Stocktaking the Climate Action in Southeast Asia

Johor Bahru, 15 November 2023 – In achieving the agenda of global energy transition, the Southeast Asia region is taking measures to climate action including its non-state actors. Meaningful participation from non-state actors is crucial in observing the currently running policies and providing input for future improvements.

Stocktaking becomes a crucial activity to track the current progress of climate mitigation and action. The results of the assessment then can be utilized to design robust policy recommendations. Non-state actors can enrich the nuance of the global stocktake  by convening and aligning climate action with the interest of the global community. 

Wira Agung Swadana, the green economy program manager at the Institute for Essentials Services Reform (IESR) highlighted the key takeaways from the first global stocktake during the Asia Pacific Climate Week 2023 in the session “Integrating the role of NSAs focused on the thematic areas–Adaptation, Finance, and Mitigation”. The imbalance in growth of global emissions compared to the climate mitigation plan leads to issues such as the urgency to have systemic transformation.

“We need more ambition in action and support during the implementation of the mitigative action in the region,” he said.

Wira added that achieving net-zero emissions requires systemic transformation across all sectors, and we need to tap into every opportunity to achieve higher output. The business and commercial sector is an important factor in accelerating energy transition as they consume massive amounts of energy. Besides, some of the industries (especially those involved in multinational-scale supply chains), have the obligation to green their business process.

“What the government can do for business (to decarbonize their operations) is to provide an enabling environment if they want to shift to more sustainable business process. For instance, the government can give incentive and disincentive based on the choice of energy resource used to power the businesses,” Wira concluded.

Jingjing Gao, from the UNEP Copenhagen Climate Centre, added that the private sector-led initiative is worth noting. Yet, there is still a gap in data incorporation from the private sector.

Reflection on Indonesian Leadership in ASEAN 2023

Jakarta, 20 October 2023 – The transfer of the ASEAN leadership baton to Laos marks the end of Indonesia’s leadership in the ASEAN region. A number of milestones such as cooperation with external non-ASEAN parties, as well as several opportunities for cooperation between ASEAN member countries are a good note. However, this good record has not been matched by an increasing commitment to curbing the rate of climate change, the impacts of which are increasingly being felt.

In a Public Discussion entitled “Reflecting on Indonesia’s Leadership in ASEAN 2023: Towards a Regional Frontrunner in Climate and Energy Transition Issues”, Wira Agung Swadana, Green Economy Program Manager of the Institute for Essential Services Reform (IESR), stated that during Indonesia’s leadership period, cooperation or action was agreed upon by ASEAN member countries are still mainly infrastructural.

“The results of the 2023 ASEAN Summit and other energy and climate-related meetings can be seen that there is still a lack of focus on renewable energy issues. “For example, there is no joint commitment to increase the development of a cleaner solar energy or hydropower ecosystem,” said Wira.

Apart from the ecosystem for renewable energy, Wira also said that several issues had ‘eluded’ the attention of ASEAN high-ranking officials, such as the issue of critical minerals and low-carbon and sustainable electric transportation.

Executive Director of the Indonesia Research Institute for Decarbonization (IRID), Moekti Handajani (Kuki) Soejachmoen, explained the phenomenon of the high contribution of emissions from the energy sector in ASEAN countries.

“Energy is an engine for development, so if development still uses energy procurement patterns with a business-as-usual scheme (high fossil-ed), emissions will definitely increase significantly. On the one hand, all ASEAN member countries need to carry out development but must control their emissions,” explained Kuki.

Kuki then added that the role of technology is needed to enable development to continue and keep the amount of emissions released low. The use of this technology will have financial consequences.

By looking at this problem, Kuki emphasized that it is important for ASEAN as a regional unit to develop a comprehensive strategy to achieve the NDC targets for each country and encourage the achievement of Net Zero Emissions. From this strategy, mitigation actions can be grouped that can be carried out alone, those that require international financial support, those whose emission reduction units can be sold and those that require additional purchase of emission reduction units.

