Jakarta, 24 September 2021 – Boosting the efforts to achieve energy system decarbonization targets in Indonesia, the Institute for Essential Services Reform (IESR) and the Indonesia Clean Energy Forum (ICEF) summarized 10 recommendations to the government and stakeholders referring to the dynamics of discussions during the five days of Indonesia Energy Transition Dialogue (IETD) 2021.

First, establishing a bold policy in the manifest of Indonesia’s political support to encourage decarbonization and the development of low-carbon technologies.

“As we observe today that, several policies that are correlated with decarbonization efforts are not sufficient yet. If we observe at KEN and RUEN in 2050, the portion of fossil energy is still quite large, and renewable energy is low, therefore this target needs to be changed,” said Fabby Tumiwa, the Executive Director in stating the 10 recommendations at the IETD 2021.

Fabby said the energy decarbonization process would take at least the next three decades. Hence, decarbonization needs to be supported by long-term policy certainty which is consistent and unflinching.

Second, determining the policy that creates a level playing field between renewable energy and fossil. Because the economy of renewable energy can compete with fossil energy.

“Solar and wind energy can knock out fossil energy. However, there are still existing policies that shape fossil energy as cost-cheap, therefore we need the policy to eliminate the fossil energy subsidies,” said Fabby.

By removing subsidies on fossil energy or defining the right carbon price in boosting the renewable energy economy, it will accelerate the development of renewable energy.

Third, developing a national energy plan based on reducing carbon emissions and considering the potential for expanding existing low-carbon technologies. Fabby said there have been several plans for technology utilization. But the plan needs to consider the speed of innovation in each of the world’s low-carbon technologies.

“Moreover it is also necessary to consider how the price of this low-carbon technology will be until 2050. Therefore, energy policies, particularly those related to costs, must be considered in the long term. What is affordable today, due to market distortion, could be expensive in the future,” said Fabby.

Fourth, determining the optimal plan to retire coal-fired power plants (CFPP) based on data analysis on each CFPP unit. This analysis can be used to define several strategies and the suitable implementation time for each CFPP unit.

“Then we also have to think about how much capacity remains and we must supply it (with renewable energy) when the power plant retires,” said Fabby.

Strategies to overcome the issues are such as refinancing to accelerate the retirement period of the CFPP, retrofitting the power plant, and diverting funding and investment from thermal energy to renewable energy.

Fifth, increasing the bankability of renewable energy projects by improving the project scale and comprehensive regulatory support. The development of renewable energy on a large scale has been proven to drive highly competitive renewable energy prices.

Sixth, increasing the adoption of electric vehicles by establishing the electric vehicle ecosystem. Fabby continued that it needs combinations of several policies to accelerate the penetration of electric vehicles. For instance, stipulating disincentive usage of fossil fuels such as the prohibition of using fossil vehicles and the establishment of standards for fossil fuel efficiency.

Seventh, determining the role of clean fuels towards 2050 in the deep decarbonization of the transportation system. Electric vehicles will have been dominant in the sector of passenger vehicles.

“Yet the role of clean fuels also needs to be prepared to support the decarbonization of the transportation sector which is difficult to be replaced by electric vehicles,” said Fabby.

Eighth, Indonesia needs to provide integrated policy support from multiple parties. Furthermore, Indonesia needs collaboration from various parties to attract investment in renewable energy.

“In the short term, until 2025, efforts need to be made to improve the investment climate and encourage the deployment of renewable energy. Currently, there are many national and international funding sources ready to support it. However, Indonesia is now only waiting for the government’s commitment to renewable energy targets through government policies,” said Fabby.

Ninth, the government needs to develop a low-carbon industry as a national priority industry. Indonesia has identified its potential low-carbon industry. It should be included in the National Medium-Term Development Plan (RPJMN) and the National Industrial Development Master Plan (RIPIN). For example, the battery industry, the electric vehicle industry, and the clean fuel industry.

“Industrial development needs to be aligned with the domestic technology research and development plan. Moreover, we need to commercialize and scale up domestic technology projects to increase the demand for technology. And it needs to be prioritized to maximize the potential of sustainable natural resources,” explained Fabby.

“The low-carbon technology industries are solar panel manufacturing, battery manufacturing, and hydrogen production. Moreover, training and preparation of workers are needed to support the development of the industry from year to year,” added Fabby.

