Indonesia is far from net zero emission
The President of Indonesia, Joko Widodo, spoke at the MPR Annual Session and the DPR
Joint Session on August 16 2022. He conveyed the agenda of the ideals of Indonesia Maju.
One of which is the green energy transition. Jokowi shows an attitude of optimism in
realising an inclusive and sustainable. At the 2021 National Development Planning
Conference, President Jokowi said that if Indonesia could implement this agenda, Indonesia
could achieve better national development.
Indonesia has made efforts to reduce gas emissions or help the transformation from fossil
energy to green energy. In 2022, at the G2O Summit in Bali, Indonesia launched the Just
Energy Transition Partnership (JETP) by relying on a financing scheme of USD 20 billion
from the member countries International Partners Group (IPG) – European Union, United
States, Canada, Denmark, France, Germany, Norway and the United Kingdom – and
coordinated by the Glasgow Financial Alliance for Net Zero (GFANZ). Each of them
provided funds amounting to USD 10 billion.
Retno Marsudi, Minister of Foreign Affairs of Indonesia, is also diplomatic with other
countries. With Norway, for example, Marsudi met with the Norwegian Minister of Foreign
Affairs, Anniken Huitfeldt, by agreeing to a Memorandum of Understanding (MoU) on the
forestry sector; Norway is committed to assisting Indonesia with USD 250 million in the
context of implementing JETP.
According to a statement from the Ministry of Environment and Forestry, the efforts that
have been made make Indonesia optimistic about reducing the greenhouse effect from 29% to
41% in 2030.
The Problem Is Not 'Green'
Even though there have been efforts, Indonesia still needs to be affected by quite a few big
problems and challenges in carrying out the energy transition.
First, even though it has repeatedly issued statements regarding clean energy, Indonesia still
needs to fulfil its commitments. Indonesia’s primary energy is still driven by non-renewable
energy. The Center of Economic and Law Studies (CELIOS) released a study in 2024
showing that Indonesia's dependence on coal and oil is still very large. Two of the reasons are
the economical price and the large potential space for miners. This is what makes Indonesia
still experience an 'addiction' to non-renewable energy.
The coal sector, for example, increased from 100.51 million barrels to 167.41 million barrels.
This figure shows a peak in 2022 of 299.19 million barrels. Although there is a decline in
2020 and 2021, it does not show a significant figure.
The weakness of this commitment is also shown by private and state banks, which support
the non-renewable project. In the case of PT Adaro Energy Tbk, on May 12 2023, Bank
Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Central Asia
(BCA), and Bank Permata contributed USD 1.75 billion in funds for the construction of the
PLTU with 1.1 gigawatts in North Kalimantan. This disbursement of funds, according to the
Director of the Center of Economic and Law Studies (CELIOS), Bhima Yudhistira, still
argues that the rate of return of loan funds is still high. In fact, there has been a lot of
encouragement in the construction of the Adaro project to move away from using coal.
Several banks, such as CIMB Niaga Bank, Standard Chartered, Mizuho Bank and HSBC
Bank, withdrew from the coal business.
The green energy mix target in 2030 reaches 44%. According to Harryadi Mahardika,
Director of the Clean Transition Program, Indonesia's lack of seriousness towards the energy
transition is also accompanied by an increase in the 35 Gigawatt (GW) Program - the
electricity program - the majority of which is still dominated by coal-based PLTU.
Kompas, the Indonesian media, at the beginning of 2023, issued an article showing that the
contribution of renewable energy to energy consumption in 2022 will still be at 12.3%, an
increase of 0.1% from the previous year. This data shows that Indonesia still needs to reach
the government's target of achieving 23% in 2025. In fact, the government also failed to meet
the target in 2022 of 15.7%.
According to Saudi Arabia's oil company, Aramco, Amin Nasser, reducing gas emissions is
just a 'fantasy' for the country because instead of reducing demand, Naseer predicts there will
actually be an increase in the next few years. Therefore, countries, including Indonesia, still
lack commitment.
Second, the JETP scheme still needs to be clarified. In terms of financing provided by IPG, it
will still be in the form of debt. However, it is feared that this section could burden the fiscal
sector, resulting in Indonesia entering a debt trap. Data from Kata Data in 2023 shows that
60% will still be concessional loans, 17% in the form of guarantees from the US and UK
through the International Bank of Reconstruction and Development (IBRD), 14% are non-
concessional, the remaining percentage is in the form of equity investment and grant funds. In
addition, the GFANZ group still needs to make financing details. This is dangerous if the
Indonesian government is not careful.
The launch of CIPP JETP had a minor impact on the facts on the ground. Before the
publication of CIPP JETP, Indonesia had launched its Energy Transition Mechanism (ETM)
on November 14, 2023, with the Asian Development Bank (ADB). In this document,
Indonesia decided that the Cirebon-1 PLTU, with a capacity of 1x660 Mega Watt (MW),
would retire early in 2035, and the Pelabuhan Ratu PLTU in 2037. Even though they are
already in the ETM, these two PLTUs remain a priority for early retirement in the CIPP JETP
document. According to the government, this pension policy is a compliance action to reduce
global emissions. However, on the other hand, this step is still 'repetitive.' Indonesia has
never been serious about solving environmental problems by diversifying other PLTUs.
Like PLTU Suralaya and PLTU Paiton, which will be targeted for early retirement, the
Executive Director of WALHI West Java, Wahyudi Iwang, pointed out that the early
retirement schemes for PLTU Cirebon -1 and Pelabuhan Ratu do not reflect the principles of
justice. According to Iwang, in the ETM scheme, the ADB did not provide information to the
public regarding the consequences of the decision. One way is to use techniqueco-firing.
Based on reports and research results from the Center for Research on Energy and Clean Air
(CREA) and the Institute for Essential Services Reform (IESR), the effectiveness of this
technique can only reduce emissions by around 20%. This method will still have an impact
on air pollution, especially on public health.
Third, (if) the Indonesian government prepares for an energy transition, not all regions can do
it. This is a negative trend in the context of equal distribution of green energy. Based on a
study by Media Wahyudi Askar and Achmad Hanif Imaduddin entitled "Indonesia's Energy
Transition Readiness Index: Mapping Current Conditions and Navigating the Future of the
Energy Sector" shows that DKI Jakarta occupies the top position with a score of 84.24,
followed by DI Yogyakarta (66.4), Banten (58.5), Central Java (55.22), West Java (55.19),
and East Java (52.89). On the other hand, provinces outside Java are still prevented from
following the energy transition trend, such as Papua, Central Sulawesi, Bangka Belitung and
West Papua, the majority of which are still below a score of 40.
According to Askar and Imaduddin, provinces with high averages are supported by sufficient
financial capabilities. Until 2020, for example, as many as 90% of Solar Power Plants (PLTS)
are still located on the island of Java. However, provinces with low scores still need help with
access due to, among other things, the electrification ratio. When compared on a national
scale, these provinces are still below 99.2%. Another challenge is human resources (HR).
Provinces with low scores tend to have low human resources in understanding foreign
languages and technology such as computers and electronics.
It can be concluded that the Indonesian government's commitment to implementing a green
energy transition still needs to be improved, especially when the government failed to
implement mixed energy towards NZE. Apart from minimal commitment, the energy
transition in Indonesia still needs to be characterised by unclear JETP schemes and equal
distribution in each region. Therefore, Indonesia is not ready to carry out the green energy
transition.
