Jakarta, 18 August 2023 – The President of the Republic of Indonesia (RI) Joko Widodo (Jokowi), in his state address for the 78th Indonesian Independence Day, which also served as an introduction to the 2024 state budget bill and 2024 financial note stated that the 2024 state budget is directed toward accelerating economic transformation that is inclusive and sustainable. In his speech, the president mentioned the potential crisis due to climate change. For this reason, the transformation of the economic sector that is sustainable and environmentally friendly is crucial. The president emphasized that the transition to the use of green energy needs to be carried out progressively but remains fair and affordable.
The Institute for Essential Services Reform (IESR) appreciates the direction of the 2024 state budget. It encourages the government to accelerate the development of a green economy and the utilization of renewable energy so that Indonesia can gradually reduce the portion of fossil energy while simultaneously reducing greenhouse gas emissions, which are the cause of global boiling. boiling) and climate change.
Fabby Tumiwa, Executive Director of IESR, stated that to achieve the 23% renewable energy target in 2025, the president must direct his staff to increase the renewable energy mix by 2024. This would require the construction of 11 GW of renewable energy generators in the next 2.5 years. The progressive penetration of renewable energy would necessitate the cessation of coal-fired power plant operations, which are old and inefficient, even under conditions where the PLN electricity system is still overcapacity.
The 2024 state budget should support renewable energy use outside Java-Bali, reform policies hindering its acceleration, prepare for the coal-fired power plant’s early retirement, and offer large-scale renewable energy projects to investors.
Indonesia needs to take more aggressive steps to avoid the climate crisis by showing a more substantial political commitment to reducing the use of coal and confirming the termination of coal-fired power plant operations in 2050. According to Fabby, amid Indonesia’s independence celebrations, the National Capital, Jakarta, was covered in severe air pollution. IESR notes that one of the sources of pollution comes from burning coal in power plants and industries around Jabodetabek.
“Last year, the government and IPG agreed on the Just Energy Transition Partnership (JETP). This agreement is Indonesia’s opportunity to accelerate the transition to increasing green energy before 2030, which is fair and affordable. For this reason, the 2024 State Budget must also be allocated to support the implementation of the Comprehensive Investment and Policy Plan (CIPP),” said Fabby.
During preparing the JETP Comprehensive Investment and Policy Plan (CIPP) until October, Deon Arinaldo, Manager of the Energy Transformation Program, IESR, emphasized the importance of identifying policy changes to accelerate the energy transition. He suggested that policy change should focus on integrating implementation between various ministries and agencies.
“There must be a priority in policy directions, for example ending fossil energy subsidies, especially the coal DMO price policy, building massive solar PV, and developing the solar manufacturing industry. Determining the main strategy is important so that execution can be carried out smoothly in the next 3-5 years or even faster with implementation support from various ministries and agencies. Implementation of this integrated strategy can support achieving the vision of Indonesia Gold 2045,” explained Deon.
IESR hopes that the preparation of state budget (APBN) spending will also include efforts to reduce fossil energy subsidies and anticipate the impact of the energy transition on society. The budget from reducing fossil energy can be used to develop renewable energy, early termination of coal-fired power plant operations, and structured programs to anticipate the impact of the energy transition on communities, workers, and coal-producing areas.