Indonesia’s Climate Action and the Urgency to Decarbonize the Energy Sector

The Leader Summit on Climate that was held last April had revealed the real intention of countries in dealing with climate change. Many countries, including China as the current largest emitter globally, have pledged a clear target to reduce their emission. However, Indonesia has yet to show its vivid, let alone ambitious target to solve climate change.

During his speech, President Joko Widodo emphasized the importance of just regulation for the Forest and Land Use Conversion (FOLU) sector within climate frameworks. This was widely perceived as an attempt to call for fair treatment on Palm Oil, one of Indonesia’s main export commodities, which has been politically contested by its counterparts for years. But this attempt was severely misplaced. While diplomatic attempt for fair treatment is necessary, Indonesia’s government should look into the event’s root cause before setting up its agenda.

When discussing climate change, it is obvious that the energy sector should be put ahead in the conversation. The energy sector is currently producing two-third of global emission and is projected to emit 58% of Indonesia’s total emission by 2030 (IESR, Agora Energiewende, LUT University, 2021). Scientists and think-tank organizations have consistently stated that high dependency on fossil fuels will be the cause of the catastrophe. Therefore, the only answer to the problem is to transform the energy sector from fossil fuelled-based sector into a clean and renewables-based one.

The Status Quo

Regarding climate target, Indonesia has actually pledged to reach net-zero by 2070 through the Long-term Strategy on Low Carbon and Climate Resilience 2050 (LTS-LCCR 2050). The problem is, the target is still unaligned with the climate target set in Paris Agreement. To keep global warming below 1.5º Celsius, the net-zero should be achieved by at least 2050. Moreover, the LTS-LCCR also lacks adequate measures and clear indicators to decarbonize the energy sector.

Within the LTS-LCCR, Indonesia targeted new and renewable energy to fulfill 33% of the national energy mix by 2050 (KLHK, 2021). This target is simply not enough, as Indonesia still expects more coal proportion within the same timeline. Many scholars and activists have called the government to increase the target. For example, the Indonesian Renewable Energy Society (METI) has proposed that Indonesia should reach at least 50% renewable energy by 2050 (Purningsih, 2021). A report from Institute for Essential Service Reform (IESR) even suggests that Indonesia can reach the net-zero by 2050, noting that it undergoes deep decarbonization in the energy system and uses 100% renewables share in the energy mix (IESR, Agora Energiewende, LUT University, 2021).

The question now lies at how to accelerate the proportion of renewables in the energy sector. Until the end of 2020, new and renewable energy had only contributed to 11.51% of Indonesia’s energy mix (Meilanova, 2021). To accelerate the utilization of renewable energy at an unprecedented rate, Indonesia must consider two important points. The first is to stimulate renewable energy through supportive regulatory frameworks. The second and not less important is to limit the growth of fossil fuel utilization in the energy sector. In simpler words, Indonesia should take a stand to favor the utilization of renewables instead of fossil fuels.

Nonetheless, the existing regulatory frameworks in the energy sector indicate that Indonesia still favors fossil fuels (Bridle et al, 2018). For example, in electricity generation, Regulations 12/2017 and 50/2017 capped power purchase prices at 85% of local average generation cost (BPP), which is too low for renewables power developers to recover their investment. On the other hand, Indonesia allocates a huge amount of subsidy for the coal industry, pushing the price of electricity produced by coal-powered generation to be lower than the market price. Considering that renewables’ prices are linked to this price through the BPP, unsubsidized renewables are now competing against subsidized coal generation.

Through its state-owned electricity company (PLN), Indonesia also announced that it will stop building new coal-fired power plants by 2023 and only develop renewable power plants afterwards (Husaini, 2021). While this marks a bold move for PLN to decarbonize Indonesia’s electricity system, the company still plans to develop 15 new coal-fired power plants with 336.8 MW total capacity (Meilanova, 2021b). It shows that PLN still holds the interest of promoting the utilization of fossil fuels despite a significant shift within its agenda.

What Needs to Be Done

To achieve something extraordinary, we need to do something extraordinary. It goes the same with climate target: Indonesia will not overcome climate change problem if it does not consider taking extraordinary measures.