Tenth, the government needs to prepare local workers for future low-carbon industries by supporting domestic industries and maximize the positive socio-economic impact of the potential development of low-carbon technology industries in Indonesia.

The IETD 2021 event lasts for 5 days which includes 13 main sessions and several additional sessions. IETD 2021 involved more than 80 speakers and panelists international and national leading, as well as the participation of more than 1500 users from all over the world.

Jakarta, September 24, 2021 – The world is moving in accelerating the energy transition to clean energy to pursue the Paris Agreement target of preventing the earth’s average temperature from rising above 1.5 degrees Celsius. Renewable energy financing in Indonesia is increasingly wide open as the commitment of developed countries to assist the transition of renewable energy in developing countries. This funding requires the support of government policies to minimize the funding risks and increase investment interest in renewable energy.

It was said by Deni Gumilang as advisor to Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in the fifth day of the Indonesia Energy Transition Dialogue (IETD) 2021, Friday (24/09/2021).

Deni said that currently there are various kinds of de-risking instruments in funding renewable energy for Indonesia, including the provision of guarantees, green bonds, and concessional debt. However, in his opinion, the de-risking instruments need to be supported by policies and regulations to reduce the risk of renewable energy investment, such as by setting clear renewable energy targets.

“So far, there are still many differences in emission reduction targets within the government. If there is consistency in the target, the collaboration between all stakeholders will be easier to be implemented, ” added Deni.

Moreover, Deni explained that Indonesia needs to consider the technical support for integrated renewable energy development, create a licensing climate that supports small-scale projects, and increase the credibility of renewable energy projects to be bankable in obtaining funding.

In response to this, the President Director of PT SMI, Edwin Syahruzad, said that PT SMI has provided a de-risking project by providing technical support. This makes it easier for developers to access technology and funding a renewable energy project.

Member of the Indonesia Clean Energy Forum (ICEF), Faisal Basri said that renewable energy is needed to encourage Indonesia’s economic development. Because, if decarbonization is not immediately implemented, Indonesia is predicted to have a large energy deficit.

“If we don’t immediately decarbonize, then by 2040 we will have an energy deficit of USD 80 billion. Because we will import more energy than export. It happens because our needs (on energy) will grow higher. Therefore, we need a long-term plan of macroeconomics by more accelerated decarbonization,” said Faisal.

However, he thought that, in reality, the government’s policies have not supported renewable energy. As it is reflected in Indonesia’s State Budget, which still provides hundreds of trillions of subsidies for fossil energy.

Faisal believes that the government needs to put forward the right policies to support the research of renewable energy and ensure the development of the renewable energy industry, to ensure that Indonesia will be a player too, rather than just a consumer.

Supporting the statement of Faisal, Lisa Wijayani, Manager of the Green Economy Program, IESR revealed that the synergy of economic growth with energy transition is essential to provide positive benefits for human life.

“There are several opportunities that can be developed, such as through the development of electric vehicles, implementing energy efficiency, creating a green industry so it can generate many green jobs,” said Lisa.

Arunabha Ghosh, Founder, and CEO of the Council on Energy, Environment, and Water (CEEW) added the importance of aligning human resource development to meet with green jobs that will be created forward with the energy and economic transformation of the country.

“In India, we have a skill council for green jobs which is set up to improve manpower in renewable energy. Within the skills council, there are various programs to train tens of thousands of people from various backgrounds, they graduate from well-known universities, not have from top universities” he explained.

Jakarta, 23 September 2021 – The Institute for Essential Services Reform (IESR) studies entitled Deep decarbonization of Indonesia’s energy system shows that biofuels and hydrogen have a role in achieving deep decarbonization of the transportation sector. The dominance of electric vehicles using electricity sourced from renewable energy will be settled in 2050 especially for passenger vehicles, while biofuel and hydrogen will be potential in the heavy ground transportation

Julius Adiatma, Clean Fuel Specialist, IESR explained that in the short term, hydrogen has the potential to be used in the industrial sector by observing the economic development of hydrogen.

“For the land transportation sector, battery-based electric vehicles are the most suitable option because their efficiency is higher than other options. The price continues to decline, as the technology also keeps improving and it’s getting faster (to achieve the target by 2050),” he said on the fourth day of Indonesia. Energy Transition Dialogue (IETD) 2021 held by the Indonesia Clean Energy Forum (ICEF) and the Institute for Essential Services Reform (IESR), Thursday (23/09/2021).

