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Luhut: President Jokowi orders to promptly implement the energy transition

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Jakarta, 20 September 2021 – Indonesia needs to take several steps to accelerate the transition and development of renewable energy by 2050 by aligning regulations and policies and encouraging investment in renewable energy.

Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan said that basically, the Indonesian government always stays committed and tries its best to prevent the increase of earth’s temperature to more than 1.5 degrees Celsius. He stressed that President Jokowi’s directions explicitly ask for an immediate energy transition as the government is currently preparing an energy transition mechanism, especially for Indonesian coal-fired power plants.

“Financial support is significant to support the transition to renewable energy. We need help from developed countries to achieve carbon neutrality by 2060 or sooner. Currently, the transition from coal to renewable energy is underway. There are coal-fired power plants that must be replaced (by renewable energy) and are being prepared with PLN. We are optimistic it can be done faster because technology is also developing. So it is more efficient,” said Luhut in The 4th Indonesia Energy Transition Dialogue (IETD) organized by the Institute for Essential Services Reform (IESR) and the Indonesia Clean Energy Forum (ICEF), Monday (20/09/2021) virtually.

He said that the Indonesian government is targeting tourism areas, especially Toba Lake and Bali to be carbon neutral in 2045 or the 100th anniversary of Indonesia’s independence.

“Toba Lake is possible (to phase out from fossil fuel-ed) because it has 1,000 megawatts of geothermal and some hydropower energy. Therefore, the community there no longer needs to use fossil energy, so as Bali,”  he added.

In his opinion, the change is undeniable even in the next six years. Currently, all industries worth almost USD 100 billion have started to use renewable energy.

“We have great potential for renewable energy. By 2050 Europe will not use fossil fuels. We have goods from renewable energy or green products. PLN must also participate and make a start,” he said.

On a different occasion, at the Press Conference of The 4th Indonesia Energy Transition Dialogue (IETD) 2021. The Director of Electricity, Telecommunications and Information at the Ministry of National Development Planning (Bappenas), Rachmat Mardiana, said that Bappenas had compiled several studies on net-zero emission. The study comprises considerations of social, economic, environmental, and the needed funding to accelerate decarbonization in Indonesia.

“Indeed, we also need to explore the efforts to reduce coal dependence through several endeavors. For instance, studying future technological developments, the potential of hydrogen energy to meet the needs of transportation, industry, power plants,” said Rachmat at the Press Conference of The 4th Indonesia Energy Transition Dialogue (IETD) 2021, Monday (20/09/2021) virtually.

Director-General of New, Renewable Energy and Energy Conservation of the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said that the transition to renewable energy needs to wait for the National Electricity Supply Business Plan (RUPTL). 

“We will complete the RUPTL, examine it from the budget side, whether it needs a state budget or replacement costs. Then we will inform the Ministry of Finance of the Presidential Decree on New Renewable Energy (EBT). It has been processed, soon the National Electricity Supply Business Plan (RUPTL) will be discussed, then the Ministry of Finance will only do the budget calculations,” said Dadan. 

Furthermore, the integration of renewable energy needs to be supported with solutions to overcome the oversupply from power plants. The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa said that it can be overcome through deep decarbonization in the industrial and business sectors.

 “The solution is by substituting heating energy that uses fossil fuels to electrification. The second solution, the most effective,  is with rooftop solar PV. Official data from the government in 2019, the solar PV only covered 186MV, but data in the Solar Energy Association is much larger, on 2020-2021 both in the pipeline and complete stage until July shows the total of 480 MW, “says Fabby.

Fabby said the government needs to scale up investment opportunities for renewable energy projects. The IESR study shows that to meet the target of 23 percent of the renewable energy mix by 2025, it requires investment of around US$14 billion to US$15 billion, or equivalent to Rp. 210 trillion. 

Meanwhile, to achieve net zero-emission, IESR estimates that the required investment until 2030 will reach US$25 billion to US$30 billion per year, or around Rp 420 trillion per year. This number will be higher in 2030–2050, reaching about US$50 billion to US$60 billion per year. The investment cost includes the development of low-carbon technology in the electricity, transportation, and industrial sectors. Fabby said the investment also includes the development of green hydrogen, as well as synthetic fuels for the transportation sector that are difficult to electrify such as planes and ships.

In terms of the coal industry, a member of the Indonesia Clean Energy Forum (ICEF), Widhyawan Prawiraatmadja said the coal industry needed a robust signal through a carbon tax to participate in the transformation and support the decarbonization of the energy system. 

“In this context, we apply the tax carbon US$ 5 per ton. The fossil fuel producer will think that it is okay to deal with such a tax (low tax-ed). So, it means that the regulation is not working. Unless like in another country where the tax is about USD 50 (per ton). It will drive you to deeply consider using fossils,” said Wawan. 

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