COVID19 Aftermath: The Energy Transition must start Now!

EU Climate Diplomacy Week: Green Recovery in Post COVID-19 Era 

Jakarta, 2 November 2020 — The COVID-19 pandemic brings significant shocks to the world economy and energy. The implementation of lockdown and large-scale social restrictions in a certain period of time has resulted in many industries going out of business and millions of people losing their jobs. The IMF predicts that the global economy will contract 4.4% this year before it is expected to recover positively again next year or post COVID19.

The shock from a pandemic leads to reduced emissions globally. The result is a sudden 8.8% reduction in global CO2 emissions in the first half of 2020. Although it seems in line with the Paris Agreement to reduce greenhouse gas emissions to prevent the earth’s temperature from rising above 2 degrees Celsius, this would not be the case if it is not immediately responded with the right policy. This is a good opportunity for every country in the world to immediately take strategic policies to restore their economy while at the same time making an energy transition by leaving fossil energy to renewable energy. 

Joining the EU to celebrate the Climate Diplomacy Week series, Institute for Essential Services Reform (IESR) conducted a webinar on Post-COVID-19 Green Recovery. Speaking at the event was Fabby Tumiwa, Executive Director of IESR, Thomas Capral Henriksen, Head of Energy Cooperation at the Embassy of Denmark to Indonesia, Lidia Wojtal, Project Leader, Agora Energiewende, Catrina Laura Godinho, Project Coordinator, Climate Transparency and Lourdes Sanchez, Leader and Senior Policy Advisor, International Institute for Sustainable Development (IISD) and responding was Ridha Yasser, Deputy Director of Energy Program and Investment, Directorate of Energy, Coordinating Ministry for Maritime Affairs and Investment.

“Globally, data from the International Energy Agency (IEA) notes that demand for oil has decreased by 9%, while coal has also fallen by 6%. Indonesia itself has experienced a decline in coal exports reaching 11% by August this year, compared to last year. This equates to a loss in income of $ 2.2 billion. The demand for coal in the Indonesian market fell by 20%. On the bright side, the decline in demand for fossil fuels is actually an opportunity to accelerate the energy transition, if the country views it like that, “said Fabby Tumiwa opening the activity.

Fabby explained the fact that in 2018, Indonesia through President Joko Widodo had signed the Solidarity and Just Transition or Silesia Declaration. This declaration is an urge for Indonesia to undertake a low-carbon energy transition and economic transformation that is resilient to climate change in order to achieve sustainable development based on a “just transition”.

“The spirit and characteristics of this declaration must be integrated into Indonesia’s economy and post-pandemic development strategy. For example, the government needs to ensure that provinces who depend on coal for their revenues should have new revenue streams and job creation alternative economic activities that replace the extractive sector that is losing its charm. Unfortunately, we don’t have much time. The energy transition must start now, considering that coal exports continue to experience a sharp decline, “said Fabby.

IESR believes that by 2030, Rooftop Solar, both its power generator and battery storage, will be cheaper to build and run than Coal power plants.

 “IESR believes that the moratorium on coal-based power plants should be a serious consideration by Indonesia’s electricity and utility planners to avoid stranded assets that will burden taxpayers in the country going forward. The decisions we make today will determine our future and our record in history, “explained Fabby.

On the other hand, Thomas claims that the European Union is very ambitious to meet the targets of the Paris Agreement. One of the mechanisms listed in the EU Green Deal is to ensure an equitable energy transition and to mobilize an investment of 1 trillion euros in renewable energy over the next 10 years.

“In Denmark, we haven’t decided on a new policy related to COVID-19 and energy. However, the Danish energy policy was quite ambitious in 2018. Currently, 50 percent of Denmark’s energy comes from wind power. We are targeting that by 2030, Denmark will already use 100 percent renewable energy. In 2050, Denmark will be free from fossil energy, “said Thomas.

Although 50 percent still rely on Windpower, Thomas guarantees that the security level of the electricity supply is close to one hundred percent. This is proven by the low level of electricity disruption of fewer than 20 minutes for the average electricity consumption every year.

The oil crisis and the high price of coal made Denmark begin to make an energy transition around 1979 or 1980. However, the development of renewable energy has been running rapidly over the last ten years.

