Exchanging Insights on Local Solar Manufacturer in Indonesia and Viet Nam

Ha Noi, 14 December 2023 – The Ministry of Science and Technology of Viet Nam hosted its annual event: Technology and Energy Forum 2023, in collaboration with the Ministry of Industry and Trade and Project Clean, Affordable and Secure Energy for Southeast Asia in Viet Nam.In recent years, Viet Nam has witnessed remarkable development in the trends of energy transition, particularly in wind and solar power. By the end of 2022, the total capacity from wind and solar power had reached 20,165 MW, constituting 25.4% of the overall power capacity within the system.

However, despite this progress, 90% of equipment for renewable energy projects in Viet Nam is imported from countries like China, Germany, India, and the US. This reliance is due to the country’s limited ability to perform specific tasks during project assessment and development phases and its high dependence on imported technologies. Factors contributing to this situation include inadequate local technology capacity, production levels falling short of requirements, and a lack of support from industrial policies and mechanisms to encourage renewable electricity.

Consequently, Vietnamese enterprises and local supply chains have seen limited participation. Similarly, Indonesia faces comparable challenges in its procurement of renewable energy, particularly in solar power. Despite both countries boasting immense potential in solar power, their domestic markets are not yet equipped for solar manufacturing. This deficiency stems from uncertainties in local demands and the lack of competitiveness in the local supply chain.

Fabby started with an explanation about local content regulation that could minimize dependence on imported products. 

“Indonesia is currently facing domestic market issues; these local products encounter difficulties entering the market. The lack of a credible development pipeline limits financial viability for new solar modules manufacturing facilities. When it comes to Rooftop PV, PLN limits the installation capacity to 15%. This regulation further restricts the market for domestic solar modules,” state Fabby.

Fabby went on to highlight several lessons learned from implementing Local Content Regulations (LCR) in Indonesia, which could potentially accelerate the development of Viet Nam’s solar energy local content. First, despite the projected growth in solar power, there’s insufficient market signal to stimulate the growth of the solar module industry without a reliable pipeline. Second, inconsistencies in policies across government bodies might discourage investment in the solar power market due to increased uncertainty. Third, support for the domestic solar modules industry should encompass downstream raw material industries to reduce import dependency and enhance the competitiveness of end products. Lastly, governments should offer incentives, both fiscal and non-fiscal, to encourage the development of solar module manufacturing facilities. Fabby emphasized that LCR, without a conducive investment climate for the industry, might impede rather than foster the development of solar power.

Implementing the Energy Transition: Policies in Colombia, Germany, India, Indonesia and South Africa

Background

The Global Stocktake is clear: All countries need to raise their ambition to curb their emissions effectively, to a degree that is fair to their development status.

But ambitious targets are not sufficient on their own; policies need to be in place and be implemented effectively. Climate Transparency’s new Climate Policy Implementation Check has been designed to assess, rate, and monitor the implementation status of policy instruments along four categories: legal status, institutions and governance, resourcing, and oversight.

Facilitated by the Climate Emergency Collaboration Group, we analyze the implementation of a variety of climate policies in the power sector of India, South Africa, Indonesia, Colombia, and Germany.

Ahead of COP28, we want to discuss possibilities and implications for international cooperation to effectively implement the energy transition away from coal and towards a renewable energy future. With their strong interlinkages in coal production and consumption, the countries we analyze exemplify the possibilities and challenges of successful transformations, and they will be key to the debate on how to change long-standing international relationships from brown to green.

Agenda

  1. Selected Energy Transition Policies in India, South Africa, Indonesia, Colombia, and Germany: Implementation status and outlook
  2. International implications of domestic energy transitions

Language

This event uses the English language

Towards COP-28: Indonesia Needs to Speak Out for Concrete Action in Addressing the Climate Crisis

Jakarta, November 2, 2023 -The United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP-28) is scheduled to take place in Dubai, United Arab Emirates (UAE) from November 30 to December 12, 2023. Guntur, a policy analyst from the Coordinating Ministry for Maritime Affairs and Investment, has stated that the COP-28 meeting will include the first-ever global stocktake (GST) to evaluate the progress made in implementing the Paris Agreement.

 

“The GST is a crucial turning point for taking climate action in this critical decade, where the global community is aware that the implementation of the Paris Agreement is currently off track. For this reason, collaboration between various parties is needed in course-correcting efforts and improving solutions that are reflected in the results of the negotiations as well as in the COP28 Presidential Actions Agenda,” he explained at the Pijar Foundation Policy Playground event on Thursday (2/11/2023).

 

Guntur mentioned that COP28 is focused on several issues to fulfill the pillars of the Paris Agreement, particularly related to energy transition, especially renewable energy. Indonesia also continues to prepare the pavilion as soft diplomacy or diplomacy with a socio-cultural approach. This is also an effort to convey to the world the concrete steps and concrete actions that Indonesia has taken in reducing emissions and addressing climate change. In addition, Indonesia took the theme of climate action to be held in the Indonesian pavilion during the implementation of COP28. 

