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.

Carefully Designing Indonesia’s Energy Policy Framework

Jakarta, March 28, 2024 – The National Energy Council (DEN) plans to adjust the renewable energy mix target. Currently in the draft Government Regulation on National Energy Policy (RPP KEN), DEN plans to reduce the national renewable energy mix target to 17-19 percent by 2025. Previously, the renewable energy mix target was 23 percent by 2025.

The Institute for Essential Services Reform (IESR) considers this a step back from the Indonesian government’s commitment to overseeing the energy transition.

Raditya Wiranegara, IESR Research Manager, in a hearing with the National Energy Board expressed his concern behind the setting of the renewable energy mix target.

“IESR has previously conducted modeling that has been published in our annual report, Indonesia Energy Transition Outlook (IETO). Our modeling results show differences with the modeling results that form the basis for the formulation of the KEN RPP. This is especially evident in the final energy growth, where in the modeling for IETO we used Bappenas’ GDP growth assumption for Indonesia Emas 2045,” Radit said.

This was clarified by Retno Gumilang Dewi, ITB’s modeling team, who assisted DEN in the modeling, that the figures currently circulating are adjusted figures.

“The model we produced can be said to be an ideal model. The modeling was then brought for FGD (focused group discussion) and received various inputs, so it was adjusted,” said Retno Gumilang.

Fabby Tumiwa, Executive Director of IESR on the same occasion said that in preparing a country’s energy planning, it is important to ensure the choice of technology that is most relevant and tested with the latest technological developments.

“This step is important and crucial to avoid being locked-in by high-carbon technologies,” Fabby said.

Fabby added that if we are already trapped in the choice of high-carbon technology, it will require even greater investment to get out of the high-carbon technology. IESR also encourages the achievement of renewable energy targets that have been set in the RUPTL and national strategic projects as a driver of the growth of the domestic renewable energy industry.

Report Launch Nusa Penida 100% Renewable Energy

Replay Event

Background

The Bali Provincial Government set a vision for 2023,2023,Bali Net Zero Emissions by 2045 in August 2023 supported by non-governmental organization partners. This vision covers the electricity, transportation, and climate entrepreneurship development sectors. This ambitious target can be achieved by the Bali Provincial Government through an effective and collaborative strategy and a targeted and accountable roadmap. To ensure the achievement of these targets, the roadmap to Bali NZE was developed to formulate policies that support the growth of an optimal renewable energy development ecosystem and prepare a green workforce that will drive the transition.

According to Kemenko Marves, Nusa Penida Island, located in the south of Bali, holds five national titles, namely as a National Tourism Strategic Area (KSPN), one of the Outermost Islands, an Aquatic Conservation Area, a Bali Cattle Breeding Center, and a Renewable Energy Development Tourism Area. Nusa Penida’s strategic role can be encouraged as a pilot project to supply electricity powered by renewable energy to supply all electricity needs independently on one island. The existence of the senseinpilot project and the strategic predicate of Nusa Penida is expected to change the paradigm of renewable energy-based energy provision at a broader sense.

To support this initiative, IESR, in collaboration with partners, analyzed the potential of renewable energy (RE) in Nusa Penida that can be developed. Based on the results of the analysis, the potential for RE in Nusa Penida includes rooftop solar power plants worth more than 10.9 MWp, biodiesel power plants (castor plants and seaweed) of more than 2 MW, small-scale wind power plants, and Pump Hydro Energy Storage (PHES) capable of reaching more than 120 MW. Apart from renewable energy, the energy potential in Nusa Penida can also utilize wastewaste (Waste to Energy/WtE) at 700 kW.

After knowing the renewable energy potential of Nusa Penida, IESR also analyzed Nusa Penida’s electricity system in more depth to determine the optimal configuration of generation, transmission, and distribution systems to supply regional energy needs, including the capacity of potential renewable energy power plants, proposed locations, and network adjustment needs. The results of this analysis and study can be encouraged and are expected to become a blueprint for renewable energy-based island development and become part of the Bali NZE 2045 roadmap.

Objective 

This event was organized with the aim of disseminating the results of the Nusa Penida 100% study.

 

Presentation

Potential Mapping for 100% Renewable Energy Nusa Penida

Pemetaan-Potensi-untuk-Nusa-Penida-100-Energi-Terbarukan

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Fighting for Just Energy Transition in Indonesia, Colombia, and South Africa

Jakarta, February 29, 2024 – The aspect of justice in energy transition is closely tied to community involvement in the process, particularly in preparing communities in coal-producing areas. Civil society organizations, as entities that closely engage with both the community and the government, play a significant role in urging the government to adopt participatory policies and integrate equitable principles. Additionally, they help in enhancing the community’s capacity by providing skills and knowledge, enabling them to effectively articulate their interests.

