Encouraging Industrial Decarbonization Starting from Consumer Lifestyle

Jakarta, 22 March 2024 – The increase of the earth’s temperature is an inevitable phenomenon as a result of various natural events and human activities and lifestyles which produce greenhouse gas (GHG) emissions as the cause of the rise in the earth’s temperature.

The invention of the steam engine in 1880 made monumental changes to human life with the beginning of industrialization. The development of industry has been accompanied by increasing greenhouse gas (GHG) emissions.

The Intergovernmental Panel on Climate Change (IPCC) in 2022 recorded an increase in earth temperature of 1.1 degrees Celsius. This is a warning for humanity to immediately take steps to control temperature rise to prevent the temperature increase from reaching no more than 1.5 degrees Celsius.

Faricha Hidayati, Coordinator of the Industrial Decarbonization Project, Institute for Essential Services Reform (IESR) explained that rising earth temperatures could trigger hydrometeorological disasters, one of which will be at an increasingly high frequency.

“Apart from environmental problems, another side impact is health costs which will rise along with the increase in disease, especially those that attack vulnerable groups such as the elderly, children and poor households,” explained Faricha.

Even though it is one of the sectors causing increased GHG emissions, the industrial sector has a significant economic contribution. So strategic steps and efforts are needed to decarbonize the industrial sector.

In 2021, industrial sector emissions will be the second largest emitting sector after electricity generation. If we continue to use the business as usual scheme without any intervention, the value of emissions in the industrial sector will double by 2050.

“The industrial sector contributes to emissions of more than 300 million tons of CO2 in 2021, with the highest source of emissions from the use of fossil fuels as an energy source,” added Faricha.

Even though there are regulations that encourage industry to practice sustainable principles, their implementation is not yet mandatory. Even for industries that independently have the initiative to implement sustainable principles, there is no incentive system for them.

Faricha continued, apart from through policy advocacy to the government, consumers can contribute, one of the ways is by choosing products that are produced with sustainable principles. Consumers can also demand that producers or industries start implementing sustainable principles in their production processes.

Embarking on the Decarbonization Journey of the Steel Industry

Jakarta, 20 March 2024 – The industrial sector is one of the important sectors for reducing emissions. The large energy consumption and its significant contribution to the economy in 2022 amounting to 16.48 percent of Gross Domestic Product (GDP), are strong reasons to make this sector more sustainable. Industries with high energy needs, such as the iron and steel industry, require strategic preparation to carry out decarbonization.

Indonesia is one of the largest steel producing countries in Southeast Asia, and ranks number 15 steel producers in the world. In 2023, Indonesia’s steel production capacity will reach 16 million tonnes and is estimated to reach 33-35 million tonnes in 2030.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in the webinar “Accelerating the Transformation of the Steel Industry in Southeast Asia: Indonesia Chapter” stated that Indonesian steel production still has high emissions.

“Indonesia’s projected steel demand is predicted to increase. If we don’t take serious decarbonization steps, emissions from the steel industry will also continue to increase,” said Fabby.

We also face international market demands to produce lower carbon steel. For example, the European Union has implemented the Carbon Border Adjustment Mechanism (CBAM), which, effective in 2026, will have a negative effect on the exports of the Indonesian steel industry. For this reason, the steel industry needs to undergo transformation.

Farid Wijaya, Senior Analyst at IESR, explained that decarbonization for the steel industry will bring prospects for economic growth, although currently there are still quite a lot of challenges.

“Green industrial standards can be one way to encourage environmentally friendly industries. Green standards for steel have only recently been established and are still limited to sheet steel per layer. “Currently there is no steel industry that has received a green certificate due to implementation limitations,” said Farid.

Kajol, Program Manager for Climate Neutral Industry Southeast Asia, Agora Industry, added that currently almost 80% of steel production is carried out through blast furnace technology.