 

Arief Rosadi, Coordinator of Climate Diplomacy Institute for Essential Services Reform (IESR), said the climate crisis harms the world. Based on the UNFCCC report in 2022, global emissions will increase by almost 14% throughout this decade. The UNFCCC’s 2023 data shows that current policies will result in a temperature rise of 2.8°C by the end of the century.

 

“For this reason, Indonesia must take real action to address the climate crisis, and collective efforts are needed to address and deal with it by emphasizing the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). There are currently various opportunities for young people to participate in international conventions despite possible challenges, such as closed processes and limited financial, regulatory, and logistical support. Citing data from the Yale Program on Climate Change Communication, most Indonesians feel morally obligated to protect the environment,” Arief said. 

 

Based on the agenda, Arief said, the delegation of the Republic of Indonesia (RI) will pay more attention to three global crises. These three crises, also known as the triple planetary crisis, include climate change, pollution, and biodiversity loss. These are significant global challenges that require bilateral and multilateral collaboration and cooperation to ensure that the Earth remains habitable for the future.

Indonesia-South Korea Golden Jubilee: Advancing Bilateral Cooperation through Green Energy Partnership Toward Sustainable Energy Transition

Background

The diplomatic relations between the Republic of Indonesia and the Republic of Korea have been established since 1973. Since then, the two countries have continued to increase and improve their relations through bilateral, regional, and multilateral cooperation (Embassy of The Republic of Indonesia in Seoul), e.g. The ASEAN – Korea Free Trade Agreement (AKFTA), members of the G-20, and members of The Regional Comprehensive Economic Partnership (RCEP) in the Asia Pacific. In that manner, both countries try to strengthen their relations through economic cooperation and development agendas.

One of the important areas of cooperation for both countries is trade. Indonesia and South Korea trade increased significantly. The volume of international trade (export/import) between the two countries has increased significantly over the last 4 years. In 2021 the volume of trade reached $19.18 billion compared to 2017 when it reached $ 1.4 billion in 2017 (The Observatory of Economic Complexity). In pursuit of sustainable development, the two countries have also signed a Memorandum of Understanding on Comprehensive Cooperation in Energy Safety Management. This agreement opens up opportunities for broader bilateral cooperation to develop clean energy generation through solar, hydrogen, and wind power (MEMR, 2022). It can be interpreted that the countries have reached a high degree of interdependence, and it will be accelerated through the implementation of the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA) in 2023 (Indonesia Ministry of Trade).

These strong diplomatic relations should be directed to enhance the realization of the green economy, attain Sustainable Development Goals (SDGs), and meet the Paris Agreement agenda due to the world facing a climate crisis, considering both countries are members of the UNFCCC. In the 2050 Carbon Neutral Strategy of the Republic of Korea: Toward a Sustainable and Green Society, Korea has set its target to reach carbon neutrality by 2050. The country will harness green innovation and advanced digital technologies to create synergies between the Green New Deal and the Digital New Deal, the two pillars of the Korean New Deal. Also, it will support investment and development of innovative climate technologies, and will lead by example to help the international community jointly take efforts to reach carbon neutrality by 2050. This policy document has five key elements; 1) expanding the use of clean power and hydrogen across all sectors; 2) improving energy efficiency to a significant level; 3) commercial deployment of carbon removal and other future technologies; 4) scaling up the circular economy to improve industrial sustainability; and 5) enhancing carbon sinks. It concludes, in its domestic affairs, South Korea’s policy toward a green agenda, which is also reflected in its foreign investment, namely through supporting green infrastructure and ocean health in ASEAN (ADB, 2022), and energy investment development in Africa (AFDB, 2021).

At the same time, Indonesia is in the middle of a transition toward a greener economy. The country has set its climate target at 31.89% (CM1/self-effort) and 43.20% (CM2/with international support) by 2030 (The Enhanced NDC, 2022). In relation to economic growth, the energy sector’s target has been set at 12.5% and 15.5% emission reduction and will be achieved through renewable energy, energy efficiency, low carbon-emitting fuels, clean coal technology, gas power plants, and post-mine reclamations. Nevertheless, to achieve this target, Indonesia needs massive financial support and investment. According to IESR (2022), to reach Paris-aligned NZE by 2050, Indonesia needs 20 to 25 billion USD from 2021 to 2030 and 40 to 60 billion USD in annual investment. The Ministry of Energy and Mineral Resources forecasts that the investment required for Indonesia to attain net-zero emissions by 2060 will reach USD 1 trillion, or USD 29 billion annually. This calculation is only for the supply side, not the demand that includes transportation, building, and industry. It means Indonesia needs massive resources to transform its economic structure and achieve its climate target.

Considering this, both countries have common interests in terms of investment opportunities in financing clean energy infrastructure projects, technology cooperation, and there could be potential cooperation to advance further between the two countries in achieving their respective economic development and benefits.

