Launch of Report on Identifying Financing Needs for an Equitable Transformation of Indonesia’s Electricity Sector

Background

As one of the largest coal consuming and producing countries, Indonesia is ranked 6th as a global greenhouse gas emitter with a share of 3.11% of total global emissions (Climatewatch, 2024). In 2020 alone, the energy sector became the largest contributor to emissions, following the forestry and land sectors that have almost always dominated in the last decade. This is influenced by the high consumption of fossil energy, which is still dominated by 80% fossil energy over the past decade (IEA, 2023). Recognizing this, Indonesia has set a target to reach net zero by 2060 or earlier, and increased the energy sector target in the National Determined Contribution (NDC) to 31.89% or at least 915 MtonCO2 reduction. The government has also decided to no longer build new power plants and plans to retire several power plants listed in Presidential Regulation 112/2022. This step is a signal for Indonesia to prepare for the impact of fossil energy dependence as soon as possible.

The growing narrative of energy transition raises concerns due to the transition risks posed. It is no longer just technical and economic constraints that are being discussed, but also considering the social, environmental and economic aspects of those affected by the transition. From this, the discussion of the energy transition narrative becomes inseparable from the principle of justice. This is in line with the Paris Agreement which encourages a just transition, especially in the labor sector in accordance with the priority development agenda (EBRD, 2024). Global and national discourses related to energy transition in recent years have been very intense, especially related to the dismissal of fossil power plants closely related to the practice of just transition for people and communities around PLTU and in coal mining areas. In addition, the energy transition also requires an equitable approach in areas that will also be affected to support the transition, for example coal mining areas, mines and critical mineral industrial areas, and renewable power plant development areas. This was further strengthened at COP 28 in 2023 where at the ministerial meeting it was stated that the transition would not occur unless it was carried out in an equitable manner. This momentum has made the equitable transition agenda the focus of discussion both at the national and international levels.

 

Objective

This activity was carried out with the following objectives

  • To collect information related to policies in building an equitable transition framework that is in accordance with aspects of national and regional economic development to be included in the medium-term development plan;
  • Identifying challenges and opportunities faced by various stakeholders, especially CSOs, think tanks and academia in bringing the issue of equitable transition;
  • Building partnerships with CSOs, think tanks, development partners, and academics to harmonize the messages delivered.

Engaging More People in the Emission Reduction Effort

Jakarta, 22 April 2024 – Energy transition has gained traction and momentum in the past years. Countries have pledged to reduce emissions as well as accelerate their energy transition agenda to keep the global temperature rise on the 1.5-degree Celsius level. Indonesia pledged to achieve net zero emissions status in 2060 or earlier. This commitment is 10 years later than the Paris Agreement target in 2050. 

Irwan Sarifudin, Coordinator for Clean Energy Hub IESR, during the SEA Morning Show on 22 April 2024, said that the IESR’s study Deep Decarbonization shows that Indonesia technically can achieve zero emissions in the energy sector in 2050.

“This choice (to be NZE in 2050) is technically possible and economically viable for Indonesia,” Irwan said.

Irwan also explained that to push the government agenda in accelerating energy transition targets, multi-sector collaboration is essential. One of the initiatives launched by IESR is Generasi Energi Bersih (Gen-B), a youth community focused on personal emissions reduction. 

Maya Lynn, GEN-B Coordinator explained that the community encourages each individual to contribute to emission reduction efforts. Gen-B utilizes tools such as jejakkarbonku.id to calculate individual carbon footprints.

“Jejakkarbonku.id has already been customized to suit the Indonesian context, so the transportation options and food choices are developed according to the Indonesian habit and custom,” she said.

To further engage more people, the GEN-B community will keep encouraging the community members and will also be involved in the Community Funded Offset Project (CFOP) which is a carbon offsetting activity by providing renewable energy installation or mangrove planting. The CFOP itself is planned to be in several locations in Indonesia.

Webinar on the Decarbonization Opportunities of Small-to-Medium Enterprises (SMEs) in Indonesia and Lesson Learnt from Global Experience

Replay Event

Background

Indonesia is one of the largest economies in the world and continues to experience growth. Amongst other economic activities, the industrial sector as the backbone of the economy will also be expected to grow to support the realization of Indonesia Emas in 2045. Along with the growth, the expected growth of the industrial sector will contribute to the country’s total greenhouse gas emissions, which in 2021 have reached about 420 MtCO2 and are expected to double if no necessary measures are taken. Therefore, a commitment to transition towards more sustainable business and industrial practices is compulsory to control and limit the emissions to 31.89-43.2% less than the business-as-usual level in 2030, whilst ensuring the global competitiveness of Indonesia’s industry.