“We have to start thinking about better and modern technology to replace blast furnaces. “When the blast furnace facilities currently operating start to become less efficient in 2030-2040, we must replace them with more modern technology and no longer invest in blast furnaces,” she explained.

One of the technologies Kajol refers to is Direct Reduced Iron (DRI) which can produce primary steel using natural gas or clean hydrogen. Iron ore is reduced to produce DRI, which can then be melted in an electric arc furnace (EAF) to produce primary steel.

Viable strategies for decarbonizing the steel industry include direct and indirect use of renewable energy, resource efficiency and circular economy, and closing the carbon cycle.

Helenna Ariesty, Sustainability Manager of PT Gunung Raja Paksi (GRP) as an industry player emphasized the importance of regulatory certainty in encouraging industrial decarbonization.

“We face several challenges to navigate the inconsistent policy direction. Apart from that, access to funding is affordable considering the initial investment required is significant,” Helenna said.

Joseph Cordonnier, Industrial Policy Analyst, OECD agrees that policy and access to funding will be key framework components for building a supporting ecosystem for industrial decarbonization.

“As part of this framework we also have to really look at how to maximize the utilization of existing assets based on engineering variables, energy efficiency and emission reduction of these assets,” said Joseph.

Fausan Arif Darmaji, Infrastructure Development Analyst, Green Industry Center, Ministry of Industry said the government is aware of the need to reduce emissions from Indonesian steel production.

“The steel sector is also our current focus. “While we are waiting for the policy regulations that are currently being made, we are providing training on GHG calculations for the steel sector, as well as calculating the economic value of carbon,” said Fausan.

Deon Arinaldo, IESR Energy Transformation Program Manager closed this webinar by underlining the need for industrial decarbonization as an effort to remain relevant to the demands of industrial development.

“Currently decarbonization in the industrial sector is still considered a challenge. Not only in Indonesia, but also a global phenomenon. “We must anticipate this trend because decarbonization is inevitable,” said Deon.

Kompas | When can Indonesia Rely on Renewable Energy?

The transition from fossil energy to low-emission energy is non-negotiable. It’s not about following global trends, but about the earth and its life in the future. However, the question arises when Indonesia can really rely on renewable energy? Because, even though we are blessed with abundant renewable energy potential, access is not easy and the price is not cheap.

Read more on Kompas.

Decarbonization of the Iron and Steel Industry Needs a Comprehensive Roadmap

press release
The Executive Director of IESR, Fabby Tumiwa
The Executive Director of IESR, Fabby Tumiwa

Jakarta, March 20, 2024 – Indonesia’s iron and steel industry is experiencing consumption growth. Data from the Coordinating Ministry for Economic Affairs shows that in 2022, the average steel consumption was 15.62 million tons annually. This number exceeds the average steel production of around 12.46 million tons annually. Meanwhile, in terms of exports, the iron and steel industry experienced an increasing trend from USD 7.9 billion in 2019 to USD 28.5 billion in 2022.

Increased consumption of iron and steel on a national level directly impacts the amount of greenhouse gas emissions. According to the Institute for Essential Services Reform (IESR) report, the iron and steel industry alone contributes to 4.9% of total industrial emissions. This amounts to approximately 430 million tons of carbon dioxide in 2022, equivalent to 20-30 million tons per year. To promote greener and more sustainable business practices, the IESR recommends that the government and iron and steel industry players work together to reduce emissions.

The Executive Director of IESR, Fabby Tumiwa, stated it is crucial to address the transfer of iron and steel production process technology to decarbonize the iron and steel industry sector. Currently, 80% of iron and steel production in Indonesia is still produced using blast furnace technology, which relies heavily on coal and coke as fuel. This means that reducing emissions in Indonesia’s iron and steel industry will become increasingly challenging if the use of blast furnace technology continues to rise.

