Arrange a Strategy to Get Around the Impact of Coal Power Plant Shutdown

Jakarta, 27 September 2023 – Indonesia’s increase in climate commitments in the Enhanced Nationally Determined Contribution (E-NDC) brings a number of implications, including plans to stop coal-fired power plant operations early to reduce emissions. This plan has several impacts, including a decrease in the income of coal-producing regions as well as national income, the potential for massive layoffs, as well as other socio-economic impacts.

In a hybrid seminar, entitled “Sunset CFPP and the Coal Industry: Reviewing Multisectoral Direction & Impact in a Just Energy Transition” (27/9), Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) explained that the energy transition agenda for both Indonesia and the destination countries for Indonesian coal exports will have an impact on a number of aspects in Indonesia.

“There are three factors that can be seen from the energy transition in coal producing areas: the link between the local economy and coal, the readiness of existing human resources, and alternative economic options that can be developed in that area, and how mitigation plans can be prepared,” said Fabby.

In the presentation material delivered by Ilham Surya, IESR Environmental Policy Analyst, it was explained that the role of the coal industry in the economy of coal-producing regions is quite significant.

“The GRDP contribution is between 50% and 70% in Muara Enim and Paser, but the multiplier effect is not that big,” said Ilham.

Within the scope of national policy, the Ministry of PPM/Bappenas is currently preparing a Long Term Development Plan (RPJP), one of the points  is economic transformation.

“The energy transition is part of the green economic transformation, so in the latest draft of RPJP, what we meant by transition is not only seen from the energy sector,” explained Nizhar Marizi, Director of Energy, Mineral and Mining Resources, Bappenas.

Grita Anindarini, Deputy Director for Programs, Indonesia Center for Environmental Law (ICEL), emphasized the important role of the policy framework and implementation of various existing regulations.

“A just energy transition requires a very big policy transformation on employment, environment, energy, and financing. Currently there are several policy regulations regarding the energy transition, but their implementation still faces various obstacles,” explained Grita.

Haris Retno Susmiyati, Lecturer at the Faculty of Law, Mulawarman University, admits that economic dependence on coal commodities is not a good thing. She said that in 2015, when coal prices fell drastically, the economy of East Kalimantan also slumped.

“By regulation, the company’s obligation to pay royalties to the government is only 13.5% of that figure. The regional government only gets 5%, so it is not the coal producing regions that actually enjoy the profits from coal,” said Retno.

Having a similar context to East Kalimantan, Jambi province is also starting to prepare for transition. Ahmad Subhan, Head of Economy and Natural Resources, Bappeda Jambi, said that even though it is not the main coal producing area, the contribution of the coal sector to GRDP is quite significant.

“Coal is indeed significant for supporting the economy, but if there are substitutes that are more relevant to regional conditions, they can be explored further. For this transition, we in Jambi province are supportive but not drastic. We are also waiting for substitutions for economic transformation,” said Ahmad.

Implementation Check Methodology: a Much Needed Mechanism

New York, 21 September 2023 – The global community is urging global leaders to take serious actions to address climate change. During the COP 27 in Egypt, several countries renewed their commitment to reducing greenhouse gas emissions and achieving net zero emission status. However, there are still gaps between commitment and implementation of policy and action to seize the determined target. 

To assess, rate, and monitor a country’s progress during the policy implementation, Climate Transparency, a global partnership of research organizations and NGO in the G20 countries, has developed a methodology to review policy implementation across four categories: legal status, institutions & governance, resourcing, and oversight.  

Yvonne Deng, Energy and Climate Strategy Expert from the 7Gen Consulting, emphasized the importance of having monitoring instruments to review current policy and its role to seize the climate target. 

“We (Climate Transparency) analyze the gap and go deeper to the sectoral approach to recommend what sectoral policy a country should take to pursue the ambition,” said Yvonne.

South Africa, one of the countries receiving global attention lately as the first recipient of Just Energy Transition Partnership funding. Guy Cunliffe, Energy System Researcher of the University of Cape Town explained that as a country receiving international assistance, South Africa needs to showcase accountability during implementation. 