Economically, he believes that biofuels, particularly biodiesel will have a significant role in Indonesia. He considers the availability of organic sources to produce biofuels.

“Unfortunately, currently biofuels are focused on palm oil. Meanwhile, the available land is getting fewer for developing palm oil. So we have to find other ways to produce biofuels other than palm oil, for example from waste or other plants,” he explained.

Referring to the National Research and Innovation Agency (BRIN) Outlook Energy 2021, Eniya Listiani Dewi, a BRIN researcher said the development of electric vehicles by using renewable energy will effectively reduce carbon emissions.

“We ask PLN (State Electric Company) to increase the penetration of new and renewable energy. If the electric vehicle has a limited range, we will extend it by using hydrogen fuel,” said Eniya.

In her opinion, the technology for developing green hydrogen fuel with the concept of electrolysis from a combination of Solar PV or wind turbines can make it energy carries.

“Currently, an electrolysis study of the Cirata Floating Solar PV is being carried out. Next, the excess energy from the Solar PV will be recommended for processing of electrolysis of water and producing hydrogen gas, “she said.

Alloysius Joko Purwanto, Energy Economist, Economic Research Institute for ASEAN and East Asia (ERIA) explained a scenario to support the development of hydrogen in the transportation sector, one of which is the use of hydrogen produced from gas (grey hydrogen) to create markets and build infrastructure that needed and subsequently switch to green hydrogen which is produced using renewable energy.

As part of the principle development of green hydrogen in Indonesia, he explained that it is also necessary to look closely at the market niche for hydrogen-fueled transportation.

“Hydrogen may be suitable for long-range vehicles or heavy equipment vehicles, such as commercial vehicles or busses. Then it must be adjusted to the area where renewable energy for electricity is sufficient,” concluded Joko.

Jakarta, 23 September 2021 – As the second-highest emitter in the energy sector after the power generation sector, electrification of the transportation sector based on renewable energy will be one of the significant pillars to reduce carbon emissions and prevent global temperature rise exceeding 1.5 degrees Celsius. There are at least three main drivers of accelerating the adoption of electric vehicles, such as the availability of supporting regulations, adequate infrastructure, and affordability of prices.

These main driving factors were presented by Rahul Gupta, Senior Expert at McKinsey & Company, on the fourth day of the Indonesia Energy Transition Dialogue (IETD) 2021. In his opinion, there is a big economic opportunity for Indonesia if it can create an electric vehicle ecosystem because Indonesia has the potential to become the largest market after China and India.

“We project two-wheeled vehicles to be the main driver in terms of significantly higher penetration (electric vehicles),” he explained.

Comparing the electric vehicle ecosystem in Indonesia, Zainal Arifin, Vice President of Technology Development and Standardization, PT Perusahaan Listrik Negara (State Electric Company), admits that electric vehicle infrastructure in Indonesia is still limited.

“We have built 32 electric vehicle charging stations in 14 cities. Based on the roadmap, we will have more than 2400 units for electric vehicle charging stations throughout Indonesia in the next 5 years,” he said.

Zainal added that to meet the needs of electric vehicle infrastructure, the construction of charging stations will be fulfilled by 40 percent by State Electric Company (PLN) while the remaining will be built by private companies. Furthermore, Zainal also said that the disparity in price with conventional vehicles made the demand for electric vehicles less attractive.

The price issue was also highlighted by Sony Sulaksono, Director of Maritime Industry, Transportation and Defense Equipment, Ministry of Industry. He stated that the Indonesian government has set a target of 1.6 million two-wheelers and 400 thousand four-wheel electric vehicles by 2025. However, the adoption of electric vehicles in Indonesia is currently under 2000 units.

In his opinion, the government has tried to reduce the price by issuing Government Regulation (PP) NO. 74, which regulates incentives and disincentives for electric vehicles and conventional vehicles.

“For instance (the government) is giving a 0% luxury tax for electric vehicles,” he said.

Furthermore, Sony highlighted that the higher price of electric vehicles is also influenced by the cost of batteries which cover 40-50% of the total cost of electric vehicles.

Sony said that the battery swap stations area is the solution as the research and development of electric vehicle batteries is still being developed in order to reduce costs. He explained that using this approach, transportation companies will be able to rent out electric batteries to the public. The fees are charged based on kilometers traveled by electric vehicles.