“Steel is a vital material required for various developmental purposes, including producing technologies that support the worldwide shift towards renewable energy. To generate 1 MW of renewable energy using solar panels and wind turbines, we need approximately 20-180 tons of steel. Therefore, it is essential to decarbonize the steel industry to ensure that the technology supply chain becomes low-carbon through increased energy efficiency. One way to achieve this is by switching to environmentally friendly technology, using renewable energy, and optimizing the use of recycled steel (scrap),” said Fabby Tumiwa in the Webinar Accelerating the Transformation of the Steel Industry in Indonesia and Southeast Asia organized by IESR and Agora Industry. 

The urgency to reduce carbon emissions in the iron and steel industry is influenced globally by low-emission product regulations, carbon limits for exports, and carbon trading. At the national level, Farid Wijaya, a Senior Analyst at IESR, stated that decarbonizing the iron and steel industry can help achieve Indonesia’s economic growth goals, protect the domestic supply chain and future economy, and increase export competitiveness for global markets that value environmentally friendly practices.

“To reduce carbon emissions in the industry, it is essential to establish regulations and standards for building a green industry ecosystem. This ecosystem should include the provision of green energy and low-carbon technology. To effectively achieve this goal, each industry and association needs to develop a clear roadmap for decarbonization. Currently, this roadmap only exists for a few sectors and has not yet been established as a regulation that can serve as a basis for action by industry players and associations,” Farid said. 

The IESR study provides recommendations to encourage the reduction of carbon emissions in Indonesia’s industrial sector. Firstly, the Ministry of Industry should complete the industrial decarbonization roadmap by the end of 2024 or sooner. Secondly, the study recommends strengthening the reporting and data collection process regarding implementing the Minister of Industry Regulation No.2/2019, which concerns the procedures for submitting industrial data through the National Industrial Information System (SIINAS). This will ensure the disclosure of industrial sustainability reports for transparency and access to information, mainly reporting on energy and raw material use and waste generated. Finally, the study suggests benchmarking green industry production processes and expanding the scope and limit values of green industry standards (SIH) from voluntary and referring to local best practices to mandatory, based on the emission reduction needs in 2060 or earlier.

Kajol, Southeast Asia Climate-Neutral Industry Program Manager, Agora Industri, said the transformation of the iron and steel industry requires three strategies, namely the use of direct and indirect renewable energy, resource efficiency and the implementation of a circular economy, and ending the carbon cycle with the use of Carbon Capture Use and Storage (CCU/S) and biomass and bioenergy supplemented with CCS (BECCS).

Fausan Arif Darmadi, Infrastructure Development Analyst, Center for Green Industry, Ministry of Industry (Kemenperin), it is worth noting that the party has introduced a green industry standard (SIH) that covers various aspects such as raw materials, auxiliary materials, energy, production processes, products, business management, and waste management. Minister of Industry Regulation (Permenperin) No. 12 of 2023 also sets limits on energy use, water consumption, and greenhouse gas (GHG) emissions for coated steel. This regulation aims to assist companies in adopting an efficient and eco-friendly production process.

“The commitment of the industrial sector is crucial in reducing carbon emissions. As a result, the Ministry of Industry has offered training to the steel industry on calculating greenhouse gas (GHG) emissions and determining the economic value of carbon. Meanwhile, a comprehensive guide to aid in calculating the economic value of carbon is currently in development,” said Fausan.

Small and Medium Enterprises (SME) Emissions are not Small

Dekarbonisasi emisi UKM

Jakarta, 14 March 2024 – The industrial sector has become the backbone of the Indonesian economy. Not only large industries, Small and Medium Enterprises (SMEs) are also the driving force of the national economy, including creating employment opportunities and contributing 60.5% to GDP.

However, this economic contribution figure is also accompanied by large, haunting emissions. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform, in his opening remarks for the Webinar on Decarbonization Opportunities for Small and Medium Enterprises in Indonesia and Learning from Global Experience, said that currently emissions from the SME industrial sector in 2023 are 216 million tons of CO2e.

