Draft CIPP Targets 44 Percent Renewable Energy Mix by 2030

Jakarta, November 2, 2023 – The government has released the draft of the Comprehensive Investment and Policy Plan (CIPP) in the Just Energy Transition Partnership (JETP) for public consultation on Wednesday (1/11/2023). 

The Institute for Essential Services Reform (IESR) has acknowledged some changes in the CIPP document, particularly the significant increase in the renewable energy mix target to around 44% by 2030, up from 34% in the JETP joint statement last year. However, the CIPP includes establishing a net zero emissions (NZE) target in the electricity sector by 2050. This does not align with the Paris Agreement, which calls for phasing out fossil generation by 2040.

Furthermore, the emission reduction target was focused solely on power plant emissions within the PLN grid, rather than addressing emissions from the overall power sector, to 250 million tons of carbon dioxide equivalent in 2030. This figure does not include the emission reduction target from captive power. If combined, the total peak emission target is much higher than projected during the JETP negotiation last year. Furthermore, the previous draft had a plan to end the operation of coal-fired power plants with a total capacity of 5 GW, but it was removed due to unclear funding sources from the IPG.

IESR assesses that eliminating the plan of early retirement of coal power plants will make it difficult for Indonesia to achieve its net-zero target in 2050 and increase the renewable energy mix after 2030. In the current JETP scenario, emission reductions are achieved by reducing the utilization of coal power plants. Therefore, to achieve the new target of 44% renewable energy mix in 2030, there should be an increase in the flexibility of PLN’s coal power plant operations, and a review of private coal power plant contracts, as well as regulatory support for accelerating the development of renewable energy in Indonesia. The renewable energy development plan, which gives a large portion to geothermal power plant (PLTP) and hydropower (PLTA) and adjusts PLN’s priorities, can pose a risk in achieving this target, considering the development period of geothermal power plant (PLTP) projects, which takes 8 to 12 years and hydropower, which can take 6 to 10 years.

“The elimination of the plan to early retire the operation of 5 GW of coal-fired power plants before 2030 due to the lack of funding support is regrettable. This makes Indonesia’s JETP even further away from the Paris Agreement target. Based on the results of the IESR study, to achieve the previous peak emission target of 290 million tons of carbon dioxide, it is necessary to end 8.6 GW of coal-fired power plants in PLN’s electricity network by 2030. For this reason, it is necessary to conduct further dialog with IPG to explore blended finance with a matching fund scheme where funding for early retirement of CFPP comes from additional funds above IPG’s commitment and is equalized with funds from State Budget and other sources,” explained Executive Director of IESR, Fabby Tumiwa.

IESR also highlighted the CIPP document that has not considered the termination of captive CFPP operations operated by utility companies outside PLN.

“The challenges of captive power plants vary depending on the industry they supply. However, there is already a basis for Presidential Regulation 112/2022, which requires a 35% reduction in emissions and an end of operations by 2050. Therefore, emission reduction strategies and early termination of operations for captive power plants and other business areas need to be reviewed immediately,” said Deon Arinaldo, Program Manager of Energy Transformation, IESR.

Policy reforms and increased commitment from policymakers and stakeholders are crucial in implementing CIPP, which aims for a 44% renewable energy mix by 2030. Indonesia’s renewable energy capacity of 12.6 GW needs to be increased by 62 GW to reach around 75 GW of renewable energy capacity in 2030.

“The procurement process of existing renewable energy plants is still constrained in several ways. Often, this is due to project preparation, including grid connectivity studies, land acquisition, and the completion of relevant permits before the auction process. In Indonesia, this is still a burden on developers, making renewable investment prospects accessible only to certain ‘players’. Policy reforms that emphasize efficiency and ease in the renewable energy plant procurement process are necessary if the capacity expansion target is to be achieved,” said Raditya Wiranegara, Senior Analyst IESR.