IESR Energy and Climate Diplomacy Coordinator, Arief Rosadi, highlighted ASEAN’s tendency to seem slow in taking strategic diplomatic positions, thus creating various gaps such as institutional gaps, ambition gaps, implementation gaps and participation gaps. According to him, Indonesia can use its position to strengthen its climate and energy diplomacy and contribute to narrowing gaps in ASEAN.

“Increasing climate ambition in strengthening Indonesia’s climate and energy diplomacy strategy is a modality for Indonesia to encourage the same thing in other countries at regional, bilateral and multilateral levels. Apart from that, fixing the gap can be done by encouraging the resolution of the gap at the regional level in ASEAN’s internal processes,” added Arief.

Workshop the Calculation of Greenhouse Gas (GHG) Emission and Budget Tagging

To achieve the ambitious target of reducing Greenhouse Gas (GHG) emissions in accordance with the Paris Agreement, Indonesia released the Enhanced Nationally Determined Contribution (NDC) document which states the emission reduction target is 31.89% (with its own efforts) and 43.2% (with support internationally) in 2030. In more detail, the National Medium Term Development Plan Document (RPJMN) also supports this target by stating that Indonesia can achieve a 27.3% reduction in GHG emissions by 2024.

As a province that uses and uses large-scale coal, and is able to export electricity to surrounding provinces, South Sumatra is one of the largest GHG contributors nationally. In connection with this, the Institute for Essential Services Reform (IESR) held a capacity building event entitled Workshop on Calculating GHG Emissions and Budget Tagging with the Provincial and Regency/City Regional Planning Agencies (Bappeda) in South Sumatra on September 25 2023.

In the workshop which was attended by around 25 representatives of Provincial and Regency/City Bappeda in South Sumatra, IESR presented two speakers from the Fiscal Policy Agency and the National Research and Innovation Agency (BRIN). Representing the IESR Sustainable Energy Access team, Reananda Permono explained that IESR is committed to holding four workshop events in the context of capacity building for the South Sumatra Bappeda in dealing with the issue of a just energy transition and economic transformation in South Sumatra. In the regional context, this capacity building activity is needed because Bappeda is an important stakeholder in energy transition activities.

In his speech at the opening of the event, Hari Wibawa, Head of the Economic and Development Funding Division of Bappeda for South Sumatra Province, reminded Bappeda colleagues of the importance of insight into GHG emissions and budget tagging. Moreover, South Sumatra’s economy is largely supported by the mining industry, as evidenced by the many districts in South Sumatra that depend on their GRDP from the coal mining sector.

Policy Analyst from the Fiscal Policy Agency, M. Zainul Abidin, who was the first resource person, explained the importance of Budget Tagging in monitoring the impact of climate change in Indonesia. Budget marking activities are directly connected to the APBN, so that they can support the development agenda and national fiscal policy. Zainul also mentioned three functions of the APBN as an economic stimulus instrument, namely as a shock absorber (stabilization function), development agent (allocation function), and solution for people’s welfare (distribution function).

“The results of budget marking are used in the NDC (Nationally Determined Contribution) achievement monitoring system in the Ministry of Environment and Forestry’s National Registry System (SRN), and efforts are made to support the low carbon development monitoring system in the AKSARA Bappenas system. “There are quite a lot of uses for budget tagging, for example as a basis for forming cooperation in climate change action and as a basis for local governments to obtain innovative financing,” explained Zainul.

The second resource person, researcher from BRIN Rohmadi Ridlo, stated the importance of developing climate change mitigation and adaptation strategies to reduce GHG emissions in South Sumatra Province. Information regarding GHGs can then be used in identifying climate change mitigation and adaptation strategies, formulating sustainable environmental policies, and even as a basis for preparing special budgets to reduce GHGs at the provincial level.

“In general, there are five sectors that produce GHG emissions, namely energy, waste, IPPU (Industrial Process and Product Uses), agriculture, and FOLU (Forestry and Other Land Uses). The energy sector is still the largest source of GHG emissions nationally with 453.2 Mton CO2. “For the case of South Sumatra, one example of a strategy to reduce GHG emissions in the energy sector is biomass co-firing technology to produce electricity in coal-fired power plants,” explained Ridlo.