Small-to-medium enterprises (SMEs) hold a crucial position in Indonesia’s economy and constitute the largest share of manufacturing industries in the country. According to the Asian Development Bank, in 2019, SMEs accounted for about 99% of formal business and nearly 97% of employment in Indonesia. Locally, they also foster social development and equity, contributing to rural development, community empowerment, and poverty reduction. Despite its role in becoming the engine of economic growth locally and nationally, SMEs’ financial management and technical capacitances are often left behind to be developed compared to large businesses. Moreover, as with more relaxed regulations toward SME players, emissions from this sector are often overlooked and may unfold a higher number of emissions compared to the larger industry sector. Based on IESR’s latest study, it is found that the estimated energy-related emissions of SMEs reach 216 MtCO2 in 2023, on par with the emissions generated from industry sectors nationally.

This webinar is conducted to disseminate the latest study findings of IESR and LBNL that focus on exploring decarbonization opportunities suitable for SMEs in Indonesia. Key insights for SME players, policymakers, and financial institutions will be unfolded to unlock the untapped potential of energy efficiency and decarbonization in SMEs whilst improving their business competitiveness toward the current market change. Moreover, global experience on SME decarbonization will be shared to showcase the best practices that are already implemented in China, the United States, and other significant economies in the world hence providing a best reference for retrofitting for Indonesia’s SME landscape. The webinar will be held online via Zoom and streamed on IESR’s YouTube channel. It is expected that the webinar will provide valuable insights and spark innovative initiatives amongst all stakeholders in Indonesia to start the decarbonization journey for SMEs.

Objective 

There are several objectives of this workshop:

  1. Disseminate and share information on Indonesia’s Small-to-Medium Enterprises (SME) landscape on its economics, energy, and waste management,
  2. Receive feedback from the SME decarbonization recommendation from relevant key stakeholders,
  3. Discuss essential and actionable steps required to implement the decarbonization initiatives for Indonesia’s SMEs, and 
  4. Discuss challenges and opportunities, and initiate collaborations to promote decarbonization and sustainable growth in selected SMEs in Indonesia.

Presentation

Exploring Decarbonization Opportunities in Indonesia’s Small-to-Medium Enterprises (SMEs) – Abyan Hilmy Yafi

Exploring-Decarbonization-Opportunities-in-Indonesias-Small-to-Medium-Enterprises-SMEs-Abyan-Hilmy-Yafi

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Unlocking Energy Efficiency – Decarbonization Potentials in SMEs – Bo Shen

Unlocking-Energy-Efficiency-Decarbonization-Potentials-in-SMEs-Bo-Shen

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Decarbonization of Small and Medium Industries (SMIs) in Indonesia – Achmad Taufik

DECARBONIZATION-OF-SMALL-AND-MEDIUM-INDUSTRIES-SMIs-IN-INDONESIA-Achmad-Taufik

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Building a Framework for Understanding Mutual Cooperation on Renewable Energy

Bekasi, 23 January 2024 – Human life cannot be separated from various types of energy use. Starting from the household scale for cooking, to the utility scale such as power plants with a capacity of hundreds of megawatts. Even though energy utilization activities are carried out every day, understanding and literacy about energy still needs to be built, especially regarding the use of renewable and cleaner energy sources.

The Institute for Essential Services Reform (IESR) actively collaborates with various parties to continue to build understanding and capacity regarding the energy transition, one of which is through the Jelajah Energi program. Jelajah Energi is initiated by IESR, as an effort to document various good practices for using renewable energy in society and in the industrial sector.

Deon Arinaldo, IESR Energy Transformation Program Manager, in the introductory workshop on Jelajah Energi Jawa Barat (Jelajah Energi chapter West Java), stated that a deep understanding of the energy transition and its benefits for the environment as well as socio-economic benefits is the motivation to drive community participation in the energy transition process.

“It is hoped that proper public understanding of the use of renewable energy can provide full support in implementing clean energy-based solutions,” said Deon.