Emission reduction efforts listed in this CIPP document also need to emphasize justice aspects by including community participation. Based on IESR’s various studies on mitigating the impact of energy transition in coal-producing areas, the government needs to increase the capacity of national and local government institutions in implementing energy transition and diversifying the economy to a more sustainable economy.

Capacity Building for Sub National Government in the Era of Just Transition

Jakarta, 26 October 2023 – The energy transition currently being discussed will have a significant impact on the use of fossil fuels such as coal. Various countries have committed to reducing the use of fossil fuels as one of the key actions in their energy transition. Fossil producing countries such as Indonesia need to be aware of this, because there will be a decrease in demand from the global market.

South Sumatra and East Kalimantan are the largest coal producing areas in Indonesia. Coal has become a key component in the economic growth of both provinces. In 2022, coal will contribute 30-35% to East Kalimantan’s GRDP and 15% in South Sumatra. These two provinces need a special strategy to get rid of economic dependence on coal. Stefan Boessner, a researcher at the Stockholm Environmental Institute (SEI) in the “National Workshop on a Just Transition: Building Government Capacity for a Sustainable Coal Transition in Indonesia” said that economic alternatives are available and can be developed.

“There have been examples of a region successfully diversifying its economy. The government will need capacity building support from the central government,” he said.

Stefan added that the Indonesian government has started to create a policy framework that will become the legal basis for the energy transition in Indonesia, such as a net zero emission target, regulations on the economic value of carbon, as well as a roadmap for early retirement for coal-fired power plants.

In preparing for this transition, development, economic and energy planning are very important. Involvement of various elements that will be affected by the transition become crucial.

Martha Jessica, Social and Economic Analyst at the Institute for Essential Services Reform (IESR) explained that one of the initial findings of the study currently being conducted by IESR is that there is a capacity gap between the central government and regional governments so that this transition planning is not considered optimal.

“To have a proper planning process, various superior/adequate capacities are needed by the government as the initiator (early actor) and catalyst of the energy transition,” said Martha.

Elisa Arond, SEI researcher, added that regional governments can play a crucial role in supporting a just transition agenda. To do all this, of course local governments will need a certain amount of support from the central government.

“They (sub-national governments-ed) need financial support from both the central government and international institutions, inclusive dialogue involving actors with diverse backgrounds, funding strategies, and transparent access to information about mine closure plans,” explained Elisa.

Tavip Rubiyanto, Associate Expert Policy Analyst as Coordinator of Energy and Mineral Resources, Directorate General of Regional Development, Ministry of Home Affairs, explained why currently the energy transition is not yet underway in the regions because regional authority is still limited.

“For this reason, the Ministry of Home Affairs has initiated the preparation of Presidential Decree no. 11 of 2023 to strengthen regional authority in carrying out government affairs in the ESDM sector, especially in the renewable energy sub-sector,” he said.

Brilian Faisal, representative of the South Sumatra Province Planning Office Bappeda, expressed the hope that the concept of a just energy transition must be related to access and infrastructure.

“In our regions we have not yet made derivative regulations from various regulations related to the energy transition because to make them we need to revise the RUED, which most of the authority is mostly in the MEMR sector,” said Brilian.

Wira Agung Swadana, IESR Green Economy Program Manager stated that this workshop was the right moment to prepare the RPJMN and RPJMD which must include the coal transition agenda.

“This transition requires several things such as planning and funding and must be included in the regional development agenda so that it can receive funding from the government,” said Wira.

Air Pollution: Economic Impacts and Steps Towards Clean Air

Direktur Eksekutif IESR, Fabby Tumiwa

Jakarta, October 5, 2023 – Air pollution is a major environmental challenge society faces today. With increased industrial activity, population growth, and human mobility, air pollutants have drastically increased, causing severe impacts on human health and ecosystems. The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, emphasized that air pollution is a significant issue that also has an economic impact. For instance, when someone falls sick and cannot work, they lose the opportunity to earn money. Similarly, when the same person has to visit the doctor, they lose a lot of money. 