“An implementation monitoring is critical to showcase success of the implementation and as a beneficiary country it is also a way to display progress of the committed project,” he said.

Guy added that as the first JETP recipient, South Africa has increased its climate ambition and tried to integrate significant renewable capacity to its grid. However, during the implementation, the country is experiencing a glitch in terms of electricity supply. This glitch ‘forces’ them to adjust the plan and policy while rapidly changing the energy market. This is only possible with continuous policy monitoring. 

Similar to South Africa, Indonesia, as one of the biggest coal producers, has its electricity generation dominated by coal. In 2022, Indonesia renewed its emission reduction target in enhanced NDC, from 29% to 31.89% (unconditional) and 41% to 43.2% (conditional).

Wira Agung Swadana, Green Economy Program Manager at the Institute for Essential Services Reform (IESR), noted that during the transition away from coal-dependency, there are still conflicting interests among stakeholders, primarily due to the government’s lack of clear guidance on the transition’s meaning and direction transition.

“Though Indonesia has increased ambition and target in its NDC, the enabling environment for the renewable energy developers is not attractive enough yet. There is still no clear incentive for the investors as well as the lengthy process,” Wira explained. 

The in progress New and Renewable Energy Bill (RUU EBET), though believed to provide a robust policy framework, is to some extent attempting to prolong the use of fossil fuels by including CCS technology in the renewable options.

Energy Transition in the Midst of Coal Mining Siege

Samarinda, 7 September 2023 – The energy transition is an unavoidable inevitability. Current world trends show that the earth is getting hotter and to limit the rise in earth’s temperature, structured solutions are needed, including the energy transition, which involves various sectors and multi-stakeholders.

Society and communities are one of the key actors in the energy transition who can initiate the development of renewable energy to answer their energy needs. 

The Institute for Essential Services Reform (IESR) in collaboration with the Clean Affordable and Secure Energy for Southeast Asia (CASE) project and the Department of Energy and Mineral Resources (ESDM) of East Kalimantan Province held the ‘Jelajah Energi Kaltim’ activity to see directly and closer to the development of various initiatives for using renewable energy in East Kalimantan Province.

This series of activity began with a workshop, followed by visits to a number of places. On the first day of the visit, the group saw PV installation at the Pertamina Hulu Mahakam office, TPAS Manggar, and Kariangau Coal plants in Teluk Balikpapan.

The “Jelajah Energi Kaltim” trip continued on the second day starting with a visit to Mulawarman Village to see how the community uses livestock manure to make biogas. The biogas in Mulawarman village is home-sized biogas digester aid from the East Kalimantan Province Energy and Mineral Resources Service.

Mulawarman Village is in Tenggarong Seberang District, Kutai Kertanegara Regency, East Kalimantan. Coal mines surround Mulawarman Village. This condition made the residents of Mulawarman village ask to be relocated.

The East Kalimantan Regional Government is starting to pay attention to Mulawarman village to help the economy of Mulawarman village residents, one of which is by developing livestock groups and providing assistance with biogas installations.

In 2021, the East Kalimantan ESDM Service provided biogas installation assistance to stock farmer group (which had been surveyed) in the village, totaling 20 farmers. This means that people do not have to pay monthly fees for using this biogas.

People who use biogas immediately feel positive impacts, such as savings in costs for cooking fuel. Zaenal Abidin, a resident of Mulawarman Village, who is also a beneficiary of the biogas installation assistance, said that previously, to meet their cooking needs, their family could use up to 4 pieces of 3 kg LPG in one month. Now, he can cut his LPG needs to just 1 piece of 3 kg LPG.

“For everyday cooking (biogas, ed.) is enough. But if there are social events such as recitations, we still have to use LPG gas,” said Zaenal Abidin.

Zaenal also added that the cooking process using biogas fuel takes a little longer than using LPG. This biogas installation assistance is also accompanied by the transfer of knowledge about technology to the stock farmers. So that they can detect technical obstacles that could potentially arise from using this home biogas installation.

