Energy Transition Funding Needs for Affected Workers Reach Rp38.4 Trillion

Jakarta, April 30, 2024 – Energy transformation requires adequate financing to ensure a smooth and equitable process. The Institute for Essential Services Reform (IESR), a leading think tank on energy transition and environment based in Jakarta, disseminated a report titled “Identification of Financing Needs for an Equitable Transformation of Indonesia’s Electricity Sector”. The report, created in collaboration with the New Climate Institute (NCI), explores financing instruments for energy transition that can be used to fund the retirement of coal-fired power plants, promote renewable energy development, and ensure justice for affected workers.

According to the analysis conducted by IESR and NCI, Indonesia’s Just Energy Transition Partnership (JETP) requires financing through grants and soft loans to facilitate its energy transition agenda. Grants can be used to incentivize activities that aim to end coal power plant operations, compensate affected workers, and train them for the transition into other sectors. However, the amount of grants allocated in JETP is relatively limited, accounting for only 1.4 percent of the total financing.

Meanwhile, USD 6.9 billion in concessional financing for the Joint Energy Transition Plan (JETP) can be utilized to cover any potential losses that may arise from the closure of coal power plants, promote the development of renewable energy infrastructure, and offer incentives to renewable energy developers to support the transition of coal sector workers to the renewable energy sector.

Wira A. Swadana, Program Manager of Green Economy, IESR, emphasized the importance of developing community resilience during the energy transition. He suggested that prioritizing justice is key to ensuring the community’s resilience to energy and social and economic changes. Wira also reminded us that Indonesia signed the Silesian Declaration of Solidarity and Just Transition in 2018. Therefore, the country is committed to preparing and ensuring an effective and inclusive energy transition process for 

“One important aspect that needs to be considered in the energy transition is how to build community resilience at the local level. For example, in the coal mining sector, a more inclusive economic transformation is needed to address inequality and improve the quality of health, infrastructure development and human resources (HR) in the surrounding communities,” said Wira. 

Farah Vianda, Coordinator of Sustainable Finance, IESR, said that early planning and mobilization of funding and institutional capacity are necessary to prepare for new jobs and empower workers affected by the coal sector’s decline. Farah has disclosed that a support package for affected workers, in compensation and training, will require funding of USD 2.4 billion or approximately IDR 38.4 trillion (using the exchange rate of 1 USD at IDR 16 thousand).

“The government must establish a specialized team to prioritize the equitable transition issue. Additionally, it is necessary to enhance government capacity in planning, policy-making, governance systems, and environmental protection,” said Farah. 

On the other hand, it is imperative to consider the potential health benefits of discontinuing coal power plants. Based on a scenario that aligns with the JETP target, the end of coal power plant operations will be able to secure USD 150 billion or around IDR 2,400 trillion by 2050. Meanwhile, with a scenario in line with the Paris Agreement or limiting the earth’s temperature to 1.5 degrees Celsius, the health costs that can be avoided from ending coal-fired power plants (CFPP) operations are around USD 230 billion or Rp3,680 trillion by the mid-century.

Reena Skribbe, Climate Policy Analyst at New Climate Institute, said that the success of Indonesia’s energy transition will depend on political and institutional integration into the overall planning process. According to her, the most important thing is the mainstreaming of justice at all levels of government. 

Additionally, the end of CFPP operation will reduce pollution levels by 12 percent based on the scenario by the JETP target and 18 percent based on the scenario in line with the Paris Agreement from Indonesia’s current annual GDP. Even today, there are still 48 GW of power plants in operation and another 20 GW in the pipeline.

“Based on this data, reducing coal combustion per megawatt-hour (MWh) will provide economic benefits of around USD 30 or IDR 488 thousand. Compared to the JETP funding of USD 22 billion, the avoided cost of reducing air pollution is many times greater,” Reena said.

