Prabowo announced an ambitious net-zero target at the G20 leaders' summit. (Photo: Prabowo Subianto's facebook)
Indonesian President Prabowo Subianto recently announced an ambitious climate commitment, drawing significant attention and discussion.
Sam Kimmins, Director of Energy at The Climate Group and Chair of the RE100 renewable energy initiative, expressed on social media, "This is huge news, and places Indonesia ahead of the USA." Other think tanks also have highlighted the challenges the Indonesian government will face moving forward.
IESR suggests to cut 11% of coal power in 6 years
The Institute for Essential Services Reform (IESR), a private think tank based in Jakarta, believes that for Indonesia to achieve net-zero emissions by 2050—ten years ahead of schedule—it must take immediate action to reduce coal-fired power generation. The institute suggests that reducing coal power by 11% by the end of 2030 would be a crucial first step.
IESR Executive Director Fabby Tumiwa stated, "This reduction is important to open up space for greater penetration of renewable energy in our energy mix. By 2030, renewable energy is expected to reach 40% in the primary energy mix of the electricity sector."
Indonesia currently relies heavily on coal and natural gas, which together account for nearly 80% of its power supply. To shift its energy structure, Indonesia must address the issue of prematurely retiring coal power plants and the associated additional costs, including long-term energy contracts. Fabby suggests that these costs can be managed through carbon trading and blended finance involving both public and private sectors.
IESR also suggests the creation of a cross-ministerial carbon reduction task force reporting directly to the president. Additionally, the institute estimates that Indonesia will need $1.2 trillion for energy storage and grid development. If Indonesia can immediately retire inefficient coal power plants with a capacity of 4.5 GW, it could reduce carbon emissions by 28.8 million tons annually.
Indonesia currently relies heavily on coal and natural gas, which together account for nearly 80% of its power supply. (Photo: iStock)
JETP delays threaten Indonesia’s energy transition
BMI, a research unit of Fitch Group, analyzed Indonesia's situation and suggested that, given the country's heavy reliance on coal and the slow development of alternative energy sources, fully eliminating coal by 2040 seems "unlikely."
However, BMI also noted that their analysis will be updated after the Indonesian government takes more definitive actions. "We note that risks to new coal capacity and generation could be to the downside, as the government begins to consider the decarbonization of its energy sector and coal financing faces strong headwinds globally," BMI stated.
Although Indonesia secured $20 billion in funding through the Just Energy Transition Partnership (JETP) for the early retirement of coal power plants, the funds have not yet been fully disbursed. BMI believes that securing additional funding from international partners like JETP will be crucial to the speed and success of Indonesia's energy transition.
BMI also suggests continued policy discussions and adjustments to address the complexities of the energy transition. The think tank emphasizes the importance of renewable energy developments, including geothermal, hydropower, and nuclear energy, totaling 75 GW, and highlights the potential of the green smart grid being developed by state-owned electricity company PLN as key areas to watch.
Source: Tanahair, The Edge Singapore