The Group continued their journey to Menamang Kanan Village, Muara Kaman District, Kutai Kartanegara Regency. The journey to Menamang Kanan Village takes almost 3 hours with heavy dusty road conditions which result in very limited visibility.

In the past year, residents of Menamang Kanan Village have succeeded in enjoying electricity from a centralized PV installation assisted by the East Kalimantan Energy and Mineral Office with a capacity of 87 kWp. This solar PV supplies basic electricity needs for 600 families in Menamang Kanan Village.

Previously, the residents of Menamang Kanan Village depended on the electricity supply from the diesel generator provided by one of the company’s CSR programs operating around the village. For the operation of this diesel generator, 70 liters of fuel is needed every day to provide electricity for 4 hours.

Zapir, Village Secretary of Menamang Kanan, explained that although electricity from solar PV has increased access to electricity in Menamang Kanan Village, its utilization is still limited to lighting and basic electronic equipment.

“So, it’s just for lighting, and maximumly a fan. It’s still not possible for TVs or refrigerators,” said Zapir.

Zapir hopes that the capacity of this communal solar PV can be increased in the future so that village residents can use electricity for productive activities that have the potential to bring economic value. Not limited to just lighting.

Media Indonesia | Anticipate the Socio-Economic Impact of the Decline of the Coal Industry

DIVERSIFICATION and economic transformation must be immediately planned to anticipate the social and economic impact of the decline in the coal industry. This is in line with plans to end PLTU operations and increase commitment to energy transition and emission mitigation from countries that have been destinations for coal exports so far.

Read more on Media Indonesia.

Synergistic Movement is Crucial for East Kalimantan’s Energy Transition

Balikpapan, September 5, 2023 – The Institute for Essential Services Reform (IESR) is collaborating with the Clean, Affordable and Secure Energy in Southeast Asia (CASE) program and the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province to organize a series of East Kalimantan Energy Exploration events—the first workshop of this series held on Tuesday, September 5, 2023.

Director of Electricity, Telecommunications and Information Technology, Ministry of National Development Planning/Bappenas, Rachmat Mardiana, explained that renewable energy development could serve as a new economic driver in the Kalimantan region through the green and blue economy. This can be achieved by utilizing biodiesel, solar power, and other alternative energy sources already spread throughout the province. According to Rachmat, regional governments can support through the General Regional Energy Plan (RUED) under regional authority in developing renewable energy as stated in Law 23/2014 concerning regional governments.

“There are several regional issues in Kalimantan that need to be addressed. These issues include the dominance of fossil energy in electricity production, with only a small amount of renewable electricity generation. In addition, the development of the Indonesian capital city (IKN) requires the provision of renewable electricity. The electricity infrastructure in the region also needs attention as the Kalimantan interconnection system is not yet fully connected, and the extra high voltage transmission has not been connected to evacuate power generated throughout the region,” said Rachmat at the opening of the East Kalimantan Energy Exploration series.

To overcome this regional issue, continued Rachmat, implementing various policy measures that include creating small-scale, isolated grids (referred to as isolated mini-grids), providing eco-friendly and intelligent IKN electricity, developing smart electricity networks, and integrating electricity supplies with industries through the use of primary energy sources, encouraging the use of renewable energy, and developing interconnections between regions.

Direktur Ketenagalistrikan, Telekomunikasi, dan Informatika, Kementerian PPN/Bappenas, Rachmat Mardiana

A workshop session on the energy transition followed the event. Irwan Sarifuddin, the Coordinator of the Clean Energy Hub at IESR, mentioned the importance of a just energy transition. According to Irwan, regional governments need to consider the well-being of workers in coal-fired power plants (CFPPs) and those in supporting areas to transition successfully.

“We must make preparations to ensure that people are not left behind during the transition to energy. In 2022, IESR conducted a study called “Redefining Future Jobs,” which revealed that the profits gained by coal-producing regions are not proportional to the losses experienced by the local population. For example, losses from land degradation and health risks,” explained Irwan.