“This figure is equivalent to one third of national industrial sector emissions. So, we need to seriously strive to decarbonize the SMEs industry because by prioritizing the sustainability aspect, SMEs will level up,” said Fabby.

As much as 95% of the SME sector’s emissions come from burning fossil fuels, the remaining 5% from burning waste. Large economic contributions need to be anticipated as a result of emissions output. If significant steps are not taken to reduce SME sector emissions, there is a possibility that SME emissions will increase in the future.

Abyan Hilmy Yafi, IESR Energy Data Analyst, explained in a survey carried out by IESR on 1000 SMEs throughout Indonesia that to start decarbonizing the SME industry there are several approaches from increasing understanding to technical solutions such as switching technology.

“For cross-sectors, there is a need to increase the understanding of SMEs about energy consumption and the emissions they emit. Active outreach is also needed to promote renewable energy. By sectoral approach, there are several technical recommendations such as the use of electric boilers in the textile and apparel industry,” he explained.

Bo Shen, Energy Environmental Policy Research, LBNL explained that globally, challenges to decarbonizing the SME industry include gaps in the knowledge of SME owners or managers regarding emissions, energy, or furthermore climate change and its relevance to their business.

“When SMEs already have sufficient knowledge and awareness to carry out decarbonization or reduce emissions from their business, finance becomes the next obstacle. The current upfront costs for, for example, looking for technology vendors or energy service providers (Energy Service Company – ESCO), are still quite high for the financial scale of SMEs,” explained Bo Shen.

Each country will use a different approach to encourage the decarbonization of their SMEs. In the United States, for example, governments are collaborating with universities to build industrial assessment centers.

“Apart from being useful for decarbonizing the SMEs industry, this approach also prepares skilled workers who have direct training opportunities in the SME industry,” explained Bo Shen.

Bo also added an interesting case from China which formed an initiative called Green Growth Together (GGT). This initiative encourages decarbonization of SMEs that are part of established product supply chains.

The established brands they supply require their entire supply chain network to implement emission reduction or decarbonization practices. This demand also comes with required financial assistance or technical assistance.

Ahmad Taufik from the Green Industry Center of the Ministry of Industry (Kemenperin) stated that Indonesian is currently experiencing challenges in the industrial sector. The contribution of the industrial sector to GDP continues to decline.

“Structurally, we are still continuing to improve various things, from industrial development, SME development, to ensuring the availability of environmentally friendly jobs (green jobs) and professional staff (green professionals),” said Taufik.

Encouraging the Decarbonization of MSMEs in Indonesia

press release

Jakarta, March 14, 2024 – Micro, Small, and Medium Enterprises (MSMEs) have become one of the important pillars of the Indonesian economy. Based on data from the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop), the MSME sector contributed to the Gross Domestic Product (GDP) by 60.5 percent and contributed to employment reaching 97 percent of the total workforce in 2021. 

On the other hand, MSMEs produce greenhouse gas emissions that are responsible for the climate crisis. Based on a study by the Institute for Essential Services Reform (IESR), estimated energy-related emissions from MSMEs reached 216 MtCO2 in 2023, equivalent to half of the national industrial sector emissions in 2022. For this reason, the Institute for Essential Services Reform (IESR) encourages MSME players to make efforts to reduce emissions to achieve greener and more sustainable businesses. 

The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, said that MSMEs have a significant role to play in achieving Net Zero Emission (NZE) by 2060 or sooner. According to him, reducing emissions or decarbonizing the entire supply chain in the MSME sector will open opportunities for Indonesian MSMEs to compete at the global level.

“Our study found that 95 percent of emissions from MSMEs come from burning fossil energy. Reflecting on this data, the government needs to start identifying opportunities and challenges in decarbonizing MSMEs. The government also needs to propose strategies and provide assistance in the form of financial and technical assistance to MSMEs so that they are able to plan and encourage investment to reduce greenhouse gas (GHG) emissions,” Fabby said in a webinar on Decarbonization Opportunities for Small and Medium Enterprises (SMEs) in Indonesia and Learning from Global Experiences.

