Report Launching and Discussion : 1.5°C-aligned coal power transition pathways in Indonesia: additional strategies beyond the Comprehensive Investment and Policy Plan (CIPP)

Background

Indonesia has ratified the Paris Agreement through Law no 16/2016. As a result, Indonesia is legally bound to contribute to the global struggle to mitigate the climate crisis through ambitious efforts and action in reducing Greenhouse Gas (GHG) emissions and limiting the increase of the average global temperature below 1.5 0C. In one of the IPCC climate model results of a 1.5 0C compatible pathway, the global Greenhouse Gas (GHG) emission must decrease by 45% in 2030 compared to 2010 and reach net zero emission by 2050. As of now, Indonesia is among the top 10 greenhouse gas (GHG) emitters and is still projected to increase its emissions, with the energy sector as the highest GHG contributor by 2030.

In November 2023, the Government of Indonesia published the first version of the Comprehensive Investment and Policy Plan (CIPP), outlining the country’s power sector emissions reduction roadmap and strategies. While the plan was expected to detail how the emissions reduction and renewable targets envisioned by the JETP will be delivered with investment and policies, we find that critical elements of a successful coal power transition are absent from the current version. 

According to the CIPP report, the investment required to achieve the 2030 targets proposed in the plan is estimated at 97 US$ billion.8 These resources will cover over 400 priority projects22, including grid development, phase-out of coal power plants, and the deployment of renewable energy. Overall, 50% of the resources are allocated for investment in dispatchable clean technologies such as geothermal and hydropower, while 26% is designated for variable renewable plants, and 20% for transmission infrastructure. The early retirement of coal plants represents just 2% of the entire plan8.

Join the Institute for Essential Services Reform (IESR) and the Center for Global Sustainability (CGS) at the University of Maryland on (insert date) to learn about new research into achieving a successful coal power transition in Indonesia. This event will launch two new reports, followed by a discussion session to disseminate key findings and recommendations to Indonesian stakeholders.

  1. To address the gaps in investment and subsequent resources, IESR and CGS assessed existing and pipeline coal power plants to determine retirement priority using a muti-criteria framework under a 1.5 0C compatible emission pathway for Indonesia. The research develops a comprehensive, high-ambition pathway for Indonesia’s coal power transition by combining a global integrated assessment model (GCAM), a power system dispatch model (PLEXOS), and bottom-up analyses. It expands the existing version of the CIPP in several dimensions, including (1) assessing the pathway that is 1.5°C aligned through 2050, (2) covering both on-grid plants and off-grid captive plants, (3) exploring a larger set of transition options for different coal plants, and (4) conducting plant-by-plant assessments to better understand the technical and economic suitability for individual plants, using the best available data. Further analysis is done to determine the costs and benefits of the early coal retirement scenario from economic, social, and environmental aspects, for a wider set of stakeholders. 
  2. The Center for Global Sustainability’s new report and database, the first of its kind on industrial parks, which is a pivotal element of the broader CIPP initiative aimed at bolstering regional economies. This launch highlights the importance of enhanced data availability, essential for understanding demand and making informed decisions about captive coal development. It also emphasizes the need to balance environmental objectives with economic growth and explores the potential for developing renewable energy sources within industrial estates.

Objective

The objectives of these seminars and workshops are:

  1. Disseminate the IESR-UMD study on transition strategies and 1.5°C -aligned pathway for on grid and captive power plants
  2. Discuss and identify aspects to consider for Indonesia to implement its coal-to-renewables strategy.
  3. Identify and propose a holistic framework for Indonesia beyond JETP CIPP to assess its transition strategies and 1.5°C -aligned pathway

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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