumen Indonesia (YLKI) dan Indonesian Center for Environmental Law (ICEL)  held discussions and conferences press to convey their aspirations to the NERE bill.

IESR highlights the ambiguity of the NERE bill that mixes fossil, nuclear and renewable energy in one bill. According to IESR, the new energy resource, such as a downstream product of coal and nuclear power plants, will increase the potential for stranded assets and will not significantly reduce greenhouse gas (GHG) emissions.

“This bill is heavily influenced by the interests of the status quo, the coal and nuclear industries, which sneak in using the new energy definition. The implication is making this bill blurred on developing renewable energy that strongly needs political encouragement and regulatory framework to develop it quickly, supporting the goal of the energy transition,” said Fabby Tumiwa, Executive Director of IESR.

Likewise, Ahmad Ashov Birry, Coordinator of Bersihkan Indonesia (BI), encouraged the Indonesian House of Representatives to prepare policies that support renewable energy.

“Instead, the NERE bill that claims to support renewable energy blatantly obscures a possible renewable energy future for Indonesia by making way for fossil and other harmful energy to be associated as renewable energy. This can be an unclear signal for the international community that wants to support Indonesia in solidarity with its transition. There is still an opportunity for change, and the government must take bold steps to change it,” said Ahmad.

The co-founder of the Adidaya Initiative, Aji Said Iqbal Fajri, conveyed three main points of pressure for Commission VII of the DPR RI.

“We request that Commission VII of the House of Representatives of the Republic of Indonesia (DPR-RI) remove all forms of non-renewable energy as a new energy source in the NERE bill. Second, Commission VII of the DPR-RI and related stakeholders regulate incentives for  renewable energy to achieve the new and renewable energy mix target of 23% by 2025 as stated in the General National Energy Plan (RUEN). Third, Commission VII of the DPR-RI and related stakeholders to consider scientific suggestions and aspirations of the community from various groups in preparing the NERE bill as an effort to increase economic growth while increasing decarbonization efforts in the energy sector to achieve economic and environmental justice in Indonesia.”

Questioning incentives for renewable energy users, Chairman of the Yayasan Lembaga Konsumen Indonesia (YLKI) Tulus Abadi said the NERE bill must regulate significant incentives, both fiscal and non-fiscal for renewable energy’s consumers.

Furthermore, the Executive Director of the Masyarakat Energi Terbarukan Indonesia (METI), Paul Butarbutar said that the NERE bill should be the legal basis for maximizing investment in the renewable energy  sector. 

“This bill should focus on renewable energy, therefore, it can be a strong legal basis, which provides legal certainty to maximize investment in renewable energy, as part of the energy transition to achieve net-zero emissions as soon as possible. Thus, all articles related to new energy, terms that are not known internationally, can be abolished,” explained Paul.

Meanwhile, he also added that if the government and the nuclear power plant industry intend to encourage the use of nuclear energy, the government should prioritize the revision of Law 10 of 1997 on Nuclear Energy. If it is related to the energy transition, they can revise Law No. 30 of 2007.

“If the government wants to encourage the use of nuclear power for a generation, the government should prioritize the revision of Law 10 of 1997, so that it can be used as a strong legal basis for nuclear power plant investment. Moreover, the utilization of nuclear power plants based on the government’s roadmap is still long to be realized, so the government has sufficient time to revise Law 10 of 1997. There is no urgency to include nuclear energy in this bill. Regarding the energy transition, it is not proper to include it in this bill. What needs to be done is to revise Law 30 of 2007 to accommodate issues of the energy transition, net-zero emission, NDC, and the Paris Agreement in the energy sector,” explained Paul.

Carrying the aspirations of farmers and fishermen, Harmanto, Head of the Media, Communication and Information Department of the Kelompok Tani Nelayan Andalan (KTNA) said that his party firmly rejects the development of nuclear power plants. According to him, farmers and fishermen around the nuclear power plant will be the disadvantageous group affected by the development of the nuclear power plant, especially if there is an accident at the nuclear power plant.