Renewable Energy Must Reign Supreme in Southeast Asia

Jakarta, March 27, 2024-Southeast Asia is a world’s fifth-largest economy region in 2022. However, this economic growth comes with a concerning projection: greenhouse gas (GHG) emissions in the region are expected to soar by 60 percent by 2050. Curbing these emissions is pivotal for global efforts to combat climate change. Unfortunately, current endeavors to promote renewable energy in Southeast Asia fall short of aligning with the Paris Agreement, which aims to limit global warming to below 1.5 degrees Celsius.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), stated at the Revision 2024 International Conference in Tokyo (14/3) that ASEAN countries have set a target to achieve a renewable energy mix of 23 percent by 2025. However, he emphasized that this target doesn’t align with the Paris Agreement’s objectives.

“To align with the Paris Agreement, the renewable energy mix needs to account for 55 percent, with variable renewable energy (VRE) contributing 42 percent. Except for Vietnam, Cambodia, and the Philippines, others have yet to reach 5 percent VRE penetration. The good news is that in 2023, ASEAN countries will have over 28 GW of operating utility solar and wind capacity, a 20 percent increase in operating capacity since last year. Currently, they make up 9 percent of ASEAN countries’ total electricity capacity. But in order for ASEAN countries to meet the goal, they need to install more renewable energy,” Fabby remarked.

Fabby further highlighted the relatively abundant renewable energy resources in Southeast Asia, which are estimated to be 40-50 times greater than the region’s current energy needs. He suggested that utilizing floating solar power plants could be a strategic move towards decarbonizing the energy system. He elaborated on the technical potential, with reservoirs boasting 134 to 278 GW and natural water surfaces such as rivers, lakes, and seas holding 343 to 768 GW. However, he stressed the importance of conducting detailed calculations of the technical, market, and economic potential, as well as site-specific assessments to develop floating solar power plants.

Additionally, he highlighted the need for Southeast Asian countries to adopt more ambitious policies, provide robust budget support and incentives, and enact policies that attract investment. The average annual investment in renewable energy capacity should be increased by five times to USD 73 billion per year.

Fabby emphasized that Southeast Asian countries must elevate their ambitions to meet the Paris Agreement targets. As an immediate step, ASEAN should aim for a 23 percent renewable energy mix by 2025 and 40 percent by 2030.

“Various studies have shown that decarbonizing the energy system with renewable energy in Southeast Asia is feasible; however, current policies and actions are insufficient to achieve significant decarbonization by 2050. While renewable energy resources are abundant and ample, substantial investment is needed. Each country must reform policies and manage risks associated with renewable energy projects to attract and mobilize investors further,” Fabby added.

He also cautioned against perpetuating a narrative that prioritizes fossil energy as a baseload generator under the guise of maintaining energy security, while sidelining renewable energy. Such a narrative, he argued, is counterproductive and contradicts the spirit of the Paris Agreement.

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.

Civil Society Recommendations for the Development of Indonesia’s Second NDC

press release

Jakarta, February 2, 2024 – Indonesia, under the coordination of the Ministry of Environment and Forestry (MoEF), has initiated the drafting process for its Second National Determined Contribution (SNDC) aimed at emissions reductions by 2030 and 2035. The MoEF intends to submit the SNDC to the UNFCCC in 2024.

The Institute for Essential Services Reform (IESR) along with several civil society organizations have requested for revisions in the SNDC, proposing updated scenarios and targets aligned with the objective of limiting global warming to below 2 degrees Celsius. They advocate for striving to achieve the ambitious goal of 1.5 degrees Celsius, as set forth by the Paris Agreement and reinforced by the Global Stocktake decision at COP 28.

IESR also urges the government to engage public participation in the preparation process of the SNDC. Furthermore, it is essential for the government to adhere to the principles outlined in Article 4, Line 13 of the Paris Agreement and the provisions of the COP series during SNDC preparation.

