Just Energy Transition: Corporate Responsibility for Post Mining Environment and Economic Recovery

Jakarta,  24 January 2024 – Energy has become our primary need. Therefore, transitioning from fossil to renewables will impact the livelihood of every community. Institute for Essential Services Reform (IESR) believes in an inclusive and just energy transition for Indonesia, that will involve every single community in the process. 

Coal and mining industry had been the biggest economic contributor for coal producing regions. However, many have predicted the energy trends for coal will soon decrease and will also impact coal demands from Indonesia. 

“Coal and mining sectors do contribute to regional economic growth, especially through the revenue shared fund. Nevertheless, this sector also contributes to the negative impacts, not only to our environment, but also to the people. Coal corporations should be involved in a just transition, both in coal producing regions and other regions,” said Wira in his opening remarks in The Just Transition Dialogue: Identifying the private sector role within social and economic development, Jakarta (24/01).

According to Wira, corporations should play their role to reduce the negative impacts through reclamation, post mining activities and community development to ensure the continuity of economic activities after the coal mines have been closed. 

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal presented reclamation activities that took place since the exploration and production phase. In addion to that, post mining activities have been submitted since the production phase. He further explained several reclamation techniques, including land utilization, revegetation and land maintenance.  

“There are several activities to rehabilitate voids from mining activities, including slope stabilzation, mine void security, rehabilitation of water quality, water management and the maintenance of mine void,” said Sulistiyo.

Thriving to be one of the post mining activities case study, Yulfaizon, the General Manager of PT Bukit Asam Ombilin Mining Unit shared their experience to ensure the mining region can be useful for the environment and communities. Ombilin mine was the oldest mine in Indonesia, operating since 1892 during the Dutch Colonization and was retired in 2016.

Yulfaizon shared several post mining activities that were conducted by PT Bukit Asam, including: development of Sawahlunto Zoo, Establishing a research site of underground coal mining, and Lobang Mbah Soero Museum.

Strengthening the Government’s Commitment in Mitigating Climate Change

Jakarta, 15 December 2023 – The Indonesian government continues to improve in terms of strengthening its commitment to climate change mitigation. Since starting to aggressively commit to climate mitigation in 2021, the Indonesian Government has continued to carry out follow-up actions through various assessments of funding commitments and creating decarbonization roadmaps in each sector.

Nurcahyanto, Policy Analyst for the Ministry of Energy and Mineral Resources (MEMR), said at the launch of the Indonesia Energy Transition Outlook (IETO) 2024 report organized by the Institute for Essential Services Reform that one of the efforts currently being carried out by the government through the Ministry of Energy and Mineral Resources is to carry out revision of the National Energy Policy (KEN). It is hoped that the results of the revised KEN will be more relevant to Indonesia’s current efforts to carry out comprehensive decarbonization, especially in the electricity sector.

“Target revision (KEN) is only a method based on numbers, but from an implementation perspective it must be supported by regulations and we need to optimize it. For example, in carrying out early retirement for PLTUs, a road map needs to be prepared, as well as consolidation with related ministries/institutions,” he said.

The issuance of Presidential Decree 112/2022 is one of the guiding documents for the decarbonization of Indonesia’s electricity sector, with the main point being to accelerate the cessation of coal-fired power plants.

August Axel Zacharie, Head of Energy Cooperation, Danish Embassy, said that in the global context, Indonesia’s position as a developing country (emerging economy) is an investment attraction in itself, but Indonesia needs to prepare a supportive ecosystem.

“Investment needs for the energy transition, which reach approximately 1 trillion USD until 2050, must be seen as not just building infrastructure, but within these cost requirements there are community aspects, job transition, quality of life, and other non-physical aspects,” added August.

Still related to the high need for investment in renewable energy, and the government’s obligation to guarantee energy security, the Indonesian Government provides energy subsidies. However, this policy is not a sustainable policy.

Evita Herawati Legowo, PYC Senior Fellow, stated that it is necessary to think about a more targeted method for providing energy subsidies.

“There needs to be involvement of all parties in this matter, not just collaboration but a clear division of tasks as to who does what, starting from industry, research, energy, as well as investors,” said Evita.

The Indonesian Government’s commitment to decarbonization is a binding guideline. Delivered by Unggul Priyanto, Main Expert Engineer, BRIN, especially after 2060, all energy sources must come from clean energy sources.

“(The use-ed) LNG, or natural gas, is one option during the transition. But after 2060, like it or not, it has to be replaced with a truly clean (energy source-ed),” he said.

IETO 2024: Reviewing Progress in the Energy Transition in Indonesia

Jakarta, 15 December 2023 – In the last three years, there has been a number of advances in the energy transition in Indonesia. Since 2020, the Indonesian government has begun to include the energy transition agenda in the government’s agenda.