In the same forum, the Head of the West Java Energy and Mineral Resources (ESDM) Office, Ai Saadiyah Dwidaningsih, said that the Jelajah Energi Jawa Barat activity was a relevant relevant to the current situation in West Java which had recorded 23.41% of renewable energy mix by 2023.

“West Java has a renewable energy potential of 192 GW, ranging from solar, biomass, geothermal, hydro and wind. However, of this 192 GW potential, only 3.41 GW or still around 2% has been utilized,” said Ai.

Ai added that the activity will provide an experience to understand and know the development of this energy transition in Indonesia, especially in West Java, so it is hoped that cross-sector collaborative initiatives or input will emerge after.

After the introductory workshop, the Jelajah Energi trip began with a visit to the Bantar Gebang Waste Power Plant (PLTSa) unit. PLTSa Bantar Gebang is located at the Bantar Gebang Integrated Waste Disposal Site (TPST) and is one of the largest waste disposal sites in the world.

The Bantar Gebang PLTSa unit is a pilot project belonging to the DKI Jakarta Regional Government. Currently PLTSa Bantar Gebang produces around 750 kWh of electricity per day. The electricity produced is used for the operations of PLTSa and Bantar Gebang TPST, and uses around 300-450 kWh.

Harun Al Rasyid, Deputy Operations Manager for PLTSa Bantar Gebang, stated that there is a lot of excess power so it is necessary to think about options for using this excess power.

“Because we are not connected to the grid, now excess power is wasted,” explained Harun.

Apart from being used as PLTSa fuel, waste from the Bantar Gebang TPST is also used as refuse derived fuel (RDF). Ari Prihantono from the Nathabumi PT Solusi Bangun Indonesia Tbk team, said that RDF is a cost-effective alternative fuel.

“Waste sorting is the biggest challenge in the RDF supply chain process. Improving this sorting process is the key to improving the RDF supply chain. If we can sort from the start, we can cut the costs of centralized sorting,” said Ari.

PLTSa Bantar Gebang also produces paving blocks from Fly Ash Bottom Ash (FABA), the combustion residue from PLTSa. From 100 tons of waste per day, 10 tons of usable FABA can be produced.

Water Drives Coffee Production in Tangsi Jaya Hamlet

Bandung, January 24, 2024 – A relaxed atmosphere and raindrops soaking the ground welcomed the Jelajah Energi West Java team when they arrived at the Gunung Halu Microhydro Power Plant (PLTMH). The winding journey, which took about 3-4 hours from Purwakarta, brought the team to a location that embodies innovation and empowerment of the local community. Gunung Halu Microhydro Power Plant (MHP) is one of the micro-hydro energy empowerments managed by the local community. By utilizing the abundant potential of river water, this micro hydro power plant can generate electricity sustainably without producing high carbon emissions. 

The operator of Gunung Halu MHP, Toto Sutanto, explained that before installing the micro hydro, Tangsi Jaya Hamlet’s residents needed more access to electricity and basic amenities like lighting, refrigerators, rice cookers, and televisions. The hamlet relied on oil lamps to illuminate their homes. The lack of infrastructure, distance, and a small population were some of the reasons that prevented the electricity network from entering the hamlet before 2000.

“The residents in the area took the initiative to use the current of the Ciputri River to generate electricity using a simple water wheel for ten years due to certain conditions. Later, the West Java Provincial Energy and Mineral Resources (ESDM) Office recognized and assisted the micro hydro power plant potential. As a result, the residents can now enjoy clean and affordable electricity,” explained Toto. 

Toto emphasized that this micro hydro has helped the village become more self-sufficient by adopting renewable energy and providing lighting and electricity that support the daily lives of its residents. The management of the micro hydro plant is now in the hands of cooperative residents. Following the micro hydro installation in Tangsi Jaya Hamlet, the electricity network of PLN entered the hamlet. However, most residents still prefer to use electricity from the micro hydro.

“Around 80 out of nearly 100 households in Tangsi Jaya Hamlet prefer using electricity from micro-hydro as it is more affordable and reliable. The remaining households use electricity from PLN or a combination of both. Micro-hydro electricity costs approximately Rp25,000 per month, compared to PLN’s electricity fee, which can reach up to Rp50,000 per month. However, public facilities are not charged for utilizing electricity from micro-hydro, nor are the elderly,” said Toto.

