Indonesia’s energy transition continues to face headwinds


Indonesia is one of the world's leading coal producers. Nonetheless, it has pledged to cut back on its usage of fossil fuels in the near future.

Last year, Indonesia signed five agreements to cut its carbon emissions. Among these was the $20 billion Just Energy Transition Partnership (JETP) deal, which was reached last November during the Group of 20 conference in Bali. The deal intends to turn one of the world's top coal-producing countries toward clean energy alternatives. However, experts warn that numerous challenges must be solved.

David Elzinga, principal energy specialist at the Asian Development Bank, called Indonesia's energy transformation "unusual." This is due to the country's rapid economic expansion, location, population centers, and "clean energy" potential, he said.

Indonesia has the ability to generate electricity from the sun, dams, the earth's heat, and wind. Yet, according to the International Renewable Energy Agency, only approximately 12% of its energy potential is utilized. Coal, gas, and oil meet nearly all energy demand, with coal accounting for 60%.

According to the International Energy Agency, Indonesia's energy industry emissions equaled roughly 600 million tons of CO2 in 2021. That is the world's ninth highest sum of emissions. Indonesia has the world's fourth biggest population. Its population and economic growth are predicted to triple the country's energy consumption by 2050.

Elzinga said that it is difficult to make changes when there is such rapid growth. Many more developed economies have higher renewable energy targets. Nevertheless, researchers say no country is currently reaching global climate goals.

Officials in Indonesia have begun to change. For example, they have introduced new solar energy regulations. They have also set a target to increase electric vehicle sales to 25% of overall vehicle sales by 2030. Yet, experts worry that Indonesia lags behind other Southeast Asian countries.

With the new JETP deal, Indonesia is committed to achieve net zero emissions from the power sector by 2050, a decade earlier than previously planned, and to reach a peak in those emissions by 2030.

It is raising its objective for renewable energy to account for more than a third of total power generation by 2030, which would require twice the present rate of deployment.

However, Elrika Hamdi, an energy finance expert at the Institute for Energy Economic, said that funding is still an issue. According to one estimate, Indonesia's energy system will require up to $2.4 trillion in investment by 2050.

Another issue raised by activists is that the JETP deal does not specify whether Indonesia will face constraints when building new coal plants. A 2022 presidential rule authorizes coal facilities that were planned earlier to be constructed.

CEO of PLN, the Indonesian state-owned electrical utility. said that the business had already scrapped some coal power facilities. The official stated that he is “committed to lead the energy transition in Indonesia.”

Daniel Kurniawan, a researcher for the Institute for Essential Services Reform in Jakarta, said that Indonesia has yet to developed a solid solar energy policy and there is a lack of political will in Indonesia to transition away from coal power. 

But, he added, “That is bound to change with JETP.”














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