 

In collaboration with Lawrence Berkeley National Laboratory (LBNL), IESR formulated a study that offers solutions to decarbonize MSMEs, especially in the Small and Medium Industry (SMI). SMEs were chosen because the subsector emits higher emissions than other SME subsectors. In addition, SMEs can employ up to 100 people, potentially providing jobs for local residents. This can be a reference to ensure a just transition, both at the local and national level.

The IESR and LBNL analysis recommends technology upgrades and electrification to decarbonize SMEs. The study takes three examples of SMEs with their decarbonization solutions First, electrification for the textile and clothing sector. Second, the construction sector that needs to increase the use of low-carbon cement, innovative concrete formulations and propose eco-friendly equipment to building owners. Third, the tanning industry sector to encourage the penetration of variable renewable energy (VRE), such as solar panels and domestic wind turbines.

Energy Data Analyst of IESR, Abyan Hilmy Yafi, mentioned, through the initial strategy of decarbonizing SMEs, several economic benefits will be obtained such as the creation of new business opportunities, increasing brand value, and attracting customer trust. Not only that, decarbonization will also improve production processes, profitability, and competitiveness while reducing climate change risks and ensuring a positive impact on the environment.

“MSMEs need to get more assistance because many MSME players do not know about energy, its units and how to make it efficient. With collaboration between the government, private sector, and the community, MSMEs can become agents of change that drive the transition to a clean and sustainable economy for a better future for all,” Abyan said. 

Head of the Green Industry Development Program Team, Ministry of Industry, Achmad Taufik, said that his party is working on green funding/investment for SMEs from banks, private and international sources. In addition, his party is exploring several models and preparing studies to strengthen green industry service providers. 

“For small and medium industries in an effort to transform towards green industry, we will help with training and capacity building, access to green technology, access to markets or creating new markets,” said Achmad. 

Highlighting decarbonization opportunities in the Small and Medium Enterprises (SMEs) sector, Energy and Environmental Policy Researcher, LBNL, Bo Shen stated that the application of energy efficiency is an attraction for the market in choosing SME products. In China, energy efficiency certification for SMEs is the basis for large companies to take SME products, he said. Meanwhile, learning from the United States, a number of universities have created government-funded industrial assessment centers to determine the estimated energy consumption and emissions of SMEs. 

“There are several effective ways to encourage energy savings in SMEs in Indonesia that can be applied. Among them, the availability of a standardized and transparent system to track, assess and communicate the energy performance of SMEs. Second, the existence of a government-supported evaluation scheme in business image improvement. Third, the existence of clear decarbonization targets for the government, multinational companies and SMEs,” said Bo Shen. 

Note to Editors:

MSMEs are all micro, small and medium-sized enterprises/businesses. 

Small and Medium Enterprises (SMEs) means excluding micro enterprises.

Small and Medium Industry (SMI) is a business that has a production process/conversion of raw/half-raw goods to finished goods that has a small to medium business size.

The type of micro, small, medium can be seen from the capital/income/number of employees.

Reviewing Indonesia’s Renewable Energy Investment Needs

Investasi energi terbarukan

Jakarta, March 8th, 2024 – Indonesia’s energy transition commitment officially began three years ago when the State Electricity Company (PLN) issued the 2021-2030 Electricity Supply Business Plan (RUPTL) which targets increasing renewable energy capacity as one of the prerequisites for achieving net zero Indonesia’s emissions in 2060, specifically the electricity sector in 2050.

During the Market Review session, Friday 8 March 2024, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) stated that the development of renewable energy is a necessity. The government, through a number of policies such as RUPTL 2021, and Presidential Decree 112/2022 has announced additional renewable energy capacity as well as a commitment to no longer build new PLTUs except those already in the contract process.