Currently, the government continues to utilize the business-as-usual (BAU) scenario for calculating emission reductions. However, civil society deems this scenario irrelevant as a basis for emission calculations. Indonesia must transition to a more accurate calculation system that references relative emissions in a given year, considering a realistic trajectory of global and Indonesian economic growth.

“While the emission reduction target in the Enhanced NDC (ENDC) appears to be increasing, it still does not align with the goal of limiting temperature rise to 1.5 degrees Celsius. Presently, the ENDC target only aims for a 31-43 percent reduction below BAU. If using the BAU calculation method employed thus far for setting emission reduction targets in the NDC, Indonesia’s target should be at least a 60 percent reduction from BAU for unconditional efforts and a 62 percent reduction from BAU for conditional efforts with international assistance. These figures do not include emission reductions from the agriculture, forestry, and land sectors,” remarked IESR Executive Director Fabby Tumiwa.

According to the analysis conducted by IESR, using 2022 emissions as the benchmark for target setting, Indonesia must establish an unconditional emissions reduction goal of 26 percent, equivalent to 859 MtCO2e by 2030, and a conditional reduction target of 28 percent, amounting to 829 MtCO2e with international assistance. These targets are crucial for contributing to the objective of limiting temperature rise to 1.5 degrees Celsius.

In addition to increasing emission reduction targets, Indonesia must also diminish the reliance on fossil energy sources such as coal and gas within its energy system. Based on calculations from the Climate Action Tracker (CAT), the coal component in Indonesia’s electricity system should be reduced to 7 to 16 percent by 2030, with the phasing-out of PLTU operations before 2040. Similarly, gas usage needs to be curtailed to 8 to 10 percent by 2030, with phasing-out operations by 2050.

Deon Arinaldo, IESR’s Energy Transformation Program Manager, emphasized that the reduction in the fossil energy mix should be accompanied by an increase in the share of renewable energy, ranging from 55 to 82 percent by 2030. However, it is worth noting that the target listed in the ENDC pertains to the installed capacity of renewable energy rather than the actual mix. IESR contends that solely focusing on installed capacity does not adequately reflect the relationship with emission reduction objectives.

“With the clarity of the renewable energy mix target in the electricity sector, it becomes possible to anticipate and even calculate the emission intensity of the electricity sector by 2030 to achieve the SDNC target. Furthermore, a significant presence of renewable energy will offer a clearer roadmap for electricity planning, specifying the types of renewable energy that should be prioritized to bridge the existing gap. With only 7 years remaining, it’s evident that solar and wind power plants, known for their shorter construction periods, should take precedence in development efforts to meet the mix target. Additionally, interventions are necessary for fossil fuel power plants, emphasizing the importance of reducing the reliance on fossil energy through various strategies such as terminating the operation of PLTU or reducing its utilization,” stated Deon.

Furthermore, IESR and other civil society organizations criticize the ENDC document for neglecting to incorporate the principle of climate justice. Civil society advocates for the SNDC preparation process to be more inclusive, ensuring climate protection for vulnerable groups and transparency throughout.

Wira Swadana, IESR Green Economy Program Manager, emphasized that the government must ensure fair distribution of the burden of emission reduction.

“Entities responsible for the highest emissions must shoulder a larger portion of the emission reduction efforts. Furthermore, the formulation of the SNDC should prioritize the principle of climate justice, which aims to mitigate both short-term and long-term risks while ensuring fair distribution of benefits, burdens, and risks, particularly for marginalized communities,” remarked Wira.

IESR and other civil society groups have outlined six recommendations for the preparation of the SNDC. First, the government should adhere to the principles of the Paris Agreement as outlined in Article 4, Line 13, and the guidelines set forth by the COP. Second, there should be a focus on integrating measurement, reporting, and verification (MRV) systems tailored for developing country parties. Third, the government should abandon the use of the BAU scenario as the basis for emission reduction calculations and instead adopt a method based on relative emissions in a given year, which takes into account more precise global and Indonesian economic growth projections. Fourth, climate targets should be established in alignment with the Paris Agreement. Fifth, there should be transparent and publicly accessible monitoring and evaluation mechanisms put in place. Sixth, principles of climate justice should be incorporated and implemented throughout the process. These recommendations for the preparation of the Second NDC have been submitted to relevant ministries and institutions.