On another occasion, Idoan Marciano, a Researcher and Specialist in Energy and Electric Vehicles, IESR, said that to bridge the the price gap of electric vehicles is increasing the tax incentives from the government, the usage of more affordable electric vehicles models and meet with the preferences of the Indonesian community, as well as parallely accelerate the development of the domestic battery industry.

“The development of the domestic battery industry is important to support efforts to achieve deep decarbonization targets. Its existence will support the penetration of electric vehicles and is necessary for the electricity grids simultaneously with the increase in the renewable energy mix,” explained Idoan.

Toto Nugroho Pranatyasto, President Director of the Indonesian Battery Company (IBC) said that IBC is in progress to produce and develop electric batteries. IBC is also developing battery recycling to anticipate battery waste.

“This development is not something that can be done quickly, we need a large amount of investment. To develop 140 GWh of battery capacity, we need an investment of around USD 15.3 billion for three to four years,” Toto said at the IETD 2021.

Toto added that besides the electric battery development process, IBC also involved various partners to design the supply chain and technology. It is to prepare the electric vehicle ecosystem chain.

“The government needs to encourage electric vehicles into the middle-cost segment. The range price of two-wheeled vehicles also needs to be affordable, “said Toto.

Jakarta, 22 September 2021 – Electricity is projected to become the predominant energy resource in future energy systems due to electric vehicles and the electrification of the industrial sector. For this reason, it is essential to ensure that the energy source in the electrification of the sector comes from clean energy. However, the development of renewable energy in Indonesia still faces various challenges, both from a technical perspective, as well as from a regulatory, economic, social, and environmental perspective.

It was explained by a senior researcher of the Institute for Essential Services Reform (IESR), Handriyanti Diah Puspitarini on the third day of Indonesia Energy Transition Dialogue (IETD) 2021, Wednesday (22/09/2021). Yanti said that from the regulation, Indonesia does not have comprehensive policies in fully supporting the development of renewable energy.

“Until now, no comprehensive regulations are supporting fully renewable development related to the tariffs, incentives, subsidies, and risk reduction. It has been prepared but not yet launched,” said Yanti at the event organized by the Indonesia Clean Energy Forum (ICEF) and IESR

Moreover, analyzing the investment, Yanti explained other challenges, such as the lack of availability of funding from local financial institutions and the limited number of bankable renewable energy projects. She said that to overcome these challenges, firstly need clear regulatory support. On another hand, public awareness also needs to increase to support the potential of renewable energy.

Responding to the statement, Director General of New Renewable Energy, and Energy Conservation of Ministry Energy and Mineral Resources of Indonesia, Dadan Kusdiana conveyed that in Energy and Mineral Resources studies, it was explained that technical solutions can be solved as long as the new renewable energy in Indonesia is economical.

“Because we have the technology and resources to absorb emissions, we can maximize what we have to reduce emissions,” said Dadan.

Furthermore, Dadan also revealed that related to project funding, currently, many investors are already queuing up to invest in renewable energy. To make effective financing, in his opinion, the government still needs to prioritize the types of renewable energy that will be developed.

“In the National Electricity Supply Business Plan (RUPTL) (green-ed) that has been signed, we will give a wider focus to solar PV. Meanwhile, existing projects such as geothermal projects will continue to be expanded, as well as hydropower projects,” he explained.

In line with Dadan, CEO of Pertamina Power Indonesia, Dannif Danusaputro confirmed that many parties want to invest in new renewable energy (NRE) projects in Indonesia. It is because funding support from investors is increasingly limited to invest in fossil energy projects by extending the climate commitments of many countries in the world.

“The problem is they are looking for a project that is quite big, and we didn’t have too many bigger projects, let say above 50 MW. The bigger project needs to be developed to become more bankable,” said Dannif.

Ulrike Lehr, Head of Socio-Economic and Policy, IRENA, highlighted that the average world economic growth is predicted to be higher in 2050 if it boosts low-carbon economic growth. The social problems that may arise related to job losses in the fossil mining and fossil fuel industries can be easily compensated by the creation of jobs in other industries that will grow faster.

“There are sets of policies that are needed, we believe that there should be holistic policies set combining the deployment policies that are mainly oriented at deploying the (renewable) technology, integrating policy to integrate it into the grid and new energy system, structural change and just transition policy, also civil society is buying into the energy transition and is providing a high level of acceptance,” said Ulrike.