“These commitments must be translated to executable technical and economic plans. Therefore, the RUKN and RUPTL revision process which is currently underway is very important,” said Fabby.

In the 2024 – 2040 RUPTL, PLN plans to increase its renewable energy generation capacity by up to 80 GW. This plan will have the consequence of a significant increase in renewable energy from currently around 9 GW to 70 GW.

Fabby added that this enthusiasm and ambition needs to be monitored by the public considering that the government’s record for increasing renewable energy capacity is always below the target. In pursuing the target of a 23 percent renewable energy mix by 2025, Indonesia has not shown the expected progress. Until 2023, the renewable energy mix will only be 13 percent. This makes the remaining two years a challenge for accelerating renewable energy.

The required cost for building renewable energy plants, which reaches USD 152 billion (equivalent to 2,300 trillion rupiah) by 2040, is in the spotlight. This figure is considered a realistic figure by Fabby, considering that this figure represents investment needs including the need for building renewable energy plants as well as building transmission and distribution networks.

“The figure of USD 152 billion is a realistic figure at this time. We also have to understand that technology continues to develop, it is very possible that in the future this investment need will gradually decrease according to technological developments,” explained Fabby.

Fabby highlighted the government’s intention to involve the private sector more. To invite greater private investment, regulatory improvements are needed, including the National Energy Policy in line with the electricity sector’s net zero emission target in 2050, a review of electricity purchase prices from renewable energy generators, and a review of the current electricity tariffs.

Civil Society Coalition: New Energy Sector Rules Set Back Energy Transition Commitment

press release

Jakarta, March 8, 2024 – The Renewable Energy Movement’s Civil Society Coalition is questioning the government’s commitment to the energy transition. They consider some regulations to be disincentives for switching to renewable energy. These regulations include the Energy and Mineral Resources (ESDM) Ministerial Regulation on solar PV, the Presidential Regulation (Perpres) on carbon capture and storage, and the Draft Government Regulation (RPP) on the National Energy Policy (KEN).

The Ministry of Energy and Mineral Resources (ESDM) has recently issued Regulation No. 2 of 2024, which outlines new rules for Rooftop Solar Power Plants. Unfortunately, these changes may discourage the public from installing rooftop solar power plants, particularly in households and micro, small, and medium enterprises (MSMEs). The first change is that excess rooftop solar power production can no longer be exported to PT PLN. Therefore, it won’t be counted as a bill reduction. The second change is that the development of rooftop solar PV will follow a quota system set by PLN. In addition, there will be only two registration periods per year. The problem is that the export of electricity to the PLN grid is the attraction of rooftop solar PV. With this provision, people can pay more to install batteries. Not only that, the payback period for rooftop solar power plants will also be extended to 9-10 years. In fact, with the 100% excess electricity export provision as in the current regulation, the cost of installing rooftop solar power plants can be recovered in four to five years.

“This regulation is a setback because it will reduce public participation in installing rooftop solar power plants. Not only does it hinder household consumers, but this new regulation also makes it difficult for industries that want to install rooftop solar power plants. This means that the new regulation shows that the government is getting further away from its commitment to energy transition,” said Jeri Asmoro, Digital Campaigner of 350.org Indonesia.

Community enthusiasm for rooftop solar power installation in rural and urban areas is relatively high, according to Reka Maharwati, Coordinator of Enter Nusantara. For instance, the people of Sembalun Village in West Nusa Tenggara and the Al-Muharram Mosque community in Taman Tirto, Yogyakarta, have installed rooftop solar power to achieve their dream of energy independence.

“I’m sure many other communities want to install rooftop solar panels in their homes or even be empowered to work collectively in the community. The government should be able to collaborate with these enthusiasts and create new schemes more beneficial to the community,” said Reka.

