The government is encouraging dedieselization in regional areas by increasing the use of power plants sourced from green energy. Most recently, the Ministry of Energy and Mineral Resources (ESDM) completed the construction and revitalization of a Mini Hydro Power Plant (PLTM) with a capacity of 1 megawatt (MW) in Oksibil District, Pegunungan Bintang Regency, Papua Mountain Province.
Read more on Koran Jakarta.
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.
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.
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.
Small and medium-sized enterprises (SMEs) can gain various benefits if they can cut or even eliminate their emissions.
Read more on Kompas.com.
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.
The impacts of climate change have become a serious threat to the lives of children and youth. A study conducted by Save the Children in 2020 found that children born in 2020 experienced disasters 3.4 times more frequently than their grandparents born in 1960. The disasters involved climate change, such as heatwaves, droughts, forest fires, floods, and crop failures, putting additional pressure on the environment necessary for children’s growth and protection. Another study conducted by UNICEF highlighted that climate change is the biggest threat to children’s health, nutrition, education, and future.
On the other hand, the development of the industrial sector in recent decades has changed people’s lifestyles in many ways. From electronic goods to daily clothing. Unfortunately, environmentally unsound production and consumption activities often have adverse impacts on climate change. For example, the overuse of natural resources, deforestation due to industrial activities, and the development of fast fashion trends that encourage unsustainable consumption. In fact, the industrial sector alone accounts for 25% of global carbon emissions (UNEP, 2023). Therefore, it is necessary to make changes in mindset and daily behavior, especially for the younger generation, to reduce and mitigate the impact of climate change on the industrial sector and lifestyle.
This webinar aims to dig deeper into how climate change is caused by industry and the lifestyles of the general public, including those of young people. Through in-depth discussions, a better understanding of the challenges and opportunities faced by young people in the context of climate change is expected. In addition, this webinar is also geared towards formulating solutions and concrete actions that can be taken by young people in building sustainable lifestyles and formulating innovations in industry to reduce negative impacts on the environment.
The Institute for Essential Services Reform (IESR) reports that greenhouse gas (GHG) emissions from the Micro, Small and Medium Enterprises (MSMEs) sector are very high. As much as 95 percent of emissions from these MSMEs come from burning fossil energy.
Read more on Kata Data.
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.
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