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.

Encouraging the Growth of Renewable Energy Investments in Central Java

Semarang, July 4, 2023 – Recognizing that renewable energy investments play a crucial role in addressing climate change and achieving the Paris Agreement, the Institute for Essential Services Reform (IESR), in collaboration with the Government of Central Java Province, held the ‘Central Java Renewable Energy Investment Forum 2023’ event. This activity is a platform to promote the potential of renewable energy investments in Central Java to achieve the target of a 21.82% renewable energy mix in Central Java Province by 2025. Exceeding the target with a renewable energy mix of 15.76% in 2022 has encouraged the Government of Central Java Province to proactively open doors for renewable energy investments to achieve the set targets and maintain regional economic competitiveness.

Fabby Tumiwa, Executive Director of IESR, explained that Central Java has abundant potential for renewable energy, particularly solar energy. According to IESR’s study, if 9 million residential buildings install rooftop solar power systems, it could generate 100,000 megawatts (MW). Additionally, if the 35 regent and mayor offices throughout Central Java install rooftop solar power systems, it would generate around 5 megawatts (MW) of solar energy. Fabby emphasized that the renewable energy potential in Central Java, including wind power plants, micro-hydro power plants, biomass power plants, and geothermal power plants outside of Central Java, reaches 198 megawatts (MW).

“The availability of renewable energy is now a key factor in attracting investments. Therefore, if we want to enhance investment competitiveness in Central Java, it is necessary to increase the availability of green energy supply. This becomes a new indicator for investors. The vast potential of renewable energy sources cannot be realized without funding for their development,” explained Fabby Tumiwa.

Vice Governor of Central Java Province, Taj Yasin Maimoen, explained that Central Java has abundant solar energy potential that is yet to be fully utilized. Therefore, the use of solar power plants needs to be accelerated. Since 2019, the Provincial Government of Central Java, through the Department of Energy and Mineral Resources, has installed solar power plants in every regional organization office, including the Central Java Regional Council and several educational institutions. The use of solar power plants is aimed at reducing carbon emissions and has economic benefits, such as reducing electricity expenses by around 30-40%.

“Central Java has competitive potential, including infrastructure support, workforce, and a strong commitment to investment. The renewable energy sector presents a new investment opportunity in Central Java, considering the growing needs of the manufacturing ecosystem, which requires alternative energy sources to meet its production. This potential needs to be managed together,” said Taj Yasin.

Sakina Rosellasari, Head of the Investment and Integrated One-Stop Service Agency (DPMPTSP) of Central Java Province, stated that Central Java has a general investment plan, to promote environmentally conscious investment policies (green investment). According to DPMPTSP records, there are 690 permits for self-supply electricity providers (IUPTLS), and the number of rooftop and steam IUPTLS is approximately 17 as of June 2023.

“There are several projects ready to be offered in the renewable energy sector in Central Java, including the development of mini hydropower plants in Banjaran and Logawa, Banyumas Regency, the construction of floating solar power plants in Wadaslintang Reservoir, the development of geothermal power plants in Candi Umbul Telomoyo and Baturaden, Banyumas Regency. Realizing investments in Central Java is expected to increase community income and provide employment opportunities,” stated Sakina.

Cahyo Purnomo, Director of Promotion for East Asia, South Asia, the Middle East, and Africa at the Ministry of Investment/BKPM, stated that the energy transition process cannot happen overnight; it requires time and commitment. The development of renewable energy is one of the efforts toward a low-carbon economy, and so creating a conducive investment climate is necessary.

“For example, in formulating regulations, predictability is essential for investors. We encourage direct investment based on a long-term perspective, not just for 1-2 years. Therefore, it is important to have a stable investment climate, and the formulation of regulations should involve all stakeholders; there should be no mere spectators,” said Cahyo.

Initial Steps to Nurture Renewable Energy Ecosystem ASEAN

Jakarta, 13 June 2023 – Southeast Asia is a region with the largest economic growth and energy demand. Economic growth followed by increase in energy demand in the region is projected to continue in the coming years. If the use of environmentally friendly energy sources is not anticipated, this economic growth and energy demand will become the main problem of increasing greenhouse gas (GHG) emissions in the ASEAN region.

In a webinar titled Towards a Decarbonized ASEAN: Unlocking the Potential of Renewables to Advance ASEAN Interconnectivity Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform stated that ASEAN has the opportunity to encourage the creation of a renewable energy industry ecosystem through the cooperation of the ASEAN Power Grid (APG) regional interconnection network.