At the launch of the annual flagship report Indonesia Energy Transition Outlook 2024, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) emphasized that this progress is important.

“In the last 3 years, Indonesia has attempted to consolidate renewable energy incentive policies. The results are not yet widely visible, but the energy transition issue is increasingly being discussed, has become an important issue, and is on the government agenda. The next stage, with a consolidated policy, Indonesia’s energy transition steps can be faster.”

Fabby added that in compiling the IETO 2024 report, the IESR team used four frameworks to analyze the development of the energy transition in Indonesia including (1) policy and regulatory framework, (2) funding and investment support, (3) implementation of technology, and (4) social impact and public support.

On the same occasion, Dadan Kusdiana, Secretary General of the Ministry of Energy and Mineral Resources (MEMR), stated that the consolidation carried out by the government at this time was not only carried out from a regulatory perspective, but was also carried out from a techno-economic one.

“In our opinion, one of the keys to the success of NZE (net zero emissions) in the power generation sector is the existence of a super grid that connects the islands in Indonesia,” said Dadan.

Indonesia’s decarbonization achievements during 2023 are considered less than encouraging, where in this one year the addition of renewable energy capacity only increased by around 1 GW, far from the 2021-2030 RUPTL target which set 3.4 GW target in the same period.

Alvin Sisdwinugraha, IESR Electricity Sector Analyst, said that Indonesia needs to immediately improve to pursue its decarbonization target, especially in developing renewable energy projects.

“The government can implement a number of strategies including reviewing the project preparation phase, increasing project attractiveness, improving the domestic renewable energy supply chain, and immediately improving electricity network infrastructure,” he said

Alvin also highlighted the biomass development strategy, which is closely related to the availability of land for the feedstock. Considering the limited availability of land, he said. It would be good if the use of biomass is focused on hard-to-abate sectors.

Apart from the electricity sector, other sectors that consume energy are industry and buildings. The industrial sector is the trigger for a significant increase in energy consumption in Indonesia, or around 81%. In 2022, there will be the addition of 5 commercial smelter units, which could have an impact on the potential to double energy consumption by 2023.

Fathin Sabbiha Wismadi, Energy Efficiency Analyst in Buildings, IESR, said that the existence of binding regulations would be an acceleration of energy efficiency.

“We have 6 things that can contribute to reducing energy intensity in Indonesia, first, electrification. Second, energy efficiency, third, regulations regarding energy consumption and energy efficiency, fourth, ecosystem and infrastructure such as charging locations, fifth, incentives and sixth, increase awareness of the Indonesian people,” said Fathin.

From the supply side, at the sub-national level, a number of provinces in Indonesia have completed General Regional Energy Plans (RUED). Anindita Hapsari, Agricultural Analyst, Forestry, Land Use and Climate Change IESR highlights the need for assistance in each region in accelerating the adoption of renewable energy.

“The capabilities of each region are different, requiring assistance in the form of regulations and schemes, both financial and non-financial,” said Anin.

Availability of financing is one of the issues that hinders the acceleration of renewable energy. One reason is that the perception of renewable energy investment is still relatively low. Martha Jessica, IESR Socioeconomic Analyst conveyed that investment in renewable energy generation is still considered a high-risk investment.

“The realization of investment in renewables is also still low. The trend is very far from ideal, in which this year and last year did not reach the target, namely the investment target of USD 1.8 billion in 2023, but last semester only around 30% was achieved,” she said.

The electricity sector is the leading sector in Indonesia’s decarbonization agenda, because it already has a decarbonization roadmap. However, targets in the electricity sector are still not easy to achieve.

His Muhammad Bintang, Energy Storage and Battery Technology Analyst, IESR, said there are at least three things that need to be encouraged to ensure the electricity sector decarbonization target is achieved.

“First, we need to build a clean energy ecosystem, secondly physical and non-physical infrastructure, and prioritize interventions that have been proved,” he said.

Kontan } There are Still Many Challenges to Lower Renewable Electricity Prices

Although electricity tariffs from new and renewable energy (EBT) plants continue to decline from year to year, currently the price remains more expensive than coal plants that dominate electricity sources in the country. Understandably, the price of CFPP electricity is helped by coal subsidies in the form of a domestic price obligation (DPO) of US$ 70 per ton.

Read more on Kontan.

Preparing for the Energy Transition in South Sumatra for Youth

Palembang, 5 December 2023 – The increasing intensity of hydrometeorological disasters in the last decade indicates that climate change is currently underway. Secretary General of the United Nations (UN), Antonio Guterres, said that the earth is entering an era of global boiling, where July 2023 was recorded as the hottest day in history.

