Media Briefing: Preparing for Indonesia’s Energy Transition & Anticipating Its Implications and Launching The Indonesia Energy Transition Dialogue (IETD) 2023

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Background

Between 2021 and 2022, the Intergovernmental Panel on Climate Change (IPCC) issued reports from three working groups, all of which uniformly conveyed that there is already scientific evidence related to the climate crisis and its impact on the Earth. One of the key findings of the report is that greenhouse gas emissions due to human activities have contributed to an increase in the Earth’s average temperature by 1.1°C since 1850-1900 and have the potential to rise beyond 1.5°C within the next 20 years. Furthermore, the report also outlines mitigation options that can be pursued and the scale of change that needs to occur, especially in this decade, to stay on track for 1.5°C.

Indonesia ratified the Paris Agreement through Law No. 16/2016. This means that Indonesia has legally committed itself to addressing the challenges of climate change by supporting global efforts to limit the increase in the average temperature to 1.5°C below the pre-industrial era average temperature. According to one of the IPCC models, to achieve this temperature limit, greenhouse gas (GHG) emissions must be reduced by 45% by 2030 compared to GHG emission levels in 2010 and reach net zero by 2050.

As a country that has ratified the Paris Agreement, Indonesia has reaffirmed its commitment to contribute to addressing the climate crisis. Indonesia’s own GHG emission reduction target in the Updated Nationally Determined Contributions (UNDC) is 29%, which increases to 31.89% in the Enhanced Nationally Determined Contributions (ENDC), while the target with international support in the UNDC is 41%, increasing to 43.20% in the ENDC.

A study by the Institute for Essential Services Reform (IESR) and the University of Maryland (2022) found that 9.2 GW of coal must be phased out from the state-owned utility (PLN) grid by 2030, and all unabated coal generation must be retired by 2045 at the latest, to put Indonesia on track to achieve the Paris Agreement’s global temperature target of 1.5°C. The study also concluded that coal emissions should begin to decline before the end of the decade.

Several initiatives and measures are in place to support and facilitate the early retirement of Indonesia’s power plants. In addition to the Transition Mechanism (ETM) launched at COP-26, during the G20 Summit, Indonesia and the International Partnership Group (IPG) have also signed the Just Energy Transition Partnership (JETP) agreement. This agreement aims to achieve the power sector’s peak emissions target of 290 million metric tons of CO2 (MtCO2) by 2030, attain a renewable energy mix of 34% by 2030, and make the power sector carbon-neutral by 2050.

In an effort to strengthen Indonesia’s climate action, the Government of Indonesia received a funding commitment of USD 20 billion from the Just Energy Transition Partnership (JETP) program. The formulation of the implementation of the funding is translated into a Comprehensive Investmentand Policy Plan (CIPP), which focuses on investment areas consisting of developing transmission and distribution networks, the early retirement of coal-fired power plants, accelerating the utilization of baseload-type renewable energy, accelerating the utilization of variable-type renewable energy, and building renewable energy supply chains. The government has finalized the CIPP document and will conduct public consultations over the next few months.

The energy transition can reduce Indonesia’s exposure to similar problems in the future. A smooth and successful energy transition requires the support of all parties, including the general public. Therefore, the process of preparing for the energy transition also needs to pay attention to aspects of inclusiveness. Additionally, it is important to consider impact management and anticipate the implications of the energy transition process. This includes considerations such as the fate of CFPP workers whose operational periods are ending prematurely, the creation of new jobs (green jobs), and how Indonesia’s energy transition can support economic growth through the shift from fossil industries to low-carbon industries.

Therefore, to further discuss the readiness of the energy transition in Indonesia and the launch of the 6th Indonesia Energy Transition Dialogue (IETD), we will organize a Media Briefing. This media briefing aims to provide an overview of the process and impact of Indonesia’s energy transition and to convey the implementation plan of the IETD as a forum for fact-based discussions that support the best policy formulation in the energy sector, facilitating more ambitious climate targets.

1 www.ipcc.ch/sr15/chapter/chapter-2/

2 IESR UMD, 2022, Financing Indonesia coal phase-out

Objective

  1. To inform about the JETP program’s Comprehensive Investment and Policy (CIPP) development.
  2. To discuss the socio-economic implications of the energy transition and anticipation measures in Indonesia.
  3. To announce the implementation details of the Indonesia Energy Transition Dialogue 2023 event on September 18-20, 2023.