Jakarta, 22 September 2021 – As one of the extensive contributors of carbon emissions in Indonesia at 32% over 20 years, decarbonization of the energy sector is vital to achieving net-zero emissions that are compatible with the Paris Agreement. The power generation sector, especially coal-fired power plants as the largest source of emissions in the energy sector, therefore it is essential to apply the right policies for coal-fired power plants.

Based on the analysis of the Institute for Essential Services Reform (IESR), there are two policies to reduce emissions from coal-fired power plants to comply with the Paris Agreement, which is moratorium and retirement of the coal-fired power plants from their usual lifespan 30 years to 20 years. This is stated by Deon Arinaldo as Program Manager of Energy Transformation, Institute for Essential Services Reform (IESR) in his presentation at the Indonesia Energy Transition Dialogue (IETD) 2021 organized by the Indonesia Clean Energy Forum (ICEF) and the Institute for Essential Services Reform (IESR).

Deon said that implementing the policy requires an optimal roadmap to minimize costs and impacts as low as possible. In his opinion, it can rely on data and in-depth analysis carried out for each unit of the coal-fired power plant (CFPP) in Indonesia.

“What needs to be analyzed is the age of the coal-fired power plant because it is related to the contract, the contract effectiveness, operational cost compared to the retirement cost, the readiness for planning the electricity system, and non-technical aspects such as employment, pollution & human resource capabilities,” explained Deon.

Moreover, in compiling a roadmap for coal-fired power plant’s retirement, Deon said many strategies can be considered, including refinancing, and investment in renewable energy, repurposing, and retrofitting the CFPP.

“Economically, renewable energy generation is much cheaper than coal-fired power plants. If this policy is not implemented immediately, the State Electricity Company (PLN) is projected to become the company with the second-largest asset with the possibility of stranded assets of up to USD 15 billion,” added Deon.

State Electricity Company (PLN), through Herry Nugraha, Head of the Center for Excellence, said that his party responded to the National Electricity Supply Business Plan (RUPTL) and prepared a decarbonization roadmap by conducting various studies and analyzing data on coal power plants in Indonesia.

“We routinely record how much capacity, when retirement, the performance of each power plant, reliability, production of CO2 of each unit is calculated annually for the evaluation,” explained Herry.

The Director of Electrical Engineering and Environment of the Ministry of Energy and Mineral Resources, Wanhar, explained that the Energy Transition Mechanism (ETM) has included a mechanism to replace the capacity of the coal-fired power plant with new renewable energy (NRE).

“Indeed, need a study to do it, in collaboration with the Asian Development Bank. Also, we have held discussions with stakeholders in the coal industry about this mechanism,” he said.

Architrandi Priambodo, Senior Energy Specialist, Asian Development Bank (ADB) admits that currently, his party is developing an ETM that ensures an equitable or just energy transition.

“In the end, it is the community that receives and enjoys the electricity, so we ensure that the retirement of coal-fired power plants does not harm workers, the environment and supports social aspects, including inclusiveness,” said Chitra.

Roy Torbert, principal of the Rocky Mountain Institute, added that the funds obtained from the refinancing process could be used to invest in renewable energy and help affected communities, such as workers, to transition to new jobs.

Leaving coal-fired power plants requires innovation in renewable energy technologies that will take them over. Muhamad Reza, Engineering Expert, Business Development & Energy System Business Line Manager, Tractebel Engineering Indonesia stated that when variable renewable energy (VRE) enters the system, not only does the load fluctuate but also slightly from the generation side.

“The anticipation is that we must look for technology that can meet those needs, and we need to ensure its technical and economic feasibility,” said Reza. He added that energy storage technology or batteries will hugely help these problems.

Regarding PLN’s readiness, Djoko Prasetijo, Deputy Chairperson of Conseil International des Grands Réseaux Électriques (CIGRE) Indonesia stated that PLN does not need to worry about dealing with the entry of VRE.

“PLN’s colleagues (State Electricity Company) are used to dealing with variability, for example, demand from morning to night is also different. If, for instance, there are thousands of MW (solar PV-ed) in Java, our grid is supposed to be able to handle 3,000 – 4,000 MW as long as Solar PV (PLTS) is spread geographically,” he concluded.

The IETD 2021 event is in collaboration with Clean, Affordable, and Secure Energy for Southeast Asia (CASE), a partnership project from several countries in Southeast Asia and is funded by the Federal Government of Germany. Further information can be accessed at ietd.info.