Climate change occurs due to high greenhouse gas emissions. The energy sector is one of the highest emitters, especially with the use of fossil energy such as coal. Indonesia is one of the coal producing countries, with 80% of its coal output for export needs. Indonesian coal production is concentrated in four provinces in Indonesia, namely East Kalimantan, South Kalimantan, North Kalimantan and South Sumatra. South Sumatra is a food and energy barn for the island of Sumatra. The coal produced by South Sumatra will be used to generate electricity which will supply all the electricity needs on the island of Sumatra, according to projections, it will even export electricity as far as Singapore.

Marlistya Citraningrum, Sustainable Energy Access Program Manager of the Institute for Essential Services Reform (IESR), in a public lecture at Sriwijaya University quoted a survey related to the current climate change phenomenon, young people aged 24-39 years had high concerns about the climate crisis and impact.

“The energy transition is a systematic effort to mitigate the impact of the climate crisis that we are increasingly feeling,” said Marlistya Citraningrum, who is familiarly known as Citra.

This change in the energy system also has other impacts, namely the growing need for workers who have skills and insight into sustainability.

However, young people’s enthusiasm for getting involved in green jobs is hampered by several things, one of which is the limited information about green jobs and job vacancies in the green jobs sector.

“In the energy transition process, young people can take roles according to their respective skills, not limited to the engineering field alone. Social departments such as economics and international relations can also contribute to the energy transition process,” said Citra.

Citra added that currently a number of challenges still face the development of green jobs in Indonesia, one of which is related to certification. Currently, certification is still limited to technical sectors related to renewable energy-based electricity generation.

On the other hand, reducing and stopping the use of coal and switching to renewable energy will have an impact on social and economic aspects in coal-producing regions in Indonesia. Hari Wibawa, Head of the Economic and Development Funding Division of South Sumatra Bappeda, on the same occasion, said that coal reserves in South Sumatra province will run out in 12 years, so economic diversification is very important to avoid major economic shocks when the coal sector stops.

“Our (government’s) current priority is to integrate the energy transition plan into the RPJPD so that every action or activity has a strong legal basis,” said Hari.

Comprehensive Action for Indonesia’s Energy Transition

Jakarta, 12 December 2023 – The energy transition journey in Indonesia in 2023 is entering a consolidation phase, which means that a number of policies that emerged in the 2020-2023 period need to be synchronized so that their implementation can accelerate steps towards one big goal, namely limiting the increase in earth’s temperature to level 1 .5 degrees Celsius aligned with the Paris Agreement pathway.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in an online media briefing (12/12) held by IESR, stated that there are a number of enabling conditions that determine the success of the energy transition.

“There are 4 enabling conditions for a successful energy transition, namely, policy & regulatory framework, funding & investment support, technology application, as well as social impact & community support,” said Fabby.

Fabby also added that there have been a number of energy transition initiatives since 2020, such as RUPTL 2021, the Energy Transition Mechanism (ETM) agreement, and the Just Energy Transition Partnership (JETP). The existence of these various agreements is good considering that until 2020, there were no regulations regarding the energy transition, but the most important thing is the implementation of these various policies.

Pintoko Aji, IESR renewable energy analyst, said that the energy transition (in Indonesia) must be carried out comprehensively in all sectors, not limited to the power sector alone.

“The ultimate goal of this energy transition is to reduce emissions, so energy transition efforts must be comprehensive, not limited to the power sector alone. Industry and transportation, for example, also need to start working on it because currently there are not many concrete (actionable) policies in that sector,” said Pintoko.

Yunus Saefulhak, Head of the Energy Policy and Conference Facilitation Bureau, National Energy Council (DEN), in the same forum also explained that currently DEN is working on a revision of the National Energy Policy (Kebijakan Energi Nasional, KEN) to align various national targets with developments in international energy transition commitments and the strategy.

“This revision is urgent to carry out because energy policy needs to be in line with climate change policy, and a grand national energy strategy has also been prepared as input for KEN & RUEN updates,” said Yunus.

One of the KEN renewal points is that the new renewable energy mix in 2025 will reach 17 – 19 percent, and in 2060 it will reach 70-72 percent.

Various policy developments and adjusted targets need to be continuously monitored and guarded. The Institute for Essential Services Reform has monitored various developments in the Indonesian energy sector since 2017 and outlined them in a main report entitled Indonesia Energy Transition Outlook. In 2023, IESR will return and launch the Indonesia Energy Transition Outlook 2024 report, on December 15 2023. Follow the launch either in person (limited capacity) or online by registering at s.id/IETO2024