“ASEAN power grid can be one of the supporting infrastructures to accelerate the use of renewable energy in ASEAN countries while waiting for its market share to grow. ASEAN countries can encourage supply chain cooperation in renewable energy technology, especially solar module cell technology,” he said.

Fabby added that Indonesia, as the holder of the ASEAN Chair this year, has the opportunity to encourage this initiative and encourage the transition of fossil fuel-based industries towards renewable energy. A greener industrial transformation is believed to have a multiplier effect in the form of creating green jobs in the future.

In line with Fabby, Yeni Gusrini, Sub Coordinator of the Gatrik Program at the Ministry of Energy and Mineral Resources stated that in the first phase of development, the ASEAN Power Grid had succeeded in transferring 100 MW of electricity from Lao PDR to Singapore.

“The first phase of APG development succeeded in connecting Lao PDR – Thailand – Malaysia – Singapore. Moreover, APG will be a contributor to economic growth that ensures sufficient energy throughout the ASEAN region,” added Yeni.

Indra Overland, Head of Center for Energy Research, Norwegian Institute of International Affairs, said it is important for ASEAN countries to start thinking about strategies to increase renewable energy in the country and in the region.

“We can take as an example Vietnam which has succeeded in massively adding its renewable energy capacity in the past decade. Strategies such as having a policy framework that supports the development of renewable energy including taxation and ease of licensing are very influential for investors’ interest in investing in the development of renewable energy in an area,” he said.

Added by Overland, one indicator of a country having good policy implementation is when the renewable energy sector has abundant investors.

Zulfikar Yurnaidi, Energy Modeling and Policy Planning Manager, ASEAN Center for Energy, acknowledged that the financial factor which is one of the inhibiting factors for renewable energy penetration in the network. He said that one of the focuses of ASEAN 2021 – 2025 is to build connectivity and integrate regional markets.

“Penetration of renewable energy must be translated into the addition of generation capacity. To support this, network modernization must be carried out to maintain network stability, flexibility, and toughness. All of this requires a large amount of investment, and the government’s current budget is insufficient to finance everything, so the role of private investors is needed here,” Zulfikar explained.

The existence of the ASEAN Power Grid will bring long-lasting socio-economic impacts. The hope is that the traded electricity is clean electricity produced by renewable energy generators. So, this clearly affects the location of fossil power plants which are still quite a lot in the ASEAN region.

Ahmad Ashov Birry, Program Director of Trend Asia, gave an example that Indonesia still has a pile of homework related to this fossil power plant. Starting from an early retirement plan for fossil-based power plants to the construction of new renewable energy-based power plants.

“In this series of processes (ending fossil-based plants and construction of new power plants based on renewable energy, ed), the community needs to be involved, so that they can anticipate the possible damage arising from each stage. So that the transition (energy, ed) that occurs is (transition, ed) that is just, and makes life prosperous,” he explained.

Building Collaboration Between CSOs in ASEAN to Accelerate Energy Transition

press release

Jakarta, May 16, 2023 – As the Chair of ASEAN in 2023, Indonesia can engage civil society in enhancing ASEAN’s relevance in various aspects aligned with global development challenges. These include increasing ambitions for regional climate targets, developing renewable energy, and promoting sustainable development.

The Institute for Essential Services Reform (IESR) believes that following the success of the energy transition agenda at the G20, Indonesia can foster cooperation among ASEAN countries to implement energy transitions in line with the targets of the Paris Agreement. This collaboration can help build joint efforts to strengthen resilience in the face of various threats and impacts of climate change, through sustainable development.

ASEAN already has the ASEAN Working Group on Climate Change (AWGCC) and ASEAN Working Group on Forest and Climate Change (AWGFCC), as well as ASEAN Energy Cooperation. However, achieving climate mitigation targets and advancing renewable energy require additional efforts and collaboration between these working groups, along with civil society organizations and transnational communities, to increase their contribution to the region.

IESR believes that Indonesia, as the Chair of ASEAN, can provide space for civil society at the regional level to be involved in the process of its chairmanship agenda in 2023, particularly regarding energy and climate issues.