With that regard, the Institute for Essential Services Reform (IESR) in collaboration with Solution for Our Climate (SFOC) from Korea would like to conduct a bilateral webinar between South Korea and Indonesia key stakeholders to explore the opportunity of strengthening and advancing partnerships in accelerating the energy transition agenda and achieving climate ambition with highlight clean energy infrastructure, electric vehicles, and clean energy investment themes.

Objectives

  1. To foster Indonesia-South Korea cooperation in accelerating the energy transition and climate ambition through scaling up a clean energy infrastructure
  2. To explore the opportunity of strengthening and advancing partnerships between Indonesia and South Korea’s key business stakeholders to contribute to tackling climate change through business
  3. To promote and increase the number of investments between Indonesia-South Korea, particularly in clean energy-related infrastructure, both in supply and demand

Fairness and Inclusivity Should be the Foundation of Indonesia’s JETP Investment Plan

Jakarta, June 27, 2023 – Following the signing of the Just Energy Transition Partnership (JETP), three countries, namely South Africa, Indonesia, and Vietnam, promptly initiated actions to implement the agreement and prepared various strategic steps to achieve the goals of JETP in each country. The JETP Convening for Exchange and Learning Session facilitated communication and discussions among the three countries to share information and lessons learned in achieving equitable energy transition.

Dadan Kusdiana, the Director General of New Renewable Energy and Energy Conservation at MEMR, mentioned that the JETP Secretariat in Indonesia is currently in the process of drafting a roadmap to phase out coal-fired power plants (CFPP).

“We are currently discussing (within the JETP Secretariat-ed) the prioritization of the Pelabuhan Ratu CFPP in the plan for early retirement of its operations. The Ministry of Energy and Mineral Resources is also reviewing the regulations, particularly concerning asset transfers and the establishment of power purchase agreements (PPAs),” said Dadan.

Fabby Tumiwa, the Director of the Institute for Essential Services Reform (IESR), emphasized the importance of conducting the comprehensive investment plan (CIP) preparation process with transparency, clarity, and easy accessibility, while consistently involving public participation.

Furthermore, Fabby also urged the government to reform policies, among other actions, to achieve the goals of JETP and promote the widespread adoption of renewable energy.

“JETP aims to create an enabling environment for renewable energy. While the allocated 20 billion dollars may not be sufficient to achieve the targets of the Paris Agreement, we must utilize it as a catalyst to increase the share of renewable energy and phase out the use of coal-fired power plants,” explained Fabby.

Mpetjane Lekgoro, the South African Ambassador to Indonesia, also stated during the same occasion that his party prioritizes the principles of justice and inclusivity in managing JETP funding.

“South Africa is committed to utilizing the JETP to promote restorative justice in the energy transition. These investments should not only provide financial support but also uphold sustainability and security, ensuring the inclusion of those most affected,” he added.

Similarly, Dipak Patel, Head of Climate Finance & Innovation for the President’s Climate Commission (PCC) in South Africa, emphasized that a detailed discussion on equity in the energy transition is their primary focus.

“South Africa has identified three areas of equity in the energy transition, encompassing restorative justice by considering the most affected communities, procedural justice that involves all communities in decision-making related to energy and climate transition, and distributional justice that guarantees fair and equitable treatment,” Patel explained.

Examining the JETP funding allocated to South Africa, amounting to USD 8.5 million over a period of 3-5 years, Neil Cole from the JETP-IP Project Management Unit in South Africa emphasized the importance of thoroughly and innovatively integrating the JETP funding into projects at both the national and subnational levels.

“It is crucial to synchronize the top-down and bottom-up approaches in order to identify the shared requirements and collaboratively develop an actionable and inclusive implementation plan,” Cole explained.

Le Viet Anh, Director General of the Department of Science, Education, Natural Resources, and Environment at the Ministry of Planning and Investment in Vietnam, highlighted several key actions to expedite the attainment of JETP targets. These actions encompass establishing a robust, collaborative, and supportive environment among the government, international partners, and the private sector. Additionally, accelerating the institutionalization of enabling legal frameworks such as green taxonomy, green incentives, and green financing mechanisms is essential. Furthermore, facilitating the transfer of clean energy technologies, expertise, and technical know-how to enhance Vietnam’s capabilities is crucial.

“The Vietnamese government has demonstrated a strong commitment to promoting green growth through our national strategy. Vietnam has made significant green commitments at COP26, including targets such as achieving net-zero carbon emissions by 2050 and phasing out coal-fired power plants by the 2040s,” he explained.

The Just Energy Transition Partnership (JETP) Convening was jointly organized by the Ford Foundation in Indonesia, the Institute for Essential Services Reform (IESR), and the African Climate Foundation (ACF), with support from the Global Energy Alliance for People and Planet (GEAPP). The primary objective of the event was to provide a platform for stakeholders to engage in a forum for learning and knowledge exchange.