COP28 in Dubai resulted in ambitious agreements in the energy sector to ensure global temperature rise does not exceed 1.5°C. Some of the agreements from COP28 included tripling renewable energy and doubling energy efficiency by 2030. Additionally, the agreements aim to accelerate the phase-down of coal-fired power plants and the transition from fossil fuels to achieve Net Zero Emission (NZE) by 2050. While this agreement affects the parties involved, especially countries that are still reliant on fossil fuels like Indonesia, it also provides Indonesia with opportunities for a transition to renewable energy by considering sustainable development and overcoming poverty. As the Indonesia Research Institute for Decarbonization (IRID) finds it essential, a discussion on "COP28 and Its Impacts towards Indonesia's Energy Sector" was held on 18 January 2024 to gather more understanding from wider stakeholders on the issue. Some of the key findings from the discussion are the following:
Challenges
- Despite Indonesia's abundant energy resources, Indonesia is facing various challenges regarding to develop more renewable energy-based power plants. First, the sources are scattered in various places in Indonesia, which require innovative solutions to utilize them. Another challenge is on the lack of human resources with the right competence in these areas, to develop the potential renewable energy power plants. However, this kind of situation can be used by Small and Medium Enterprises (SMEs) as an opportunity to be directly involved, but developing the feasibility studies become a challenge for them.
- The issue of access to electricity. Government of Indonesia views that ensuring all people to have access to electricity still placed as a top priority. At this moment, not all households in Indonesia have the ability to pay for electrical installations , which costs between IDR 400,000-IDR 500,000 for 450 VA, aside from the required officer who does the installation . Another challenge is the uneven power grid and infrastructure in all regions. Currently, Indonesia has limited inter-island transmission, such as those between Java and Sumatra. Transmission lines are crucial to ensure renewable energy-based sources for power plants to be utilized and distribute the generated electricity, to other regions. Way forward
- The Government of Indonesia plays a role to formulate all regulations to support the achievement of tripling renewable energy, including who will bear the risks of energy transition. If the risks need to be borne by the people, then electricity tariff will increase. But if the Government of Indonesia is the one who will bear the risks, then the subsidies or compensations must increase.
- Ensuring equal electricity access and infrastructure across Indonesia is not an easy task. However, the decision-making process in the policies and investments, remains the main thing. The Government of Indonesia has initiated Public-Private Partnerships in non-commercial projects on infrastructure, such as at PLTU Batang, Medan-Kualanamu toll road, Jakarta Airport Express, and cruise ship port in Benoa, Bali. These projects often take a long time to complete, with some remains unfinished. To minimize similar issues occur in energy transition projects, increased investment from other parties is necessary.
- To implement the subsidies policies, the Government of Indonesia needs to undertake a thorough analysis for the subsidies to be effective and well targeted. As mandated by Law No. 30/2007 on Energy, the Government of Indonesia must consider the best mechanism that can be well implemented. For instance, how the Government tested the effectivity of biometric technology in the Liquified Petroleum Gas (LPG) transaction, to ensure it is well targeted.
- The Government of Indonesia must address the existing entry barriers within the community, such as the subsidy for LPG and electricity tariff. To replace the use of firewood and benefitting the LPG subsidy, the community will need to buy gas cylinder and stoves which are quite expensive. To benefit from cheap electricity tariff, people will need to pay for the installation themselves. A mechanism to overcome these kind of entry barriers, needs to be developed by the Government of Indonesia.
NB: (This original publication is only available in Bahasa Indonesia)
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