“NPP requires an exclusive zone that is a huge area. So, it has the potential to take up large areas such as large coastal areas. It can displace farmers’ land and limit fishermen’s access to the sea. It has been seen from some large coal-fired power plant constructions on the north coast of Java, which has displaced farmers’ land and hampered fishermen’s access to the sea, as well as changing fishing areas. In addition, the risk of a nuclear power plant accident is not zero. Reactor accidents can result in radiation leaks that impact the land, water, and sea. In Fukushima, radioactive wastewater from the Fukushima nuclear power plant is dumped into the sea and makes people afraid to eat fish,” explained Harmanto.

On the other hand, the Komisi Perempuan Indonesia (KPI), Mike Verawati Tangka asked the DPR RI to pay more attention to the voice and position of women in energy policy making. The principles of equality and social inclusion must be the perspective of energy governance from upstream to downstream in energy policies that are being prepared by the parliament and government. The article on community participation in the NERE bill must ensure that all elements of society, such as women and other marginalized groups can be fully involved in access to sustainable clean energy by ensuring gender-based representation. This needs to be done because women and other marginalized groups are still positioned as limited energy consumers so that when the energy crisis occurs they face more severe consequences.

“Gender mainstreaming is not only limited to mentioning terms in energy policy but must be operationalized within the framework of its implementation. Such as incorporating specific gender goals into the design of energy sector development and empowering and involving women and marginalized groups through consultation, participation, and decision making. Then develop a gender-specific strategy to maximize benefits for women and the poor in overcoming the impacts of new and renewable energy development,” said Mike.

Agreeing with the aspirations conveyed, Sonny Keraf, an academician from Atma Jaya Catholic University, added that the NERE bill is a ‘poco-poco dance’ which is a step forward and a step backward, because they are hijacked and imprisoned by dirty fossil traders to preserve their at the expense of humanity’s common interest in saving the earth’s crisis.

“There are too many negative impacts if we stick with the ‘poco-poco dance’. The credibility of the government’s global diplomacy of climate change negotiations could be eroded. Exports of domestic industrial products can be interfered with by the provisions of emission standards in the entire production chain and supply chain of our products. Our commitment to climate change mitigation has been hampered,” he said.***

Indonesia Fosters Investment Mobilization to Achieve Gigawatt Order of Solar

Jakarta, 19 April 2022 – Indonesia’s presidency at the G20 2022 is a momentum to show Indonesia’s seriousness in accelerating the global energy transition and the national energy transition plan to achieve carbon-neutral 2060 or faster. One of the ways to achieve it is by accelerating the utilization of solar PV, which has a potential of up to 3400 Gigawatts in Indonesia. Through the Indonesia Solar Summit 2022 organized by the Ministry of Energy and Mineral Resources (MEMR) in collaboration with the Institute for Essential Services Reform (IESR), it is hoped that the commitment of local governments, electricity consumers, private and state-owned developers, regional owned-enterprises, and the community to encourage the adoption of solar PV and mobilize the required investment.

Representing the Minister of Energy and Mineral Resources (MEMR), Secretary General of the Ministry of Energy and Mineral Resources Ego Syahrial said that Indonesia’s energy transition roadmap to achieve Net Zero Emission (NZE) by 2060, solar energy will play an important role in national electricity supply, of which 587 GW capacity new renewable energy (NRE), of 361 GW or more than 60% will come from solar energy.

“The government has three major programs for utilizing solar energy, namely rooftop solar PV, large-scale ground-mounted solar PV, and floating solar PV. The implementation of these various programs requires contributions from many parties, not only the government, business area holders, and renewable energy developers, but also energy users, such as the commercial and industrial sectors,” explained Ego in his speech as well as opening the Indonesia Solar Summit/ISS 2022 event.

The commitment, continued Ego, to realize the 2.3 GW (accumulated) solar PV project in 2022 and 2023 which was declared by 31 companies and the plan to build a solar PV component factory in Indonesia is to re-energize its solar energy investment in Indonesia.