The Decline of Indonesia’s Climate Policy and Action Rating in 2023

Delima Ramadhani, Climate Policy Project Coordinator, IESR presents the results of the CAT assessment of Indonesia’s climate policies, targets and actions

Jakarta, January 31, 2024 – According to the Climate Action Tracker (CAT) report, the climate policies, actions, and targets outlined in Indonesia’s 2023 Nationally Determined Contribution (NDC) document as “critically insufficient” to limit global temperatures  to below 1.5 degrees Celsius. This represents a decline from 2022 when Indonesia was rated as “highly insufficient.”

The Institute for Essential Services Reform (IESR), a collaborator with CAT, has disclosed that Indonesia, rated as “critically insufficient” under the Enhanced NDC target, could potentially release greenhouse gas emissions of 1,800 million tons of carbon dioxide equivalent for the unconditional target and 1,700 million tons of carbon dioxide equivalent for the conditional target by 2030. This estimation excludes emissions from the forestry and land sectors.

Fabby Tumiwa, Executive Director of IESR, attributed Indonesia’s downgrade to “critically insufficient” to the escalating use of coal in downstream mining. He stressed that the lowest CAT rating implies that the existing climate targets and policies would result in global emissions surges surpassing 4 degrees Celsius.

“Indonesia requires concrete and measurable actions to transition from fossil energy and expedite the shift to renewable energy in the coming decade,” Fabby stated during his remarks at the launch of the Climate Action Tracker Assessment Indonesia and Climate Transparency Implementation Check reports, organized by IESR on January 30. 

Throughout the 2022-2023 period, the Indonesian government has made progress in climate mitigation actions, notably by promoting the development of renewable energy through Presidential Regulation (Perpres) No. 112/2022 concerning the Acceleration of Renewable Energy Development for Electricity Supply. Additionally, the government has made positive commitments to achieving the 2030 net zero and FOLU net sink targets. Ambitious policies are needed to realize them.

The rise in emissions in 2022 amounts to approximately 200 million tons of carbon dioxide equivalent, with increased coal consumption being a contributing factor. Emissions from captive power plants, those operated by utility companies outside of PLN, are anticipated to contribute to a further increase of around 100 million tons by 2030. Indonesia’s current climate policy would result in the country reaching an emissions level of 1,487-1,628 MtCO2e (excluding the forest and land sector) by 2030.

Moreover, Indonesia has committed to the Just Energy Transition Partnership (JETP), aiming for a renewable energy mix exceeding 34% by 2030. However, it is noted that the JETP falls short of aligning Indonesia with the targets set in the Paris Agreement.

Delima Ramadhani, Climate Policy Project Coordinator at IESR, explained that to meet the Paris Agreement standards, emissions from the electricity sector must decrease to 140-150 million tons of carbon dioxide equivalent by 2030, ultimately reaching zero emissions by 2040.

“Indonesia needs to adopt key reforms as outlined in the comprehensive investment planning and policy (CIPP) document of the Just Energy Transition Partnership (JETP) and formulate and implement an ambitious decarbonization pathway for off-grid (captive) power plants,” explained Delima.

Considering the significance of the electricity sector and its potential for strategic decarbonization, IESR also assessed the implementation of the National Electricity General Plan (RUKN) policy. This policy serves as Indonesia’s primary reference for domestic electricity development and can be utilized for monitoring and evaluating renewable energy progress. Akbar Bagaskara, IESR’s Electricity System Analyst, explained that the overall assessment of the RUKN is “medium,” indicating that while it has a clear legal basis, namely MEMR Regulation No. 143/2019, there are numerous implementation challenges, including the consistent failure to achieve the annual renewable energy mix target.