To date, Indonesia’s House of Representatives (DPR-RI) is still drafting the bill of new and renewable energy (RUU EBT). Many expect that the bill will be a gamechanger for the existing regulatory framework in the energy sector. However, the current draft shows that there are points that need to be addressed. The main issue is prioritizing renewables to be stimulated instead of other kinds of new energies. Other issues include regional government participation, integrated inventory of energy potentials, subjects to the new incentives, and etc.

Ensuring that DPR-RI passes a proper framework that supports clean renewables will be important should Indonesia expect more climate action in the future. Other derivative laws also need to be arranged in line with the interest of deploying massive renewables utilization. Accordingly, Indonesia has to review the existing regulatory framework that still favors fossil fuels and create ones that endorse renewable energy. While DPR-RI and related government bodies are working for them, civil society must give recommendations and put political pressures to prevent any contradicted interest.

Furthermore, Indonesia needs to put greater commitment to divest from fossil fuels project. The opposition of this movement often argues that divesting from fossil fuels project is not economically feasible. In fact, it is sometimes profitable, especially in terms of building new power generators. A report from World Research Institute (WRI) suggests that investment in dirty energy projects, including coal-fired power plants, will result in stranded assets in the future (Chrysolite et al, 2020). Therefore, it will be rational for PLN to stop developing new coal-fired power plants instead of making new ones before entering the moratorium period in 2023.

Conclusion

Climate action will most likely become the main agenda for global leaders in the upcoming years. Indonesia shall catch the train and take the initiative where possible. President Joko Widodo has yet to pledge any clear climate target in international forums, and this should change imminently. The government can start taking the initiative by addressing its most carbon-intensive sector. While behavioral change is indeed essential, structural change in the energy sector will be the key for Indonesia’s climate action.

Reference:

Bridle et al, R. (2018). Missing the 23 Per Cent Target: Roadblocks to the development of renewable energy in Indonesia. Geneva: GSI Report.

Chrysolite et al, H. (2020). Looking Past The Horizon: The Case For Indonesia’s Long-Term Strategy For Climate Action. Jakarta: WRI Indonesia.

Husaini, A. (2021, May 7). Demi zero emisi, PLN moratorium pembangunan pembangkit batubara. Retrieved from Kontan: https://industri.kontan.co.id/news/demi-zero-emisi-pln-moratorium-pembangunan-pembangkit-batubara

IESR, Agora Energiewende, LUT University. (2021). Deep decarbonization of Indonesia’s energy system: A pathway to zero emissions by 2050. Jakarta: Institute for Essential Services Reform (IESR).

Indonesian Center for Environmental Law. (2021). Dua Isu Krusial Dalam Rancangan Undang-undang Energi Baru Terbarukan. Jakarta: Indonesian Center for Environmental Law.

KLHK. (2021). Long-term Strategy on Low Carbon and Climate Resilience 2050. Jakarta: Direktur Jenderal Pengaturan Perubahan Iklim KLHK.

Meilanova, D. R. (2021, January 15). Bauran EBT Mencapai 11,51 Persen, Masih di Bawah Target. Retrieved from Bisnis: https://ekonomi.bisnis.com/read/20210115/44/1343449/bauran-ebt-mencapai-1151-persen-masih-di-bawah-target

Meilanova, D. R. (2021, May 28). PLN Lanjutkan 15 Proyek Pembangkit Listrik Mangkrak Warisan Program FTP. Retrieved from Bisnis: https://ekonomi.bisnis.com/read/20210528/44/1398763/pln-lanjutkan-15-proyek-pembangkit-listrik-mangkrak-warisan-program-ftp

Purningsih, D. (2021, April 20). Energi Terbarukan, Kunci Indonesia Mencapai Target Net-Zero Emission. Retrieved from Berita Harian Greeners: https://www.greeners.co/berita/energi-terbarukan-kunci-indonesia-mencapai-target-net-zero-emission/

Aji Said Muhammad Iqbal Fajri adalah Co-Founder Adidaya Initiative & Mahasiswa Master International Energy, Paris School of International Affairs, SciencesPo. Dapat ditemui di instagram dengan nama pengguna @ajisaidiqbal.