Media Indonesia | Anticipate the Socio-Economic Impact of the Decline of the Coal Industry

DIVERSIFICATION and economic transformation must be immediately planned to anticipate the social and economic impact of the decline in the coal industry. This is in line with plans to end PLTU operations and increase commitment to energy transition and emission mitigation from countries that have been destinations for coal exports so far.

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Kompas | Lulled by Coal

The Our World in Data page states that at the turn of the 20th century, half of the world’s energy sources came from coal. The transition from fossil energy to renewable energy, which was previously slow, is now accelerating. In the UK, around two-thirds of electrical energy came from coal in 1990. In 2010 this fell to less than a third and is now estimated to be around 1 percent.

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Policy Reform and Concessional Finance Needed to Achieve JETP Targets

 

Jakarta, September 6, 2023 – The draft Comprehensive Investment and Policy Plan (CIPP) document of the Just Energy Transition Partnership (JETP) is under review by the Indonesian government. This review is seen as an effort to ensure that the achievement of JETP targets is in line with reality. This was conveyed by Rachmat Kaimuddin, Deputy for Infrastructure and Transportation Coordination, Coordinating Ministry for Maritime and Investment Affairs, at the Bloomberg CEO Forum at ASEAN (6/9).

“The JETP Secretariat has submitted the JETP roadmap, which is the result of work from four working groups which are technical, financing, policy, and just transition. Currently, it is still under review to assess the match between the required energy types and technologies and the emissions reduction goals in Indonesia, and to ensure that the JETP roadmap can be implemented in reality,” Rahmat explained.

On the same occasion, Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), mentioned that the limited availability of data posed one of the obstacles in preparing the CIPP document, particularly concerning captive coal-fired power plants (CFPP) or plants operated by specific companies to supply their own electricity.

“In the last two years, Indonesia has implemented coal downstreaming policies that have led to an increase in the number of industries building mineral processing facilities or smelters. This, in turn, has resulted in an increase in the number of captive coal power plants used to supply energy to these smelters. Meanwhile, when the JETP was agreed upon in 2022, the data used still did not include the captive CFPP,” he said.

Furthermore, Fabby mentioned that to create more opportunities for renewable energy developers, the government needs to evaluate the Domestic Market Obligation (DMO) policy on coal, which artificially lowers coal prices. He believes that this policy reform also needs to be discussed at the legislative level. Additionally, he highlighted that electricity tariffs from coal-fired power plants are relatively lower than those for renewable energy. This means that Indonesia’s utility company, PLN, has limited incentives to promote the utilization of renewable energy. In fact, he added, an equal electricity tariff between fossil fuels and renewable energy would provide utility companies with sufficient capital to invest in renewable energy.

Fabby stated that Indonesia requires substantial investments to expedite the development of renewable energy.

“To attain the JETP target of achieving a 34% renewable energy mix by 2030, Indonesia needs to construct approximately 40 GW of renewable energy capacity. This presents challenges in terms of the supply chain and the procurement process. Therefore, Indonesia truly needs proper financing instruments. Within the JETP framework, concessional financing with low-interest rates is a necessity,” he concluded.

CASE IESR: Indonesia Needs to Encourage Stronger Commitment from ASEAN Countries to Reducing GHG Emissions in the Region

press release

Jakarta, 15 August 2023 Holding the Chair of ASEAN in 2023 and possessing significant economic influence within the ASEAN region, Indonesia can foster a joint agreement among other ASEAN member countries to promote the reduction of greenhouse gas (GHG) emissions in alignment with the Paris Agreement. Additionally, Indonesia can mobilize support from other countries as several ASEAN nations aim to phase out coal-fired power plant operations incrementally before 2050. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), conveyed this message during a media briefing titled “Measuring ASEAN’s Climate Ambition at the Helm of Indonesia’s ASEAN 2023 Chairmanship.”

According to Fabby, while Indonesia prohibits the construction of new coal-fired power plants (PLTU) for general use, allowing their construction for industrial purposes can impede the achievement of a higher renewable energy mix. He emphasized that the Indonesian government should advocate for a stronger commitment to ending the operation of coal-fired power plants throughout ASEAN countries. Furthermore, Indonesia should bolster its renewable energy expansion within ASEAN, particularly in solar energy development. Fabby encouraged discussions on an integrated supply chain to be established during the ASEAN Ministers on Energy Meeting (AMEM) scheduled for August 2023.

“We hope that during AMEM, Indonesia can propose to become a manufacturing hub for solar PV, encompassing technology from polysilicon to solar modules. Although some ASEAN countries have advanced manufacturing capabilities, they are still limited to cells and modules. Moreover, this manufacturing progress lacks integration. Indonesia, endowed with raw materials like silica sand, has the potential, as Chair of ASEAN 2023, to champion an integrated supply chain through a collective agreement,” he stated.

He added that climate threats are escalating for ASEAN nations, significantly impacting the region’s food security, energy security, and developmental progress. Without earnest endeavors to curb global emissions, climate change will compound challenges, making sustained economic growth of over 6% in the Southeast Asian region even more challenging.

Berlianto Pandapotan Hasudungan, Director of ASEAN Economic Cooperation at the Ministry of Foreign Affairs of Indonesia, explained that transitioning to renewable energy and reducing reliance on petroleum is pivotal for Indonesia’s leadership within ASEAN amidst geopolitical, Myanmar, and climate crises.

“Alongside the advancement of electric vehicles, ASEAN is fostering energy interconnections among member countries and embarking on studies for energy interconnections within the region,” he elaborated.

Shahnaz Nur Firdausi, a Researcher on Climate and Energy at IESR, highlighted that Indonesia’s climate policies and commitments do not align with the Paris Agreement’s objective of capping temperature rise at 1.5°C. The Climate Action Tracker (CAT) report underscores the insufficiency of Indonesia’s climate targets and policies. If other countries follow a similar path, global warming could exceed 2°C to 3°C.

“For this reason, Indonesia’s climate policies and actions in 2030 require substantial improvements in line with a temperature limit of 1.5°C. Indonesia should elevate the NDC target to 75% under the NDC business-as-usual (BAU) scenario, excluding land use and land use change and forestry (conditional), and 62% (unconditional). Furthermore, Indonesia’s land use and forestry emissions have accounted for nearly 50% of total emissions over the past two decades,” said Shahnaz.

In concluding remarks, Agus Tampubolon, the Project Manager of Clean, Affordable, and Secure Energy (CASE) for Southeast Asia, emphasized the significance of collaboration among ASEAN member countries to expedite the energy transition.

“Indonesia can serve as a model for the ASEAN region by spearheading the energy transition. ASEAN countries possess tremendous potential for joint efforts in advancing solar PV technologies and crafting policies that facilitate the shift from fossil fuels to renewable energy, thereby amplifying climate targets,” Agus affirmed.