Agreeing with Irwan, the Energy Transition Advisor from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Indonesia, Yudiandra Yuwono, emphasized that in carrying out the energy transition, it is necessary to ensure the welfare of society. However, the energy transition process has many elements with various systemic constituencies.

“Some of the challenges of the energy transition include technological readiness, policy support, and acceptance by society itself. For this reason, all stakeholders play an important role in the energy transition,” said Yudiandra.

Furthermore, the workshop related to co-firing and biogas from representatives of IESR and the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province has been held. Rahmat Jaya Eka Saputra, The Energy Transformation Staff of IESR, said PLN implemented co-firing technology at 36 CFPP locations out of a target of 35 locations during 2022. The PLN co-firing program produced 575.4 GWh of clean energy and reduced carbon emissions by 570 thousand tons of CO2 by utilizing 542 thousand tons of biomass.

“There are several advantages to using biomass as a co-firing fuel. Emissions can be significantly reduced by replacing a proportion of coal with biomass (usually between 20% and 50%). Additionally, carbon dioxide balancing can be achieved by planting new trees that absorb the carbon dioxide produced by the co-firing process. However, it is important to note that co-firing is considered a “transitional” fuel and cannot be relied upon as a long-term solution for meeting our energy needs,” explained Rahmat.

Sonny Widyagara Nadar, Young Expert Policy Analyst for the Office of Energy and Mineral Resources (ESDM) of East Kalimantan Province, stated that the potential for biomass in East Kalimantan is around 936.14 MW and biogas is 150 MW. Thus, in total, the bioenergy potential is around 1,086.14 MW. With this potential, several uses of biomass and biogas have been carried out—for example, rice husks as fertilizer or biomass. There is also the use of biogas from livestock manure.

“There are several challenges in utilizing biogas from livestock manure, namely reaching the farthest areas that experience a shortage of LPG, increasing the scale of biogas for communal livestock, and downstream the use of biogas for community economic use,” explained Sonny.

Workshop Jelajah Energi Kalimantan Timur

In the next session, Fadhil Ahmad Qamar, CASE Program Staff of IESR, said that It is possible to transform palm oil mill effluent (POME) into electrical energy, which can be used as an alternative energy source. Fadhil estimates that 14 million hectares of land can produce 146 million tons of POME annually, which can then be processed into 35 million tons of crude palm oil (CPO) and 28.7 million tons of liquid waste. POME is typically treated in open ponds, undergoing anaerobic digestion and generating biogas.

“Using biogas from POME can significantly reduce greenhouse gas (GHG) emissions, such as 26 million tonnes of CO2eq/year if 100 factories utilize it. However, financial and policy support is necessary to create a favorable investment climate to promote biogas from POME,” said Fadhil.

The first day of the East Kalimantan Energy Exploration activities ended with a workshop on preparing articles for the energy transition. During the workshop, Kurniawati Hasjanah, Communications Staff of IESR, highlighted the importance of using critical terms such as energy mix, carbon, and alternative energy in reporting on the energy transition. The coverage of the energy transition mainly focuses on reducing the carbon footprint in energy consumption and promoting the use of alternative energy. Journalists and citizen journalists can benefit from understanding these concepts to provide accurate and informative coverage.

“When journalists cover the energy transition, they usually begin by creating a frame of reference for their reporting. This involves determining the topic, angle, sources, and reference documents to be used, such as the NDC document, Electricity Supply Business Plan (RUPTL) 2021-2030, and Presidential Decree 112/2022. Additionally, a list of videos and photos may be necessary to guide photographers in capturing the necessary coverage,” said Kurniawati Hasjanah.

Warta Ekonomi | IESR States that the Transition from Coal to Renewable Energy Affects Economies in Producing Regions.

