President Jokowi Instructs...

Luhut: President Jokowi Instructs Firmly for Immediate Energy Transition


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19 September 2021

Jakarta, 20 September 2021 - Indonesia needs to take several steps to accelerate the transition and development of renewable energy by 2050, including by aligning regulations and policies and encouraging investment in renewable energy.

Coordinating Minister for Maritime Affairs and Investment (Menko Marves), Luhut Binsar Pandjaitan said the Indonesian government would always be committed and tried its best to prevent an increase in the earth's temperature of 1.5 degrees Celsius. He stressed that President Jokowi's instructions explicitly ask for an immediate energy transition, even though the government is currently preparing an energy transition mechanism, especially for Indonesian coal-fired power plants.

"Financial support is very important to support the transition to renewable energy. Need help from developed countries to achieve carbon neutrality by 2060 or sooner. Currently, the transition of coal (coal) to renewable energy is underway. There are coal-fired power plants that must be dismissed and are being prepared with PLN. We are optimistic that it can be faster because technology is also developing so that it can be more efficient,” said Luhut in The 4th Indonesia Energy Transition Dialogue (IETD) organized by the Institute for Essential Services Reform (IESR) and the Indonesia Clean Energy Forum (ICEF), Monday ( 20/09/2021) virtually.

He said that, in Indonesia itself, the government is targeting tourism areas, especially Tob Lake and Bali  which will be neutral in 2045 or the 100th anniversary of Indonesia's independence.

“Lake Toba is possible (to phase out from fossil fuel-ed) because it has 1,000 megawatts of geothermal and a lot of hydropower energy, so that all life there no longer needs to use fossil energy. Likewise with Bali“

For him, the change is absolute even in the next six years. Because, currently all industries worth almost USD 100 billion have started to use renewable energy.

“We have great potential for renewable energy. By 2050 Europe will not use fossil fuels. We have goods from renewable energy or green products. PLN must also participate and make a start," he said.

On a different occasion, at the Press Conference of The 4th Indonesia Energy Transition Dialogue (IETD) 2021. The Director of Electricity, Telecommunications and Information at the Ministry of National Development Planning (Bappenas), Rachmat Mardiana, said that Bappenas had compiled several studies on Net Zero Emission. The study contains considerations of social, economic, environmental and funding needs to be able to accelerate decarbonization in Indonesia.

"Of course, for that we also need to look at efforts to reduce coal dependence through several efforts. For example, looking at future technological developments, the potential of hydrogen energy to meet the needs of transportation, industry, power plants," said Rachmat at the Press Conference of The 4th Indonesia Energy Transition Dialogue (IETD) 2021, Monday (20/09/2021) virtually.

Director General of New, Renewable Energy and Energy Conservation of the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said that the transition to renewable energy needs to wait for the Electricity Supply Business Plan (RUPTL).

"We will finish the RUPTL, investigate it from the budget side, whether it needs a state budget or replacement costs. Then we will inform the Ministry of Finance for the Presidential Decree on New Renewable Energy (EBT). This is already a process, soon the RUPTL will be discussed, then at the Ministry of Finance it will only be in terms of budget calculations," said Dadan.

In addition, the integration of renewable energy needs to be supported by solutions to overcome the oversupply from power plants. The Executive Director of Institute for Essential Services Reform (IESR), Fabby Tumiwa said that the condition of oversupply could be overcome together with deep decarbonization in the industrial and business sectors.

“The solution is that mitigation actions can be done by substituting heating energy that uses fossil fuels to use electricity. Second, the solution with roof PLTS is most effective. Official data from the government in 2019, the PLTS have 186MV, but data on the solar Energy Association is much larger, on 2020-2021 pipeline and complete that lasted until July a total of 480 mw," says Fabby.

Fabby said the government needs to open up investment opportunities for renewable energy projects. The IESR study shows that to meet the target of 23 percent of the renewable energy mix by 2025, the required investment is around US$14 billion to US$15 billion, or equivalent to Rp. 210 trillion.

Meanwhile, to achieve net zero emission, IESR estimates that the investment value required until 2030 will reach US$25 billion to US$30 billion per year, or around Rp 420 trillion per year. This figure will be higher in 2030–2050, reaching US$50 billion to US$60 billion per year. The investment value includes the development of low-carbon technology in the electricity, transportation, and industrial sectors. Fabby said the investment also includes the development of green hydrogen, as well as synthetic fuels for the transportation sector that cannot be electrified, such as planes and ships.

In terms of the coal industry, member of the Indonesia Clean Energy Forum (ICEF), Widhyawan Prawiraatmadja said the coal industry needed a stronger signal through a carbon tax to participate in the transformation and support the decarbonization of the energy system.

“In this context, we apply the tax carbon US$ 5 per ton. The actor will think that it's okay to tax it (low tax-ed). If this is the case then the rule is just not working. Unless it's like abroad, the tax is USD 50, you must have thought about using fossils," said Wawan.