 

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.

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

Playback Recording

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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CASE IESR: Indonesia Needs to Encourage Stronger Commitment from ASEAN Countries to Reducing GHG Emissions in the Region

press release

Jakarta, 15 August 2023 Holding the Chair of ASEAN in 2023 and possessing significant economic influence within the ASEAN region, Indonesia can foster a joint agreement among other ASEAN member countries to promote the reduction of greenhouse gas (GHG) emissions in alignment with the Paris Agreement. Additionally, Indonesia can mobilize support from other countries as several ASEAN nations aim to phase out coal-fired power plant operations incrementally before 2050. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), conveyed this message during a media briefing titled “Measuring ASEAN’s Climate Ambition at the Helm of Indonesia’s ASEAN 2023 Chairmanship.”

According to Fabby, while Indonesia prohibits the construction of new coal-fired power plants (PLTU) for general use, allowing their construction for industrial purposes can impede the achievement of a higher renewable energy mix. He emphasized that the Indonesian government should advocate for a stronger commitment to ending the operation of coal-fired power plants throughout ASEAN countries. Furthermore, Indonesia should bolster its renewable energy expansion within ASEAN, particularly in solar energy development. Fabby encouraged discussions on an integrated supply chain to be established during the ASEAN Ministers on Energy Meeting (AMEM) scheduled for August 2023.

“We hope that during AMEM, Indonesia can propose to become a manufacturing hub for solar PV, encompassing technology from polysilicon to solar modules. Although some ASEAN countries have advanced manufacturing capabilities, they are still limited to cells and modules. Moreover, this manufacturing progress lacks integration. Indonesia, endowed with raw materials like silica sand, has the potential, as Chair of ASEAN 2023, to champion an integrated supply chain through a collective agreement,” he stated.

He added that climate threats are escalating for ASEAN nations, significantly impacting the region’s food security, energy security, and developmental progress. Without earnest endeavors to curb global emissions, climate change will compound challenges, making sustained economic growth of over 6% in the Southeast Asian region even more challenging.

Berlianto Pandapotan Hasudungan, Director of ASEAN Economic Cooperation at the Ministry of Foreign Affairs of Indonesia, explained that transitioning to renewable energy and reducing reliance on petroleum is pivotal for Indonesia’s leadership within ASEAN amidst geopolitical, Myanmar, and climate crises.

“Alongside the advancement of electric vehicles, ASEAN is fostering energy interconnections among member countries and embarking on studies for energy interconnections within the region,” he elaborated.

Shahnaz Nur Firdausi, a Researcher on Climate and Energy at IESR, highlighted that Indonesia’s climate policies and commitments do not align with the Paris Agreement’s objective of capping temperature rise at 1.5°C. The Climate Action Tracker (CAT) report underscores the insufficiency of Indonesia’s climate targets and policies. If other countries follow a similar path, global warming could exceed 2°C to 3°C.

“For this reason, Indonesia’s climate policies and actions in 2030 require substantial improvements in line with a temperature limit of 1.5°C. Indonesia should elevate the NDC target to 75% under the NDC business-as-usual (BAU) scenario, excluding land use and land use change and forestry (conditional), and 62% (unconditional). Furthermore, Indonesia’s land use and forestry emissions have accounted for nearly 50% of total emissions over the past two decades,” said Shahnaz.

In concluding remarks, Agus Tampubolon, the Project Manager of Clean, Affordable, and Secure Energy (CASE) for Southeast Asia, emphasized the significance of collaboration among ASEAN member countries to expedite the energy transition.

“Indonesia can serve as a model for the ASEAN region by spearheading the energy transition. ASEAN countries possess tremendous potential for joint efforts in advancing solar PV technologies and crafting policies that facilitate the shift from fossil fuels to renewable energy, thereby amplifying climate targets,” Agus affirmed.