The Institute for Essential Services Reform (IESR) mentioned that coal demand in Indonesia is expected to decrease due to the trend towards transitioning to renewable energy and the commitment of the Paris Agreement to limit global temperature rise to below 1.5°C. In a study conducted in 2022, IESR estimated that Indonesia’s total coal demand, both domestic and export, would decrease by approximately 10% after 2030 with Indonesia’s current commitments.

Read more on Warta Ekonomi.

Assessing the Readiness of Coal Producing Regions for Socio-Economic Transformation

Jakarta, 1 September 2023 – In 2022, Indonesia will be the third largest coal producing country in the world. This has had a number of good and bad impacts on Indonesia, especially coal producing areas, such as Paser Regency in East Kalimantan and Muara Enim Regency in South Sumatra. The coal industry sector directly contributes to Gross Regional Domestic Income (GRDP). The contribution of the coal sector to regional income is quite large. In Paser Regency, East Kalimantan, 70% of GRDP comes from the coal sector. The coal sector also contributes to 20% of the East Kalimantan provincial APBD. Meanwhile, in Muara Enim Regency, the coal industry contributes to 50% of the GRDP and 20% of the APBD of South Sumatra Province. 

Julius Christian, Research Manager of the Institute for Essential Services Reform (IESR), explained that the downward trend in global coal use and demand will accelerate in line with the increasing climate commitments of Indonesian coal export destination countries such as China, India and Vietnam. 

“If these countries increase their climate commitments to be compatible with the Paris Agreement targets, there will be a drastic reduction in Indonesian coal. “This will certainly have an economic and social impact on Indonesia’s coal producing regions,” said Julius. 

Economic dependence on this one sector has become a concern for local governments. This was explained at the launch of the IESR Study entitled “Just Transition in Coal Producing Regions” (1/9). IESR Social and Economic Analyst, Martha Jesica, said that coal producing regional governments sometimes do not understand the risks of the energy transition. However, they understand that economic dependence on one sector is not good. 

“As an effort to get out of this dependency, the regional government is supporting the company’s CSR initiatives and starting to identify opportunities for economic diversification,” explained Martha. 

Ilham Surya, IESR Environmental Policy Analyst, added that preparing human resource capacity is an important point in making a just transition. 

“Considering that there will be changes from economic sectors that are familiar to them, such as mining, towards clean energy, there needs to be capacity building which includes education (including) financial literacy and health quality,” he added. 

Differences in education levels are one of the reasons why local communities in coal-producing areas can only access work at the sub-contractor level. In the response session, Dedi Rustandi, Intermediate Expert Planner, Coordinator of Renewable Energy and Energy Conservation at the Ministry of National Development Planning/Bappenas, conveyed the importance of preparing society for the transition. “Energy transition is an inevitability. Now is the right moment to increase public awareness of the energy transition issue. Our coal reserves actually don’t have that much anymore.” 

On the same occasion, Aris Munandar, Young Expert Policy Analyst, Sub-Coordinator 1, Directorate General of Regional Development, Ministry of Home Affairs, added that the energy transition in coal-producing areas is not only related to the ESDM sector. “We will support it through the RPJMD (Regional Medium-Term Development Planning). The regional vision will be very important to include in these strategic documents because 2024 will be a political year. 

“Regional heads must be thorough in seeing what things must be included in the RPJMD,” he added. 

Verania Andria, as Senior Adviser for Renewable Energy Strategic Program UNDP/Chair of JETP Indonesia’s Just Transition Working Group, believes that there are a number of things that need to be considered in the coal transition process, one of which is economic diversification. 

“The important thing to pay attention to in this economic diversification is related to financial sources that must continue to be explored, we cannot just depend on CSR funds from coal companies (as was the study’s findings),” he said. 

The same thing was also expressed by Uka Wikarya, Head of Regional and Energy Resources Policy Research Group, LPEM UI. 

“The quality of human resources really needs to continue to be improved through education and improving the quality of health. “For the economic sector, it is necessary to look for activities or MSMEs that are independent (not dependent for their operations on coal industry activities), so that the interventions carried out can be sustainable,” explained Uka.