By Adila Isfandiari  and Tata Mustasya 
Published 4 July 2022
According to the World Resources Institute (WRI), which lists Indonesia as one of the world’s top 10 biggest emissions contributors, the energy sector contributes more than 70 percent of total global emissions so it should be prioritized to address the climate crisis. Carbon Brief ranks Indonesia among the top five global emitters, and data from the Environment and Forestry Ministry show that more than half of country’s carbon emissions, or 58 percent, is projected to come from the energy sector in 2030.
It is critically urgent that Indonesia prioritizes the energy transition to renewable energy in the national agenda, as the country is still heavily dependent on fossil fuels, especially for electricity generation, according to PLN’s 2021-2030 business plan.
Besides environmental considerations, the energy transition is a must to achieve energy security and inclusive energy access. Indonesia and the world will be haunted by an energy crisis involving scarcity, high prices and price volatility if it continues to depend on fossil fuels, such as coal, oil and gas.
We have learned a lot from the impacts of the Russia-Ukraine war. Fossil fuels are becoming more expensive and their supply has become uncertain, while renewable energy like solar is abundant and their production continues to be cheaper. Once an oil exporter, Indonesia has spent a lot of money on importing oil. It is a matter of time before it will end up doing the same with gas and coal.
Indonesia has positioned sustainable energy transition as one of the three pillars of its Group of 20 (G20) presidency this year, along with global health architecture and digital transformation. Domestically, the government is now trying to push the energy transition, as our renewable energy mix currently reaches just 11.2 percent, or less than half of the 2025 target of 23 percent, according to the energy ministry.
One measure to accelerate the energy transition is by formulating and passing a new renewable energy bill before the Bali G20 Summit, which could then also be an occasion for the government to announce its progress and thereby present Indonesia’s leadership in promoting the energy transition among G20 countries.
However, the main objective of the renewable energy bill has been tarnished by the insertion of fossil fuels and nuclear energy by calling them “new energy”. Substantially, the bill is supposed to be on “renewable energy”, instead of “new and renewable energy”.
As stated in Article 9 of the latest draft bill, the government uses the term “new energy” to accommodate coal derivative products, including coal liquefaction, coal gasification and coal bed methane, as well as nuclear energy.
The use of “new energy” in this way is astonishing and the term is not used in other countries, which only acknowledge renewable energy. Besides, the types of energy the term refers to are not substantially “new”. According to the National Nuclear Energy Agency (Batan), for example, Indonesia has been using nuclear energy since 1965.
Nuclear energy is now declining in economical viability worldwide. Statista has noted the increased closure of nuclear reactors across the world between 2005 and 2021 to around 80 reactors cumulatively. One example of this is in the United States, where nuclear reactors are shutting down because they cannot compete with the decreasing price of renewable energy, according to NPR.
According to the 2019 World Nuclear Industry Status Report (WNISR), the price of nuclear energy is three to five times greater than that of renewable energy, like solar and wind. Moreover, apart from the difficulty and high cost of building nuclear waste storage facilities, Batan says the country has limited uranium reserves that can power only one nuclear power plant for six years. We have to import the rest.
Meanwhile, coal gasification and liquefaction are also far from new, as these technologies have been used since 1970 to replace oil and natural gas. According to a study by the Institute for Energy Economics and Financial Analysis (IEEFA), producing dimethyl ether (DME) through coal gasification as a domestic substitute for liquefied petroleum gas (LPG) will incur significant economic losses for the government.
For instance, the IEEFA has estimated that a DME national strategic project proposed by state-owned Tambang Batubara Bukit Asam (PTBA) is estimated to cause annual losses of US$377 million. In addition, the Action for Ecology and People’s Emancipation (AEER) has stated that producing DME through coal gasification emits five times more carbon per ton than producing LPG.
According to Katadata.co.id, it seems that the government is brushing off all controversy and opposition to the term “new energy”. It is thus becoming even more unclear whether the new bill is meant to accelerate the country’s energy transition or accommodate specific projects that possibly involve interest groups. It seems like the government is neglecting the fact that Indonesia has very abundant sources of renewable energy that can produce the equivalent of seven times its installed electricity capacity today.
This renewable energy bill supposedly aims to accelerate the use of this type of energy, especially solar energy. According to Our World in Data, the price of solar energy has fallen 90 percent in the last decade alone, but Bisnis.com notes that the country has harnessed less than 1 percent of its potential.
The inclusion of coal derivative products and nuclear in the renewable energy bill leaves the energy transition open to a variety of incentives, support and subsidies dedicated to these misleading solutions instead of renewable energy. Take nuclear waste storage, for example. According to the bill’s latest draft, the state budget can be used to finance the development of this costly facility, while the bill also eases licensing for this dangerous facility. Rather, the government should dedicate its funds to solve PLN’s current financial crisis and not put the money in false solutions that will lead Indonesia to a technological lock-in.
Moreover, the inclusion of coal derivative products in the renewable energy bill is only driving Indonesia in the opposite direction from its COP26 commitment to phase out coal, including early retirement for coal-fueled power plants. It will send mixed signals to the world about whether the government is embracing renewable energy or remains stuck in its coal regime.
This will only jeopardize Indonesia’s G20 presidency that has brought the energy transition agenda to the global forum. We need to bring back the renewable energy bill’s original spirit and aim to accelerate a real transition in energy sources, from toxic fossil fuels to renewable energy.
Please don’t hijack the renewable energy bill.