Ego added that the rooftop solar power plant itself is one of the quick wins in accelerating the use of solar energy through direct contributions from energy users, especially for industry to meet increasingly strong market demands for green products.

“Support from local manufacturers is also very much needed to fulfill local content requirements and provide great benefits for the country, especially in terms of job creation. Besides that, aspects of easy access to cheap financing, incentives, and other financing facilities are very important to provide financial feasibility and increase energy investment. renewable energy such as solar PV,” he said.

Michael R. Bloomberg, Founder of Bloomberg LP and Bloomberg Philanthropies and United Nations Special Envoy for Climate Ambition and Solutions, emphasized the importance of transitioning to renewable energy as one of the right solutions to achieving zero emissions. He continued that speeding up the investment in solar power will accelerate the green resilient economic development.

“Indonesia has the potential to be a global leader in solar power. This summit is an important opportunity to showcase and accelerate the country’s clean energy efforts before G20 leaders arrive in Bali this November. Solar is already cheaper than coal in many countries. The more we do to speed up investment in solar power, the faster we can cut emissions, create new jobs, and build a stronger and more resilient global economy,” Michael explained.

In 2021, IESR identified large-scale PV project pipelines totaling 2.7 GWac, with an investment value of US$3 billion. At the ISS 2022, the number of solar PV project pipelines committed by multiple companies amounts to 2,300 MW, consisting of rooftop PV (largest percentage), ground-mounted solar PV, and floating solar PV. To mobilize this investment potential, an attractive and supportive ecosystem is needed; including sound policies and regulations, comprehensive implementation of existing regulations, and support to drive the development of the solar PV industry supply chain in Indonesia. 

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that to achieve the renewable energy target of 23% by 2025 according to Presidential Regulation 22/2017, as well as the RUPTL target of 10.9 GW, additional renewable energy generating capacity of 4 GW is needed from outside of PLN. This addition can be contributed by solar PV, both rooftop solar and the use of solar PV in other PLN electricity business holders.

“From the declaration of the 2.3 GW solar PV project at ISS 2022, shows the enormous potential of solar energy in Indonesia. Indonesia can become a Solar Powerhouse in Southeast Asia with potential growth of 3-4 GW annually if it is fully supported. It opens up opportunities for green investment to stream, opportunities to grow the integrated solar power industry from upstream to downstream, and employment and become the driving force for post-COVID economic recovery. President Jokowi needs to see this potential and lead the solar energy revolution for the energy transition in Indonesia,” said Fabby Tumiwa.

The Indonesia Solar Summit (ISS) 2022 was held on 19 and 20 April 2022, highlighting support from the Coordinating Minister for Economic Affairs, Minister of Energy and Mineral Resources represented by the Secretary-General of the Ministry of Energy and Mineral Resources, Deputy Minister of State-Owned Enterprises, Deputy for Investment Planning at the Ministry of Investment, representatives of the Ministry of Finance, CEOs of national and multinational companies, and 15 speakers on Summit Day 2 workshop. ISS 2022 receives support from Bloomberg Philanthropies, Matahari Power, Utomo SolaRuv, BloombergNEF, International Solar Alliance, the Indonesian Solar Energy Association, and the Clean Affordable and Secure Energy in Southeast Asia (CASE) Project; and was attended by more than 600 participants online and offline.

NRE Bill is Ineffective in Supporting Energy Transition in Indonesia

press release

Jakarta, March 21, 2022 – Entering the harmonization stage in the Indonesian House of Representatives (DPR RI), the New Renewable Energy Bill (NRE Bill) is seen as deviating from the goal of encouraging the energy transition to achieve carbon neutrality by 2060 or as soon as possible. At the plenary meeting of the harmonization of the RE Bill (17/03/2022), experts from the legislative strengthened the position of new energy by adding new energy sources to the bill, which is now referred to as New and Renewable Energy (NRE). 