“As one of the regional organizations projected to experience 4.7% economic growth in 2023 amidst weakening global demand, ASEAN is a promising region for investment, especially in the renewable energy sector. Leveraging its leadership in ASEAN, Indonesia can encourage and embrace civil society organizations in ASEAN to focus on the energy transition. By initiating concrete collaborations, together we can accelerate the energy transition in the region and tackle climate change,” said Fabby Tumiwa, IESR Executive Director, during the public discussion titled “Making Energy Green and Low Carbon to Support Sustainable Growth: Advancing the Role of Civil Society in Southeast Asia Energy Transition During Indonesia ASEAN Chairmanship 2023,” organized by IESR.

Economic growth in the ASEAN region needs to align with commitments to reduce greenhouse gas emissions following the Paris Agreement. ASEAN has set a target of achieving 23% of the renewable energy mix by 2025. However, according to the IEA, 80% of the primary energy mix in the Southeast Asian region still comes from fossil fuels. Reducing the cost of renewable energy is predicted by the IEA to increase the penetration of renewable energy in ASEAN by up to 70% by 2040. This can be achieved through intensive coordination and collaboration among stakeholders (government, civil society, and business stakeholders) in ASEAN, especially in the regional policy-making process.

Nevertheless, Arief Rosadi, Coordinator of the IESR Climate Diplomacy Project, highlights that ASEAN currently lacks a formal channel for civil society to express aspirations, particularly on climate and energy issues. Therefore, Indonesia needs to lead ASEAN in providing an inclusive and constructive dialogue space for civil society in the decision-making process within the region.

“One immediate step to take is to increase the intensity of communication between civil society in the region, enabling the sharing of information and the latest developments in each country regarding energy and climate issues. This aims to strengthen solidarity and a sense of ownership of ASEAN as a collective region,” said Arief.

According to him, Indonesia can encourage more public discussions that focus on knowledge exchange and provide data-based policy recommendations that support the acceleration of the energy transition through the development of renewable energy at the regional level. Additionally, this approach can offer opportunities for developing human resource capacity in the renewable energy sector.

“Another important action is to strengthen grassroots collaboration and civil society networks at the regional level. This collaboration can contribute to the achievement of the climate agenda and energy transition in the region by sharing good practices and technical knowledge,” Arief added.

The Limited Option of Clean Energy for Remote Area Residents

Consumers can choose cleaner energy sources, but what if the choice is minimal? Or even none at all?

The government’s commitment to promoting renewable energy (RE) in Indonesia dates back several years. Furthermore, the signing of the Paris Agreement in 2015 to limit global temperature rise to 1.5 degrees Celsius makes the Indonesian government more serious about shifting fossil energy to cleaner energy by focusing on developing the electricity sector with renewable energy. At the same time, based on the Climate Action Tracker (CAT) assessment for the last 2 years shows that the Indonesian government’s policies, commitments and emission reduction targets are rated Highly insufficient or even lead to rising, rather than falling emissions.

With a considerable gap between the 2025 target and the results of the CAT Indonesia assessment showing inconsistencies with the Paris Agreement, boosting energy transition must continue to be pushed to a higher achievement rate, given the gap that is quite far from the “big” target of 23%. The government’s participation in enacting more ambitious policies and objectives in the energy transition is expected to breathe new life into cleaner energy policies for the community as the end customer.

The energy transition can, in reality, give Indonesian citizens optimism that there are cleaner and more sustainable energy sources for usage than fossil energy, energy with lower emission quality. Inclusiveness in accessing energy for all communities, especially in remote areas, is an important point in the energy transition carried out.

Is Diesel Still a Good Choice?

As is generally the case in the Adonara Island area, East Flores, NTT has power outages, diesel-fuelled generators and PLTD (Diesel Power Plant) are still “best friends” of residents there, at least for the last 4 years. Power outages that occur 2-3 times a day, for an unspecified period, make people with a “better economy” priority to have private generators. Then, what about those who do not belong to that group? Light from candles will be the main lighting in their house, or, they can enjoy electricity access from a neighbour’s generator if they are lucky enough.

The 62 units of the total 85 PLN power plants in the 2021-2030 RUPTL show the general usage of diesel power plants in NTT as a solution for delivering energy from the government. Diesel-based plants have often been used as a solution by the government to provide electricity in areas that are difficult to access. Indeed, the abundance of renewable energy types available can assist individuals in selecting greener energy sources, both small-scale (for example rooftop solar PV, biomass, and micro-hydro) and large-scale plants (hydropower, ground-mounted PV, geothermal).

In addition, this can also overcome PLN’s problems in the mobility of installing electricity networks in remote areas due to several things, including difficult location access, locations far from the existing grid and road infrastructure that has not been supported.