“Indonesia’s challenges in meeting the annual targets for the renewable energy mix should prompt the government to conduct a thorough evaluation and address this issue with a sense of urgency. It is crucial for the government to formulate progressive strategies and innovations aligned with the Paris Agreement,” stated Akbar.

He elaborated on several actions the government should take to enhance the implementation of renewable energy development in Indonesia. Firstly, there is a need to increase the presence of supportive laws to foster a more conducive environment. Secondly, clear and comprehensive instruments should be provided, covering the entire spectrum from planning and procurement to reporting processes, especially for entities beyond PLN. Thirdly, a new revenue model for PLN should be established. Lastly, there is a necessity to refine PLN’s sustainable finance framework to attract a broader range of financing sources.

Playing Backdoor in Emission Reduction Solutions

Fabby Tumiwa dalam Konferensi Pers Climate Action Tracker

Jakarta, December 6, 2023 – The Climate Action Tracker (CAT) has released its latest report on the climate ambition and action of 42 countries, including the European Union. CAT’s assessment shows that there has been no significant change in global temperature reduction efforts since last year.

CAT modeled four temperature increase scenarios based on current policies and actions, 2030 emission reduction targets, net zero emission (NZE) targets and optimistic scenarios. All four scenarios lead to an increase in global temperature of between 1.8℃ and 2.7℃ by 2100.

Bill Hare, CEO of Climate Analytics said that even based on the global stocktake, the world is already off track to limit global warming to below 1.5℃.

“The emissions should be decreasing now and they should be decreasing quickly, but they’re continuing to increase. The central issue for this COP and the global stocktake is to reach a conclusion about the phasing out of fossil fuels. Unless we do that, I doubt whether we’re going to see an improvement in the temperature outcome,” said Bill Hare at the CAT press conference in Dubai (5/12).

Similarly, Claire Stockwell, Senior Climate Policy Analyst, Climate Analytics argues that countries’ emissions reduction targets for 2030 are very weak

“We assess the 2030 targets for countries that have very weak targets. So for countries that we already are projecting now can very easily meet those targets with current policies, including Indonesia,” Claire said.

Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR) revealed that Indonesia’s downgrade to critically insufficient in terms of climate policy and action was due to an increase in emissions of over 21% compared to last year. Fabby explained that this increase was a result of constructing new coal power plants and resuming operations of previously paused power plants due to Covid-19.

“The Indonesia government actually has made a number of policies, for instance, last year the president issued regulations prohibiting additional new coal plants for utilities but allowing captive coal under specific conditions. We believe these regulations will have an impact, though not immediately, but perhaps in the near future,” Fabby said.

Niklas Höhne, an expert at the New Climate Institute, said that this insignificant emission reduction effort occurs because many countries are proposing backdoors to continue the use of fossil energy. He gave examples of several terms that reflect back door solutions, such as unabated fossil energy, shifting the focus to fossil fuel ‘emissions’, and phasing down fossil energy. Meanwhile, according to him, based on the Paris Agreement, countries have agreed to balance emissions and sources, and this can only happen if all fossil energy operations phase out.

“If we now decide on something more vague, like unabated fossil fuels, phasing out of emissions or something, that will be a step backwards,” he added.

He also highlighted technological solutions aiming to extend the life of fossil energy, like green hydrogen for use in gas boilers or producing ammonia using renewable energy and using it in coal-fired power plants. He considers these technological choices to be incorrect, inefficient, and costly.

Webinar: Sunset of Coal-Fired Power Plants and the Coal Industry – Reviewing Direction and Multisectoral Impacts in a Just Energy Transition

Background

Indonesia has ratified its commitment to keeping global temperatures below 1.5 degrees Celsius, in line with the Paris Agreement, through Law No. 16 of 2016. The Indonesian government has set climate commitment targets through its enhanced Nationally Determined Contributions (NDCs): a 31.89% reduction in greenhouse gas emissions compared to business-as-usual scenarios and a 43.20% reduction with international assistance by 2030. However, these targets are still insufficient to meet the goals of the Paris Agreement. Based on business-as-usual scenarios, the energy sector is projected to dominate Indonesia’s emissions in the future. The electricity sector can be the first sector to be decarbonized considering the availability of low-emission technologies, such as renewable energy, which are becoming increasingly competitive. However, the Indonesian electricity system is currently dominated by coal-fired power plants.