According to Toto, the micro-hydro power plant installed in the area provides electricity and promotes the preservation of the surrounding nature. The power plant requires a steady flow of water from the Ciputri River. As a result, the residents are discouraged from clearing the forest around the hamlet since doing so would affect the river’s flow and power generation. Therefore, preserving the forest plays a crucial role in maintaining the steady flow of water, which powers the micro-hydro.

“Gunung Halu Micro Hydro plans to expand its operations by adding a more widely utilized unit. The new micro hydro unit is scheduled to be constructed in February 2024, and it will be able to produce 30 kilowatts of electricity. With a significant increase in capacity, the electricity generated from the new micro hydro unit will be fully allocated to meet the residents’ electricity needs,” explained Toto.  

Toto mentioned that the existing micro hydro would be shifted to supply power for the coffee processing industry run by residents. Tangsi Jaya’s success in achieving energy self-sufficiency utilizing energy sources from micro-hydro has made the hamlet a pilot for MHP development. To ensure the longevity of the micro hydro, Toto has entrusted the responsibility of maintaining it to the young locals. They must collect fees and guarantee smooth water flow by removing obstacles.

Harvesting Coffee from Renewable Energy

The Tangsi Jaya Hamlet relies on microhydro to power their daily activities and coffee production. When the Jelajah Energi West Java team visited the coffee processing center, they were greeted by the irresistible aroma of coffee. Toto explained that Gunung Halu coffee had two types: arabica and robusta. They are processed using light roast, medium roast, and dark roast methods and several variants such as natural, honey, full wash, and wine.

“The micro hydro system supplies electricity to the coffee factory for processing. The factory uses only 12 kWh of electricity when all machines are running. If the electricity supply is insufficient due to the machines being used, we prioritize the factory’s electricity needs over the residents. However, so far, we have never had to cut off electricity supply to the residents,” added Toto.

Toto said that the coffee processing center was initiated with the support of Darma Persada University (Unsada) through the energy and economic independent village program. The excess power of 3 kW was utilized to promote the use of renewable energy in the financial sector. In 2017, the coffee management center received a donation worth Rp1.98 billion from Japan to implement a circular economy that can contribute positively to social, economic, and environmental aspects of life.

“Currently, coffee processing continues, and the cooperative always encourages empowering the surrounding community. For example, we offer women employment opportunities during harvest and strive to pay a premium price for the coffee we purchase from the farmers. This approach is intended to encourage them to take better care of their plants and the surrounding forests,” said Toto.

Just Energy Transition: Corporate Responsibility for Post Mining Environment and Economic Recovery

Jakarta,  24 January 2024 – Energy has become our primary need. Therefore, transitioning from fossil to renewables will impact the livelihood of every community. Institute for Essential Services Reform (IESR) believes in an inclusive and just energy transition for Indonesia, that will involve every single community in the process. 

Coal and mining industry had been the biggest economic contributor for coal producing regions. However, many have predicted the energy trends for coal will soon decrease and will also impact coal demands from Indonesia. 

“Coal and mining sectors do contribute to regional economic growth, especially through the revenue shared fund. Nevertheless, this sector also contributes to the negative impacts, not only to our environment, but also to the people. Coal corporations should be involved in a just transition, both in coal producing regions and other regions,” said Wira in his opening remarks in The Just Transition Dialogue: Identifying the private sector role within social and economic development, Jakarta (24/01).

According to Wira, corporations should play their role to reduce the negative impacts through reclamation, post mining activities and community development to ensure the continuity of economic activities after the coal mines have been closed. 

Sulistiyohadi, Associate Mining Inspector/Coordinator of Civil Servant Investigator Mineral and Coal presented reclamation activities that took place since the exploration and production phase. In addion to that, post mining activities have been submitted since the production phase. He further explained several reclamation techniques, including land utilization, revegetation and land maintenance.  

“There are several activities to rehabilitate voids from mining activities, including slope stabilzation, mine void security, rehabilitation of water quality, water management and the maintenance of mine void,” said Sulistiyo.

Thriving to be one of the post mining activities case study, Yulfaizon, the General Manager of PT Bukit Asam Ombilin Mining Unit shared their experience to ensure the mining region can be useful for the environment and communities. Ombilin mine was the oldest mine in Indonesia, operating since 1892 during the Dutch Colonization and was retired in 2016.

Yulfaizon shared several post mining activities that were conducted by PT Bukit Asam, including: development of Sawahlunto Zoo, Establishing a research site of underground coal mining, and Lobang Mbah Soero Museum.