Indonesia Energy Transition Homeworks

(Jakarta, 12 January 2023) – By definition, the energy transition is an effort to change the energy supply from previously a coal-dependent source to cleaner energy. This is the effort that the Indonesian government continues to pursue to achieve national energy security and autonomy. However, there are still many tasks that must be fulfilled by the Indonesian government.

Handriyanti Diah Puspitarini, Research Manager of the Institute for Essential Services Reform (IESR) in the Ruang Publik KBR talk show: Energy Transition in Indonesia, How Far We’ve Come organized by Berita KBR (10/01) explained that the IESR report on energy transition monitors public readiness through surveys and government readiness through research.

“Bottom-up side has supported the procurement of cleaner energy, but based on the transition readiness framework studied in the Indonesia Energy Transition Outlook 2023, the government (top-down) still has many things to improve, especially in terms of commitment and regulation,” Handriyanti said.

Meanwhile, on the same occasion, Raden Raditya Yudha Wiranegara, IESR Senior Researcher stated that from the fossil fuel side, the government has not yet paid attention to carbon emissions produced by mining, oil and gas industries.

“The government only monitors carbon dioxide (CO2) emissions, which only has a fraction of methane’s heat-trapping ability, around 29-30 times less. If there is a reduction in methane gas by only 30%, it will help abate the temperature rise by 0.5°C,” said Raditya.

Handriyanti and Raditya then discussed the upward trend of buying electric vehicles. The high price then led to the government’s proposal for subsidizing these vehicles, which is expected to stimulate public demand and lower the price of electric vehicles eventually.

However, according to them, there are several points of public resistance regarding the energy transition and the use of electric vehicles. The first is the view that fossil fuels are cheaper than renewable energy.These prices are the result of government intervention in the form of price capping, subsidies and compensation. This will surely burden the state budget when global oil prices rise. Second, there is range anxiety, which means the fear of electric vehicles inability to travel long distances.

“The government then has to work around this by increasing the number of charging stations at rest areas in-between journeys,” said Raditya.

Handriyanti and Raditya discuss the government’s progress and tasks in the matter of energy transition from a techno-economic, regulatory and funding perspective. They said that the price of renewable energy technology is becoming more affordable every year, for example, the price of solar modules is 70% cheaper than 7-10 years ago and is predicted to decrease even more. Supporting Regulations such as Presidential Regulation No. 112/2021 which stipulate ministers to make a roadmap for retiring coal-fired power plants (CFPP) needs to be supported. However, the implementation of this regulation still needs to be monitored and improved, especially considering that coal and fossil funding is currently still 10 times larger than renewable energy funding.

“The presence of international forums such as the G20 has encouraged Indonesia to make commitments towards energy transition and attract financing for those efforts. It is hoped that this financing can help Indonesia achieve its target of a renewable energy mix of 23% by 2025,” they concluded.