Indonesia Faces Difficulties with Clean Energy Transition

Indonesia Faces Difficulties with Clean Energy Transition

One of the major producers of coal in the world is Indonesia. However, it has committed to using fewer fossil fuels in the ensuing years.

Indonesia reached five agreements to reduce its emissions of carbon gases last year. The $20 billion Just Energy Transition Partnership (JETP) agreement was one of them. It was decided upon at the Group of 20 gathering in Bali in November of last year. The agreement aims to shift one of the top coal-producing nations toward renewable energy sources. But experts warn many difficulties need to be overcome.

The Asian Development Bank employs David Elzinga. He said that Indonesia’s energy transition is “very unique.” That is because of the country’s high economic growth, geography, population centers and possibilities for “clean energy,” he said.

The sun, dams, the earth’s heat, and wind can all be used in Indonesia to generate electricity. But the International Renewable Energy Agency says only about 12 percent of its energy potential is used. Coal, gas, and oil account for the majority of the world’s energy supply, with coal providing 60% of it.

According to the International Energy Agency, Indonesia’s energy-related emissions in 2021 amounted to about 600 million tons of carbon dioxide. The number of emissions is ninth highest in the entire world. Indonesia has the fourth-largest population in the world. By 2050, it’s anticipated that the country’s population and economic growth will have tripled energy consumption.

When there has been such significant growth, Elzinga claimed it is difficult to implement change. Greater goals for renewable energy exist in many more advanced economies. But researchers say no country is currently meeting world climate goals.

Change has begun among Indonesian officials. New regulations for solar energy, for instance, have been announced. By 2030, they want to see sales of electric vehicles reach 25% of all vehicle sales. Experts caution that Indonesia is lagging behind other Southeast Asian countries.

With the JETP deal, Indonesia is promising to reach “net zero” emissions from its power industry by 2050. By doing so, the nation pledges to offset its carbon emissions with carbon emissions from carbon capture.

By 2030, more than one-third of all electricity will be produced in Indonesia, according to a similar pledge.

Finances, according to Elrika Hamdi, are still an issue. She works for the Institute for Energy Economics and Financial Analysis as a specialist in energy finance. According to one estimate, Indonesia’s energy system will require investments totaling up to $2.4 trillion by 2050.

“To find out, we still have a ways to go…how we could gather up the financing to do this,” said Hamdi.

Another issue raised by activists is that it is unclear from the JETP agreement whether Indonesia would be subject to any limitations on the construction of new coal plants. The construction of coal plants that were initially planned is permitted by a presidential decree from 2022.

The economy of Indonesia benefits greatly from coal. The nation exports the most goods per unit of weight in the entire world. The war in Ukraine has also caused an increase in energy prices. For the next two to three years, Hamdi predicted that prices will likely stay high.

“You can understand the rationale for them wanting to develop their industries and their natural resources,” Elzinga said.

The electricity provider in Indonesia is called PLN. In a statement to The Associated Press, the chief of The company, according to PLN, has already canceled a few coal power plants. The official said he is “committed to lead the energy transition in Indonesia.”

The Institute for Essential Services Reform’s Daniel Kurniawan is a researcher who is based in Jakarta. According to him, Indonesia doesn’t have a robust solar energy policy. According to him, Indonesia lacks the political will to abandon coal as a source of energy.

But, he added, “With JETP, that will undoubtedly alter.”

Indonesia Mining Association employee Muliawan Margadana. The issue of communities dependent on the coal industry was brought up by him. For instance, coal accounts for 35% of the economy and nearly 9% of jobs in East Kalimantan.

However, Margadana and Hamdi asserted that it is feasible to retrain employees.

The money should be spent “to help these impacted workers, whether through upskilling, reskilling, or community development,” added Hamdi.


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