Ilham Surya, an Environmental Policy Analyst at the Institute for Essential Services Reform (IESR), highlighted that the income of coal-producing regions in Indonesia heavily relies on the coal industry. He pointed out that the lack of economic diversification in these regions could lead to economic disruptions if there’s a decrease in coal demand due to the global energy transition, especially if no measures are taken to mitigate this change.

“Indonesia is practicing distributive justice concerning fossil energy by providing access to electricity from coal and offering some subsidies to maintain affordability. The government should extend this distributive justice to the adoption of renewable energy during this global energy transition. Furthermore, Indonesia has ratified the Paris Agreement to contribute to emission reduction, including emissions from the energy sector,” Ilham explained during the webinar titled “Cross-country reflections on coal and just transitions in Colombia, South Africa, and Indonesia,” organized by the Stockholm Environment Institute (SEI) in collaboration with IESR.

Ilham emphasized the government’s promotion of the concept of energy transition, which he finds still confusing. On one hand, Indonesia receives various funding for energy transitions such as the Energy Transition Mechanism (ETM) and the Just Energy Transition Partnership (JETP). On the other hand, Indonesia appears to be permitting the construction of coal-fired power plants for industrial purposes.

According to Ilham, civil society organizations need to establish intensive discussion spaces and enhance the relevance of energy transition to the community to ensure that more people are exposed to energy transition issues.

Juliana Peña Niño, Senior Staff at the National Resource Governance Institute, revealed that the coal-producing regions of La Guajira and Cesar in Colombia are heavily reliant on royalties from the coal industry. She stated that nearly 50% of the region’s revenue comes from coal royalties, leading to a less diversified economy.

“The government must utilize these royalties to channel investments towards economic diversification. The challenge lies in the fact that local governments lack the capacity to access these resources and develop alternative economic projects,” she elaborated.

Furthermore, when discussing the energy transition in South Africa, Muhammed Patel, Senior Economist at Trade and Industrial Policy Strategies, considers the bottom-up approach as the ideal method to encourage community participation. However, implementing this approach tends to be challenging due to the prevailing top-down approach in South Africa.

“A lot of energy policy decisions can be made at a national level, but local governments sort of have to bear the costs,” added Patel. “Moreover, local governments often face capacity constraints. Even struggling to provide basic services, often private sector stakeholders take over the government.”

In South Africa, the civil society movement has also brought attention to the issue of energy transition through various means, such as pursuing legal cases concerning air pollution from factories in South Africa, lobbying the government, and engaging with the community.

“But those are some of the dynamics where there’s a strong voice for justice, strong backlash against injustice, especially when it concerns vulnerable communities and heavy industrial operations. But they don’t get a lot of support. So they often are flying the flag on the triangle,” remarked Patel.

Between Low Renewable Energy Target and High Economic Growth Ambitions

Jakarta, 20 February 2024 – Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) assesses the steps taken by the National Energy Council (DEN) to adjust the renewable energy mix target in the Draft of Government Regulation on National Energy Policy (RPP KEN)  from the original 23 percent to 17-19 percent 2030 is a backward step because it is not in line with the stated goal of reducing emissions and achieving Indonesia’s net-zero emissions target by 2060 or sooner.

Fabby also highlighted the energy transition agenda carried by each pair of presidential candidates in the 2024 election, which includes a number of renewable energy mix targets until 2030 in an interview with the Squawk Box program.

According to him, each candidate has an energy transition agenda, one of which is the desire to pursue the same renewable energy mix target as the current National Energy Policy, ranging from 27-30 percent by 2030. Apart from that, each candidate also has a commitment to limit the operation of coal power plants.

“For candidate number 02, what is clearly visible is the increase in the use of biofuel to replace or reduce fuel subsidies as stated during the campaign,” said Fabby. They (presidential and vice-presidential candidates’ number two) are targeting a biofuel blend percentage of 50 percent by 2029, as well as ethanol utilization of 10-20 percent.

Furthermore, Fabby emphasized that for the electricity sector, the aim of ending coal plant operations early must be accompanied by adding a larger portion of renewable energy. Apart from replacing the electrical power that was initially supplied by coal-fired power plants, renewable energy generation must also meet the projected electricity growth needs in the future. Moreover, Indonesia has the ambition to pursue economic growth of up to, for example, 6-7 percent, so electricity demand is projected to grow even greater.

“Based on IESR’s calculations, to achieve these various targets, the renewable energy mix in 2030 must reach 40 percent, this is somewhat different from the target adjustments made by DEN currently,” explained Fabby.

Fabby added that the new government’s homework related to the energy sector will be to accelerate the development of renewable energy, especially in the electricity and liquid fuel sub-sectors.