Capacity Development and Sustainability

If we only rely on outsiders for maintenance, especially in rural areas—which has always been one of PLN’s toughest problems in creating access to electricity—the ease of access and diversity of renewable energy growth sources will inevitably be obstructed. Without excluding the government’s right to provide electricity evenly to the community as stated in Article 2 paragraph (2) of Law 30/2009 on Electricity, the role of local communities as consumers is very large in helping the sustainability of renewable energy development.

The government should encourage local community participation in technical aspects of RE development so that in the future, local communities as final consumers are not only “recipients,” but also “experts,” with the potential to become “creators” capable of providing energy on their own.

The big knowledge gap in local communities for technical problems should be filled with capacity development by the government and expert partners with a sufficient period so that the community can be independent or with less supervision from the central, not only 1 span short program and then not continued in the next period.

One example of capacity development applied to local communities by the government and experts is The Patriot Energi program. By approximately 1 year of the program, energy independence can be increased in the community base. With a specified time, the possibility of areas that have not been fully independent should exist. However, the expectation of local communities who can explore and utilize renewable energy more deeply with qualified technical capabilities far outweighs these doubts.  It is not improbable that in the future, renewable energy technologies will be created by distant villages where the only access to electricity was provided by non-clean energy.

China’s Belt and Road Initiative Opportunities in Accelerating the Energy Transition in Indonesia

FT

Beijing, March 27, 2023 – The Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, highlighted that the Belt and Road Initiative (BRI) allowed China to play a role in accelerating the energy transition in Indonesia. He mentioned this as a guest speaker promoting green and low carbon transition in BRI participating countries and  CCICED particular policy study on green BRI workshop on Monday (27/3/2023).

“Indonesia must increase its ambition to make emission reductions compatible with the Paris Agreement. Under the current plan, Indonesia will achieve the energy sector’s net zero emission (NZE) after 2060, but the electricity sector will reach zero in 2050. For this reason, we need more efforts to decarbonize the transportation and industrial sectors,” explained Fabby.

He also underlined that Indonesia needs a cumulative investment of around USD 1.3 trillion spread across various technologies in the push for decarbonization. Under these conditions, Fabby said, China could play a role in supporting the energy transition in Indonesia through technology, manufacturing, and investment cooperation, considering that there is market potential in increasing demand for renewable energy in Indonesia.

“Solar power will play an important role in Indonesia’s energy transition. Based on the 2021-2030 Electricity Supply Business Plan (RUPTL), PLN plans to add 3.9 GW of solar energy in 2025. For this reason, BRI’s investment in 2023 needs to be focused on financially feasible projects, such as scalable solar and wind power plants, said Fabby Tumiwa.

On the other hand, the existence of BRI can enable investment in the renewable energy component industry. This can be done by considering the complexity of the supply chain. Fabby emphasized that industrialization in Southeast Asia accompanied the push for the energy transition, such as energy storage, electric vehicles, and solar panels.

“Currently, Indonesia has started to develop the battery and electric vehicle industry because of its great nickel content. Low production costs and availability of resources are several opportunities to develop the local solar module industry in Indonesia,” said Fabby.

On the same occasion, Deon Arinaldo, Energy Transformation Program Manager, Institute for Essential Services Reform (IESR), explained various power system plans and projections expected to accelerate the spread of renewable energy in Indonesia. For example, the latest power system energy planning stipulates around 20.9 GW of renewables to be built in 2030. This number will increase by at least 5-6 GW if Indonesia considers the Just Energy Transition Partnership (JETP) target of 34% renewable energy mix in 2030.

Deon Arinaldo, Manajer Program Transformasi Energi, Institute for Essential Services Reform (IESR)
Deon Arinaldo, Energy Transformation Program Manager

“To achieve the national policy target in 2025, the IEA projects an additional solar energy capacity of 17.7 GW above that planned in the RUPTL. Meanwhile, based on the IESR scenario, the power generation capacity based on renewable energy must be boosted to 140 GW to limit global warming to 1.5°C,” Deon explained.

However, said Deon, historically, the installed capacity of renewable energy has only grown around 500 MW per year. This happened because there were several main challenges, including excess capacity at the Java-Bali power plant. Moreover, the domination of coal power plant capacity with a take-or-pay mechanism needs to make room for the integration of renewable energy. Another challenge is the renewable energy procurement process and the requirements for using local content, which places unnecessary risks in developing renewable energy.