“Air pollution significantly impacts the economy at a national level.  In Jakarta, we have tracked the days with clear blue skies over the past decade. However, there has yet to be a comprehensive study on the national level. The government must conduct such a study to determine the economic impact of air pollution, including the loss of productive days due to illnesses caused by exposure to pollutants. By taking proactive measures, we can work towards cleaner air and a healthier workforce, thereby ensuring a positive impact on our economy,” explained Fabby Tumiwa in a Special Stage program entitled Synergistic Efforts in Overcoming Air Pollution, which was broadcast on TV One on Thursday (5/10/2023).

Quoting data from the Ministry of Environment and Forestry (KLHK), Fabby said three sources mainly cause air pollution in Jakarta. Vehicles account for 44%, Coal-fired power plants (CFPP) located around Jakarta account for 34%, and the remaining percentage comes from household burning and other activities. These sources produce different types of pollutants, with transportation being the largest source of PM2.5 and PM10. Agricultural activities and open burning also contribute significantly to PM. Furthermore, sulfur dioxide (SO2) is produced by 93% of power plants.

“Air pollution is a serious issue that needs to be tackled effectively. It is important to understand the different pollutants that contribute to air pollution. However, it is equally important to address the root cause of the problem, such as the smoke emitted from vehicle exhausts. This means that we need to reduce the amount of pollutants released into the air by reducing the use of fossil fuels. Encouraging people to use public and eco-friendly modes of transportation like bicycles can help achieve this goal. Besides that, the fuel quality also plays a crucial role in reducing air pollution. Fuel with higher quality emits fewer pollutants, which needs to be adopted as the standard. Unfortunately, Indonesia’s fuel quality is still below the EURO 4 standard,” said Fabby Tumiwa.

A researcher from the Faculty of Medicine, University of Indonesia (FK UI), Erlina Burhan, mentioned that there has been an increase in cases of acute respiratory infections or ISPA in the Jabodetabek area, which is believed to be caused by high levels of PM 2.5 pollutants. Erlina, who works at Persahabatan Hospital, has observed a growth of about 20% in the number of patients treated for ISPA, which could even increase by 30% during specific periods. Therefore, Erlina Burhan stresses the importance of clean air quality as it directly affects people’s lives.

“We have no control over the air we breathe. If the air contains pollutants, it can harm our health. Although our respiratory system has a natural filtration system to prevent harmful particles from entering our lungs, there are tiny particles that are too small to be filtered. These small particles can directly enter our respiratory tract and cause harm,” explained Erlina Burhan.

Erlina Burhan has appealed to people to take their health seriously, especially regarding air pollution. She suggests checking the air quality index before engaging in outdoor activities. If the index shows red, it is advisable to avoid outdoor activities. Erlina Burhan recommends a comprehensive approach to dealing with air pollution. This approach should not be limited to a single sector, such as transportation, conducting emission tests, or promoting the use of electric vehicles. Instead, it should involve concrete policies collaborating with all parties to overcome air pollution.

“Although many regulations have been implemented, their implementation seems lacking. For instance, smoking regulations have been in effect for a long time, yet individuals are still observed smoking in public areas. This highlights that monitoring and evaluation of regulations are not functioning effectively,” said Erlina Burhan.

Warta Ekonomi | IESR Estimates That 5 GW of Coal-Fired Power Plants Will Not Be Able to Recieve Funding from China

Indonesia needs to anticipate the changing times in the coal industry, which is showing a global declining trend. In a seminar titled “Sunset of Coal-Fired Power Plants and the Coal Industry,” Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), conveyed that coal is currently experiencing a significant decline.

Read more on Warta Ekonomi.

Kata Data | JETP Investment Postponed Due to Lack of Consideration for Captive Coal-Fired Power Plants.

The investment in the Just Energy Transition Partnership (JETP) is postponed because the government needs to take into account the coal-fired power plants independently built by industries and located outside the PLN network system or captive power plants. The JETP investment plan, which was previously targeted for August, has been pushed back to the end of 2023.

Read more on Kata Data.