Presentation Material

ESDM

130923-DEK-IETD-IESR-ESDM

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Faisal Basri

130923-DEK-IETD-IESR-Faisal-Basri

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CFPP Early Retirement is a Decisive Factor for Achieving Ambitious NZE

Dialogue at ISEW 2022 with the topic “Indonesian Energy Transition New Ambition Targets To Achieving Indonesia’s NZE Target””

 

Jakarta, October 10, 2022 – Retiring all coal-fired power plants (CFPP) in Indonesia early by 2045 becomes a determining factor for the accomplishment of zero-emission by 2050 according to the Paris Agreement to reduce the average risen temperature under 1.5 degrees Celsius. This was stated by Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR) in his welcoming remarks at Indonesia Sustainable Energy Week (ISEW) 2022.

“According to the IESR report, by 2030, Indonesia needs to end the operation of CFPP by 9.2 GW and the operation of all its units by 2045,” he says. He believes that the clause that gives a mandate to the Ministry of Energy and Mineral Resources (MEMR) to prepare a roadmap to accelerate the retirement of the operational period of CFPP in President Regulation No.112/2022 is the best preliminary step.

In line with this statement, Rida Mulyana, the Secretary General of MEMR, on the same occasion, says that President Regulation 112/2022 will attractively draw investments and give incentives for renewable energy. According to Rida, this is the right momentum to encourage the use of renewable energy amidst the high fossil energy prices. In addition, customers’ demand for clean energy rises.

Rida says that the government has made strategies to reduce the operation of CFPP gradually by setting a 30-year maximum contract.

“The capacity (CFPP-ed) will rise to 2030 and afterwards CFPP development will end, and the last CFPP will retire by 2058,” says Rida.

Moreover, he says that to reach net zero emissions by 2060 or earlier according to the government target, super grid development is planned to boost the development of renewable energy and, at the same time, maintain electricity stability. This will open up opportunities to export electricity to other ASEAN countries, and be connected to ASEAN super grid.

 “To support and accelerate renewable energy, Indonesia will need 1 trillion USD by 2060 for the generation and transmission of renewable energy. Financial need will grow in line with Indonesia’s plan to implement early retirement of CFPP for the upcoming years,” Rida says.

 Financial need will decline if renewable energy technology price also decreases. Besides that, the application of President Regulation 112/2022, the implementation of the CFPP retirement program, the uncomplicated permit process for renewable energy, and the accompaniment, and socialization of renewable energy regulation will boost renewable energy development in Indonesia.

 Vivi Yuliawati, the Ad interim Deputy for Maritime Affairs and Natural Resources mentions that to implement the strategy for net zero emissions by 2060, the crucial thing is to formulate technical policy to ease energy transition.

 She hopes that the result of the discussion of ISEW 2022 will be the basis for the preparation of the Medium-Term National Development Plan (RPJMN) 2025-2029 & Long‐Term Development Plan (RPJP) in 2045 by Bappenas related to energy transition to mitigate the impact of transition on the Indonesian socio-economy.

 “Renewable energy technology is not enough, we need a capacity orchestra to build a new capacity in renewable energy,” she says.

 Energy transition narration that involves all levels of the communities is also encouraged during ISEW 2022.

 “ISEW is held to facilitate a more inclusive discussion, includes various stakeholders, including the ones affected by the energy transition. Moreover, it is momentum towards the 20th summit or KTT G20 that will be held by November, which will make energy transition one of its major issues,” says Energy Program Director of Indonesia/ASEAN GIZ Lisa Tinschert.

ISEW was held based on the cooperation among Indonesia Clean Energy Forum (ICEF), Institute for Essential Services Reform (IESR), and Clean, Affordable, Secure Energy for Southeast Asia (CASE). CASE is a cooperation program between two countries: Indonesia – Germany (Directorate of Electricity, Telecommunications and Information Technology, Ministry of National Development Planning/Bappenas, and funded by the Ministry of Economy and Climate Action of the Federal Government of Germany). Before the event, a discourse on energy transition in Indonesia has been held regularly in Indonesia Energy Transition Dialogue (IETD), which this year participated in ISEW 2022. As a premiere in 2022, ISEW will take place for 5 days from October 10 to 14, 2022 with the theme of Reaching Indonesia’s Net Zero Energy System: Unite for Action and Strategy. Everyone can attend the event for free at isew. live.