“Green energy is very resilient to changing circumstances and fluctuations in fossil fuel prices. Not only that, investment in renewable energy will open up more jobs, considering that currently, many investors refuse to invest in coal mining,” he said.

He also points out that in 1990, since there was a 40 percent reduction in emissions there was a 60 percent increase in GDP in the Danish economy.

“This proves that economic growth will increase in line with the high ambition to reduce emissions,” concluded Thomas.

Lidia Wotjal said that positive developments in the field of renewable energy are also happening in Poland.

“In 2006, Poland relied on 90 percent of its electricity supply from coal. However, in 2018 coal use decreased to 78 percent and in 2019 it only became 73.6 percent,” she said.

She believes that this change is an implication of the European Union’s policy which requires reducing carbon emissions. Even though until now there are still coal mining activities, this industry has reduced the efficiency of coal costs as its Coal Power plants facilities age.

“The awareness to make an energy transition actually comes from energy producers and consumers. The need for clean air is a triggering factor for switching energy. Perhaps this is a shocking fact for other countries, but in Poland, as many as 50 percent of households use coal which results in dense air pollution in both urban and rural areas, ”said Lidia.

Seeing this problem, the Polish government decided to encourage the modernization of geothermal energy and subsidize the installation of photovoltaic (PV) two years ago. The community immediately responded to this very well. As a result, there was a two-fold increase in PV installations in just one year.

The Polish Government observed that the movement of investment will dominate renewable energy so that in September 2019, the Minister for Climate in Poland submitted a draft of energy strategy by targeting 11 percent of coal in the energy mix in 2040.

Only 3 Percent of Economic Recovery Package for Post COVID-19 Targeting the Renewable Energy Recovery 

Wondering how the economic conditions after COVID-19, especially in the G20 countries, Catrina Laura Godinho observes that the economic recovery package still focuses on fossil energy.

“The government should be able to use the COVID-19 pandemic to adjust its policies so that government spending is not only for immediate recovery response but also for long-term recovery. A recovery with concern to clean energy will be a good opportunity to ensure a healthy economy and increased employment, ”said Catrina.

“COVID-19 must be a trigger for the G20 countries to be more ambitious with their greenhouse emission reduction strategies, especially because these G20 countries produce more than two to three-quarters of the world’s greenhouse gas emissions.”

According to Catrina, the domino effect of setting a zero-emission target in 2050 is starting to be felt. Starting from several countries such as Japan, Canada, and China that have set policies to achieve these targets.

“It is also important for the G20 countries to update their Nationally Determined Contribution (NDC) to comply with the Paris agreement so that we can see the sectoral targets until 2030. Because long-term ambition will also be meaningless if it is not accompanied by short-term decisions,” she said.

Lourdes Sanchez, whose organization focuses on monitoring the flow of public money in the energy sector, found that out of 7 million dollars in Indonesia’s recovery funds, only 3 percent was devoted to renewable energy, 97 percent of which went to SOEs.

“Because this is public money, the government should channel it by providing conditions. Thus, sustainable development in the field of renewable energy can take place. For example, the government provides assistance to PLN, the government must also ask for PLN’s commitment to developing Rooftop solar, ” she said.

Responding to the explanation from the speakers, Ridha Yasser revealed that making an energy transition in Indonesia is not an easy decision. He sees that many overlapping regulations in Indonesia make an investment in renewable energy difficult. The government’s policies, which always change along with the presidents or ministers replacement, make it natural that the development of renewable energy in Indonesia is not as fast as in other countries.

“Indonesia has good potential in renewable energy. But nowadays, many people use fossil energy. However, there are opportunities for the development of renewable energy which functions to back up fossil energy, “said Ridha.

Ridha thought that if the projected renewable energy shone in other countries in the world, especially in the European Union, his party would encourage similar investment in Indonesia.

“In my opinion, we have to follow where the money goes. If now investment is inclined towards renewable energy, the government must turn its head from fossil energy to green energy, renewable energy, “said Rida.

Responding to this, Thomas encouraged Indonesia to implement attractive policies, for example by opening an auction for international investors to participate in renewable energy development in Indonesia.

Watch the discussion again:

Presentation materials

CDW_IESR roundtable 2nd november




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