On November 15, 2022, at the peak of the G20 High-Level Conference, President Joko Widodo and the International Partner Groups (IPG) led by the USA and Japan, including Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom, agreed to the Just Energy Transition Partnership (JETP) agreement. As a follow-up to this agreement, the Indonesian government needs to prepare a Comprehensive Investment and Policy Plan (CIPP) to achieve the target of peak emissions in 2030 and a 34% renewable energy mix in the electricity sector by 2030, as well as support for affected communities. The targets to be achieved are a peak emission of 290 million tons of CO2 in the electricity sector by 2030, net zero by 2050, and a 34% renewable energy mix in the electricity system. As a concrete step, the Indonesian government is currently preparing the CIPP investment plan document, which was originally scheduled to be launched on August 16, 2023, but has been postponed to the end of 2023. This delay is due to the unclear funding framework of the JETP from the IPG countries and the need for further refinement of some analyses in the document. In addition, the government also expects a more inclusive document and opens the opportunity for public consultation in the coming months.

Energy transition in various funding schemes, both JETP and Energy Transition Mechanism (ETM), is expected to prioritize justice aspects, especially for vulnerable and affected groups. The energy transition process should be seen as a comprehensive process that includes the creation of environmentally friendly jobs, social protection for vulnerable groups, as well as skills enhancement and retraining driven by employer programs to address these issues.One of the focuses of JETP is the effort to early retire coal-fired power plants (CFPP) which still contribute about 60% of the overall electricity generation. JETP also recognizes the importance of a fair transition principle for workers and communities affected by the early retirement of PLTU, including the domestic coal industry which will weaken and have an impact on the economy, especially in coal-rich areas. The JETP program in Indonesia must develop a fair transition roadmap that includes the creation of environmentally friendly jobs, social protection for vulnerable groups, as well as skills enhancement and retraining driven by employer programs to address these issues.

The impacts of this coal transition are identified and analyzed in several scenarios to study the relevant outcomes under various future conditions. These outcomes are presented so that stakeholders can make policies that anticipate the impacts that will occur. Therefore, the Institute for Essential Services Reform (IESR) will hold a public discussion to discuss the financing and investment scheme strategies, particularly in relation to the plans and anticipation of the multi-sectoral impacts of the early retirement of coal-fired power plants (PLTU) in efforts to achieve a just energy transition.

Objective:

To present and discuss the impacts resulting from the coal transition process in Indonesia.

To discuss how CIPP JETP supports a just energy transition.

To discuss the role of stakeholders in anticipating these impacts.

Media Briefing: Preparing for Indonesia’s Energy Transition & Anticipating Its Implications and Launching The Indonesia Energy Transition Dialogue (IETD) 2023

Playback Recording


Background

Between 2021 and 2022, the Intergovernmental Panel on Climate Change (IPCC) issued reports from three working groups, all of which uniformly conveyed that there is already scientific evidence related to the climate crisis and its impact on the Earth. One of the key findings of the report is that greenhouse gas emissions due to human activities have contributed to an increase in the Earth’s average temperature by 1.1°C since 1850-1900 and have the potential to rise beyond 1.5°C within the next 20 years. Furthermore, the report also outlines mitigation options that can be pursued and the scale of change that needs to occur, especially in this decade, to stay on track for 1.5°C.