Jakarta, 21 September 2021– Accelerating deep decarbonization in the energy sector is needed to achieve carbon neutrality by 2060 or sooner as the Indonesian government has targeted. Different low-carbon technologies can be the option in decreasing greenhouse gas (GHG) emission, such as renewable energy, Carbon Capture, and Storage/Carbon Capture, Utilization, and Storage (CCUS), even Nuclear Power Plants (PLTN). However, the government needs to analyze it carefully because each technology has a different character and risk level.

In terms of global development, Mycle Schneider, an Independent International Analyst on Energy and Nuclear Policy, in his presentation said that the development of nuclear power plants has been stagnant in the last ten years, compared to renewable energy, which has increased rapidly. He gave an example that in France, the electricity mix from nuclear power reached the lowest record in 2020 for the last 30 years. The reason is that there is cheaper renewable energy.

“Investing in nuclear power plants can even hinder the achievement of climate change targets because existing funding should be allocated to technology options that are readily available, inexpensive, and can be implemented quickly,” explained Schneider on the second day of the Indonesia Energy Transition Dialogue (IETD) 2021 organized by Indonesia. Clean Energy Forum (ICEF) and Institute for Essential Services Reform (IESR), Tuesday (21/09/2021).

Sharing the same views with Schneider, Craig Morris, Independent Consultant of Energy Transition, said that it is difficult to predict the price of electricity from nuclear power plants considering that nuclear power plants do not respond to market prices.

“If we go back to the year 2000 and see projection and hope of 2050, we are already in 2050 by having renewables and storage, and if you go with nuclear and CCS, you go back to 2000. We are far further with renewables than with the two technologies,” said Morris.

Moreover, CCS/CCUS technology is one of the global strategies to reduce carbon emissions. Samantha McCulloch, Head of Carbon Capture Utilization and Storage Technology, International Energy Agency said CCS/CCUS could be one of the solutions in Southeast Asia to improve energy infrastructure in the region. However, renewable energy will be the main choice for decarbonization shortly. Meanwhile, the development of CCS/CCUS will play a role in avoiding lock-in emission due to newly built infrastructure and enabling emission mitigation options in the future.

Another opportunity for CCUS in the ASEAN region is the production of low-carbon hydrogen from gas and CCUS. Currently, this option can be cheaper than producing hydrogen using electrolysis of water at a natural gas production site that can be used as storage carbon at the same time. However, the cost-effectiveness of this option needs to observe the potential for hydrogen production using electrolysis which is also expected to have significant price declines in the next few years.

Dr. M. Rachmat Sule, Senior Lecturer at the Faculty of Mining and Petroleum Engineering, Bandung Institute of Technology (ITB), also sees that the development of CCUS can help reduce emissions, such as in coal power plants adjacent to oil and gas fields. Yet, there are limitations in its development, such as to be more economical, the source location of the emission and reservoir should be next to each other. Besides, it is necessary to implement other strategies such as hub clustering or use CCUS support infrastructure such as gas pipelines to reduce CAPEX costs.

However, on different occasions, Deon Arinaldo, Program Manager of Energy Transformation, IESR encouraged the government to prioritize renewable energy technology to carry out deep decarbonization in the energy sector.

“Decarbonizing the energy sector needs to happen quickly and start now to be compatible with the Paris Agreement. In Indonesia itself, low-carbon technology that is commercially ready and quickly built is renewable energy, while other technologies such as nuclear power plants and CCS are still in the development stages and piloting. We do not have much time to mitigate this climate crisis,” he said.

Responding to the variety of low-carbon technologies in the framework of new and renewable energy, Prof. Dr. Zaki Su’ud from the Faculty of Mathematics and Science at the Bandung Institute of Technology (ITB) recommends several policies that the government needs to take to support the achievement of Indonesia’s decarbonization target by 2060 or sooner. First, all energy resources must be utilized optimally to preserve energy quality and security in Indonesia. Second, the energy mix policy must be implemented and evaluated properly toward reliable, cheap, and sustainable energy availability. Third, The government needs to allocate sufficient research and funding for H&D related to new and renewable energy.

“New renewable energy is still developing and requires appropriate and consistent policies from the government to support national energy security and achieve Indonesia’s decarbonization target,” Zaki explained at the IETD 2021.

The IETD 2021 was held for five days, from September 20-24. This event is in collaboration with Clean, Affordable, and Secure Energy for Southeast Asia (CASE), a partnership project from several countries in Southeast Asia and is funded by the Federal Government of Germany. Further information can be accessed at ietd.info.