The Institute for Essential Services Reform (IESR) views the NRE concept in one law as ineffective and ambiguous. Moreover, the inclusion of coal derivative products such as coal gasification, coal liquefaction, coal bed methane as a new energy source will potentially hamper the efforts to reduce greenhouse gasses (GHG).

GHG emissions resulting from the coal gasification process in new energy are much higher than renewable energy. The total emission from the conversion process of 1 kg of coal into Dimethyl Ether (DME) is around 3.2 Kg CO2eq or about 400 grams of CO2 eq/kWh (IRENA, 2021). It does not include the emissions caused when burning DME, which is equivalent to burning diesel oil that can reach 631 grams of CO2/kWh (assuming 40% DME stove efficiency). Therefore, the total emissions produced to get the same amount of energy reaches 1031 grams CO2/kWh. Meanwhile, the life cycle emissions generated from the use of renewable energy, such as solar power plants are only around 40 grams of CO2 eq/kWh (NREL, 2012).

“The NRE Bill draft shows the DPR RI’s lack of understanding of the need for energy development in the context of the energy transition. The DPR RI also accommodates the interests of the coal industry, which wants to continue to gain market share when the coal market for electricity generation declines. The entry of new energy technologies such as coal downstream will make Indonesia trapped with fossil energy infrastructure. Meanwhile, the inclusion of nuclear power plants will hinder the acceleration of the energy transition that requires the development of renewable energy on a large and fast scale,” said Fabby Tumiwa, Executive Director of IESR.

The utilization of technology that reduces carbon emissions in non-renewable energy (fossil energy) plants will expand the mechanism for using non-renewable energy, such as clean coal technology (ultra-supercritical power plant), carbon capture, and storage (CCS) technology, and biomass co-firing. IESR believes that maintaining coal-fired power plants with CCS technology is a relatively expensive option compared to developing renewable energy.

“The support for fossil energy or non-renewable energy in the NRE Bill will give a signal to maintain the steam power plant in the energy system for longer, instead of retiring the steam power plant earlier as has been discussed in recent months,” added Deon Arinaldo, Manager of Energy Transformation Program, IESR.

Deon added that the DPR RI should have reviewed the effective and economical use of energy in formulating the NRE Bill.

“To achieve carbon neutrality, the most cost-effective greenhouse gas mitigation should be considered, which according to our analysis is renewable energy. With regulatory support, renewable energy can be built and renewable energy funds can be used effectively to encourage the preparation of massive renewable energy projects,” he explained.

The latest draft also authorizes the central government to set prices for new and renewable energy if no agreement is reached between the parties/business entities (in this case PLN and the developer). In this case, of course, it will be related to the provision of incentive funds and compensation for new energy or renewable energy due to price-fixing by the central government. 

“The government should establish incentives and a scheduled renewable energy auction mechanism to provide certainty to business actors. Pricing should be done for technologies that are not yet commercial and are applied in remote areas to ensure access to clean energy for the community,” said Fabby Tumiwa.

Lessons Learned from Fukushima, Nuclear Power Plant Development Has Entered Its Sunset Years

press release

Jakarta, March 11, 2022 – Amid energy decarbonization efforts to achieve carbon neutrality as soon as mid-century or in 2060, the Indonesian government is considering developing a Nuclear Power Plant (NPP). However, several nuclear power plant accidents in the world, such as Three Mile Island (1979), Chernobyl (1986), and Fukushima (2011), indicate that nuclear power plants are full of security risks and adverse economic impacts. Commemorating 11 years after the Fukushima nuclear power plant accident, the Institute for Essential Services Reform (IESR) and the Earth Rekso Society (Marem) held a Webinar “Dynamics of the Development of Nuclear Power Plants after the Fukushima Accident”.