Similarly, Hadi Priyanto, a Renewable Energy Campaigner of Greenpeace Indonesia, revealed that an equitable energy transition can only be realized if the community is involved. “Community participation is one of the keys to achieving the energy mix target, but various revisions to existing regulations show the government’s lack of seriousness in energy transition efforts. The principles of fairness and democratization of energy that have been echoed in the JETP program will only be a platitude without real steps to break away from fossil energy dependence,” he added. 

 

Similar to the updated regulations about rooftop solar PV, the draft RPP KEN containing a reduction in the renewable energy mix target from 23% to 17-19% in 2025 also hinders the acceleration of the energy transition. In the National Energy Council (DEN) document on the draft RPP KEN, the renewable energy mix until 2030 is targeted at 19-21% and will only increase in 2040 to 38-41%.

Deon Arinaldo, Program Manager of Energy Transformation, Institute for Essential Services Reform (IESR), explained that the draft KEN RPP only allows Indonesia to reach peak emissions in 2035, which is 7-10 years later than what is needed to limit the increase in global average temperature below 1.5°C, as recommended by the Intergovernmental Panel on Climate Change (IPCC) report. This puts the achievement of the Paris Agreement and carbon-neutral commitments by 2060 or sooner, which the government has aimed for, at risk.

The delayed peak emission in Indonesia means that the country will have to speed up its energy transition in a shorter time frame than previously anticipated, resulting in higher costs and more significant social impacts that will be difficult to mitigate. The draft policy has also affected the perspectives of various actors, including renewable energy investors and developers, regarding the government’s commitment to promoting renewable energy development.

“This also marks the reduction in primary energy mix targets in 2025 and 2030, especially the share of renewable energy such as solar and wind, which can hamper the cooperation of the energy transition. This is because renewable energy that can enable energy democratisation, such as solar energy, has a small portion. Greater support is given to large-scale projects such as fossil plants with carbon capture storage (CCS) or nuclear technology. So the draft KEN RPP does not favour energy transition with the community,” said Deon Arinaldo.

 

The plan to change KEN also contradicts Indonesia’s JETP Agreement commitment, which targets a renewable energy mix of more than 44% by 2030. It is feared that changes to KEN will impact the revision of the JETP commitment. In addition, as a large umbrella for national energy planning, the draft KEN RPP also has the potential to undermine efforts to transition to renewable energy that have been carried out in the regions.

Red Carpet for False Solutions

Not only does it disincentivize renewable energy development, but government policy encourages false solutions as an energy transition strategy. This step is fatal because it can lock Indonesia into fossil energy dependence, which leads to failure to achieve carbon neutrality.

 

In the revised KEN, for example, until 2060, the government still plans to operate fossil energy-based power plants and ‘green’ them with carbon capture and storage (CCS) technology. In addition, the government intends to operate nuclear power plants (PLTN) by 2032 and use gas fuel for transportation and households until 2060.

The government’s support for fake solutions is also shown by the issuance of Presidential Regulation No. 14 of 2024 concerning implementing Carbon Capture and Storage Activities. This regulation allows companies to inject and store carbon emissions into underground reservoirs. The IEEFA Report shows that out of 13 CCS projects with a total of 55% of the world’s capacity, seven projects performed poorly, two failed, and one stopped operations. The application of CCS technology is feared to be a greenwashing effort that perpetuates fossil energy-based power plants.

These three regulations raise questions regarding how serious the government is about encouraging renewable energy development. This is because the national renewable energy mix has always been below the target in the last five years. 

“Regulations will be a long-term legal basis to ensure that energy transition steps are carried out legally. If the legal basis is made exactly the opposite of the target stated by the government, then where is the commitment to the energy transition? If the regulations are continuously directed to continue utilising fossil energy, investors interested in doing renewable energy business will withdraw because they do not have legal certainty. Our problem is in legal certainty,” said Agung Budiono, Executive Director of the CERAH Indonesia Foundation.