Jakarta, 21 September 2021– Achieving Indonesia’s carbon-neutral target in Indonesia by 2060 or sooner as the Indonesian government has targeted, requires clear policies and strategies, including in the energy sector as one of the largest emitting sectors in Indonesia. The pack of the energy sector decarbonization policy is being prepared by the Indonesian government to realize a smooth and just energy transition.

Arifin Rudiyanto, Deputy for Maritime Affairs and Natural Resources at the Ministry of National Development Planning, Bappenas, said that there are several strategies that Bappenas has prepared to achieve low-carbon development and climate resilience. These include the development of sustainable energy, waste management, circular economy, and the development of green industries. Moreover, he explained that there are three important things in realizing energy transition, they are political will, solid legal basis, and a comprehensive strategy.

“Political will has been obtained, a good strategy has been outlined in the Medium-Term National Development Plan (RPJMN) to transform towards green energy, while a strong legal basis has been prepared through the new and renewable bill,” said Arifin on the second day of the Indonesia Energy Transition Dialogue (IETD) 2021 organized by Indonesia Clean Energy Forum (ICEF) and Institute for Essential Services Reform (IESR), Tuesday (21/09/2021).

Responding to the statement, Sugeng Suparwoto, Chairman of Commission VII the House of Representative of Republic Indonesia (DPR RI) promised that the New Renewable Energy Bill would be ratified in 2021.

“The era of renewable energy has become a necessity. In the new renewable energy bill, there are incentives for developing new renewable energy and disincentives for energy development, which still contributes the largest carbon contribution,” he explained.

Herman Darnel Ibrahim, a Member of the National Energy Council, warned that the implementation of energy system decarbonization should also mitigate economic risks, as well as maintain national energy security, in particular, to keep energy prices affordable. Furthermore, it needs to create a level playing field between renewable energy and fossil energy, such as by utilizing carbon tax instruments.

Knowing that needed the higher funding to achieve carbon neutrality with renewable energy, Febrio N. Kacaribu, Head of the Fiscal Policy Agency (BKF), Ministry of Finance of the Republic of Indonesian analyzed that at least needs IDR 3500 trillion to achieve the NDC target in 2030.

“Our state spending planning budget is only 40% of the need, so it must involve the local government, the private sector, and international support,” he said.

Febrio revealed that the government has prepared financial instrument green bonds with low-interest rates in which the global market has responded well. The Ministry of Finance is also currently conducting tax harmonization to support the principle of reducing carbon emissions.

“So we need a carbon market mechanism to connect sectors that have not implemented net zero emissions with those carried out,” said Febrio.

Febrio added, if the carbon market mechanism in Indonesia has been established, the carbon tax signal for coal actors will be stronger as well. Therefore, Indonesia will be recognized by the global new energy market. It will certainly help the process of funding renewable energy projects in Indonesia to accelerate the achievement of Indonesia’s decarbonization targets.

Dewa Putu Ekayana, Policy Analyst, Ministry of Finance of Indonesia stated that now Indonesia is almost in the final process for the draft presidential regulation related to the economic valuation of carbon.

“The fiscal aspect of the economic valuation of carbon is not a carbon tax but a levy on carbon. This expansion of meaning is expected to include not only taxes but also other instruments. The next consideration is the balance of central and sub-national government finances. Our suggestion from the Ministry of Finance is that the financing mechanism will be paid for with carbon credits or carbon certificates,” explained Dewa.

On a different occasion, responding to the carbon economic value policy, Fabby Tumiwa, Executive Director of IESR said that the government needs to set emission reduction targets and determine targets in each sector, as well as assess the value or effective carbon price that can support the achievement of these targets.

“The price of carbon should be linked to emission reduction targets and should promote economic actors to change their technology choices. If the carbon price is too low, it is worried that it will not provide an adequate signal to encourage substantial emission reduction efforts,” explained Fabby.

Regarding the implementation of the carbon tax, Fabby said that the government needs to openly communicate the importance of carbon tax instruments to restrain the growth of carbon emissions, determine the mechanism and instruments, as well as the economic sectors that will be affected by the implementation of the carbon tax.

IETD 2021 runs for five days, from 20-24 September. This event is in collaboration with Clean, Affordable, and Secure Energy for Southeast Asia (CASE), a partnership project from several countries in Southeast Asia and is funded by the Federal Government of Germany. Further information can be accessed at ietd.info