Even though it has been regulated in PP No. 79 of 2014 concerning nuclear as a last choice, the government and PLN are still discussing nuclear power plants, such as small modular reactor technology, as one of the solutions on the net-zero roadmaps that is being prepared. However, Fabby Tumiwa, Executive Director of IESR, views that in energy policy the government should prioritize technology that is reliable and can be built quickly so that it can overcome the urgent climate crisis.

“If the government relies on unreliable technology, it will only waste resources that should be used to encourage the development of other energy sources that are safer, more reliable, and effective in dealing with climate change,” said Fabby.

Learning from Japan’s experience, Tatsujiro Suzuki, Professor at the Research Center for Nuclear Weapons Abolition at Nagasaki University, who also served as the Japan Atomic Energy Commission (JAEC) (2010-2014) stated that the Fukushima nuclear power plant accident has changed the energy sector and public perception of Japan. Before the Fukushima tragedy, there were 54 units of nuclear power plants operating, but this number was reduced to 10 units by 2021. The Japanese public perception changed drastically from 87 percent (2010) who thought nuclear power plants were a necessary power plant, to only 24 percent in 2013. As a result of the accident, investment in nuclear power plant safety and accident costs increased so that the cost of nuclear power plants was no longer the cheapest in Japan. Based on data from the Japanese Ministry of Economy, Trade, and Industry (METI), the average cost of generating nuclear power plants in 2021 will be around 11 yen/kWh, higher than solar and wind energy, which costs 8-9 yen/kWh.

Furthermore, Suzuki explained that the Fukushima accident cost around USD 322 billion up to USD 719 billion according to data from the Japan Center for Economic Research. The government’s calculation is lower, namely USD 74.3 billion up to USD 223.1 billion because it does not include the disposal costs of the remaining radioactive fuel of nuclear power plants. Moreover, radioactive waste from the Fukushima nuclear power plant contaminates water, soil, and food. Meanwhile, out of 35,000 refugees (as of April 2021), only 2.5 percent of people returned to affected cities such as Okuma City and 9.2 percent to Tomioka City.

“The impact of the accident is not only from the engineering section, we have to consider social economics, political, and ethical points of view. In addition, the government needs to involve independent scientific institutions in the policy making process and finally be able to increase public trust, because policy without science is a gamble,” said Suzuki.

He also added that nuclear power plants are like medicine which has a strong effect. It should not be taken if not needed.  

In line with Suzuki, MV Ramana, Professor, and Director of the Liu Institute for Global Issues from the University of British Columbia emphasized that the golden era of nuclear power plants has passed, about 3 decades ago. According to him, many factors have contributed to the decline in nuclear power plant development, including the cost of making reactors too expensive compared to the declining prices of solar and wind power. Ramana explained that the innovation of the Small Modular Reactor (a nuclear reactor designed in a size of less than 300 MW and consisting of modules/parts that can be built separately) is also not able to solve all of the problems in one design.

“Even if we assume the learning (about the nuclear industry) ends up with a positive rate, you still have to manufacture hundreds, if not thousands of small reactors before it can be as cheap as large reactors. While the large one is not economically competitive against solar or wind,” said Ramana.

Ramana views that instead of building a nuclear power plant with all the risks, it is better to use the investment for other sustainable solutions.

 

“On solar and wind power, 20 years ago people used to say more than 20% Variable Renewable Energy (VRE) in the grid will make it unstable. Now, the planners say you could go as high as 80%, maybe 90% on just VRE with the rest being storage or base load plants,” he explained.

Herman Darnel Ibrahim, a member of the National Energy Council on the same occasion said that without nuclear power, Indonesia can achieve carbon neutrality in 2060 by maximizing renewable energy; hydropower, geothermal, and biomass, and developing massive solar energy with a capacity of hundreds of GW.

“The conditions needed to be able to fulfill are the successful discovery of technology for penetration of up to 75% of the electricity grid, the successful development of cheaper energy storage that allows the development of Variable Renewable Energy (VRE) with storage capacity, as well as Levelized Cost of Electricity ( LCOE) solar and wind energy with storage is cheaper than a nuclear energy LCOE,” he concluded.