Indonesia ratified the Paris Agreement through Law No. 16/2016. This means that Indonesia has legally committed itself to addressing the challenges of climate change by supporting global efforts to limit the increase in the average temperature to 1.5°C below the pre-industrial era average temperature. According to one of the IPCC models, to achieve this temperature limit, greenhouse gas (GHG) emissions must be reduced by 45% by 2030 compared to GHG emission levels in 2010 and reach net zero by 2050.

As a country that has ratified the Paris Agreement, Indonesia has reaffirmed its commitment to contribute to addressing the climate crisis. Indonesia’s own GHG emission reduction target in the Updated Nationally Determined Contributions (UNDC) is 29%, which increases to 31.89% in the Enhanced Nationally Determined Contributions (ENDC), while the target with international support in the UNDC is 41%, increasing to 43.20% in the ENDC.

A study by the Institute for Essential Services Reform (IESR) and the University of Maryland (2022) found that 9.2 GW of coal must be phased out from the state-owned utility (PLN) grid by 2030, and all unabated coal generation must be retired by 2045 at the latest, to put Indonesia on track to achieve the Paris Agreement’s global temperature target of 1.5°C. The study also concluded that coal emissions should begin to decline before the end of the decade.

Several initiatives and measures are in place to support and facilitate the early retirement of Indonesia’s power plants. In addition to the Transition Mechanism (ETM) launched at COP-26, during the G20 Summit, Indonesia and the International Partnership Group (IPG) have also signed the Just Energy Transition Partnership (JETP) agreement. This agreement aims to achieve the power sector’s peak emissions target of 290 million metric tons of CO2 (MtCO2) by 2030, attain a renewable energy mix of 34% by 2030, and make the power sector carbon-neutral by 2050.

In an effort to strengthen Indonesia’s climate action, the Government of Indonesia received a funding commitment of USD 20 billion from the Just Energy Transition Partnership (JETP) program. The formulation of the implementation of the funding is translated into a Comprehensive Investmentand Policy Plan (CIPP), which focuses on investment areas consisting of developing transmission and distribution networks, the early retirement of coal-fired power plants, accelerating the utilization of baseload-type renewable energy, accelerating the utilization of variable-type renewable energy, and building renewable energy supply chains. The government has finalized the CIPP document and will conduct public consultations over the next few months.

The energy transition can reduce Indonesia’s exposure to similar problems in the future. A smooth and successful energy transition requires the support of all parties, including the general public. Therefore, the process of preparing for the energy transition also needs to pay attention to aspects of inclusiveness. Additionally, it is important to consider impact management and anticipate the implications of the energy transition process. This includes considerations such as the fate of CFPP workers whose operational periods are ending prematurely, the creation of new jobs (green jobs), and how Indonesia’s energy transition can support economic growth through the shift from fossil industries to low-carbon industries.

Therefore, to further discuss the readiness of the energy transition in Indonesia and the launch of the 6th Indonesia Energy Transition Dialogue (IETD), we will organize a Media Briefing. This media briefing aims to provide an overview of the process and impact of Indonesia’s energy transition and to convey the implementation plan of the IETD as a forum for fact-based discussions that support the best policy formulation in the energy sector, facilitating more ambitious climate targets.

1 www.ipcc.ch/sr15/chapter/chapter-2/

2 IESR UMD, 2022, Financing Indonesia coal phase-out

Objective

  1. To inform about the JETP program’s Comprehensive Investment and Policy (CIPP) development.
  2. To discuss the socio-economic implications of the energy transition and anticipation measures in Indonesia.
  3. To announce the implementation details of the Indonesia Energy Transition Dialogue 2023 event on September 18-20, 2023.

Presentation Material

ESDM

130923-DEK-IETD-IESR-ESDM

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Faisal Basri

130923-DEK-IETD-IESR-Faisal-Basri

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Kompas | Indonesia’s Target for Reducing Emissions is Insufficient to Combat Global Warming

Indonesia’s emission reduction target is critically insufficient, aka very far from enough to reduce global warming. Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, said there needed to be a more significant gap between the current policies and emission levels compatible with the Paris Agreement.

Read more on Kompas.