2023 begins with the hope that Indonesia will accelerate its transition from fossil fuels to clean renewable energy sources.
For example, the government issued a presidential decree last year as the legal basis for phasing out the country's coal-fired power plants by 2050.
In addition, the government has set higher emissions targets. Under its 2022 climate targets, known as nationally determined contributions, Indonesia has increased its commitment to reduce business-as-usual emissions by 31.89% by 2030 (or 29% of the previous target). 43.20. % (in 41%).
Meanwhile, at the G20 summit, Indonesia will receive funding from the G7 countries, as well as Denmark, Norway and Ireland for its transition to the Northern Energy Partnership. The group of countries has pledged up to $20 billion in funding for emissions reduction projects in Indonesia.
However, 2022 has also seen repeated battles to control Indonesia's fossil fuel subsidy budget. To protect the purchasing power of Indonesians, the government has been forced to triple its energy subsidy budget in 2022 due to rising oil prices following Russia's invasion of Ukraine.
By this year 2023, Indonesia should focus on more radical steps for energy transition. There are at least three key areas that need to be addressed by 2023 for Indonesia to achieve its net zero climate goal.
Increasing renewable energy capacity
Due to the slowdown of Indonesia's biodiesel program, the growth of Indonesia's clean energy production has slowed until 2022, reducing the growth of renewable energy from 11.5% to 10.4% of total energy production.
Compared to the 4 GW increase in coal-fired power plant capacity on the island of Java last year, the increase in renewable power plant capacity was very small. This is the result of the economic recovery after the pandemic, which is still dependent on fossil fuels.
The first step this year is for the government to update its electricity supply business plan to align with 2022 climate targets. Renewable energy projects are expected to start in 2023, run until 2025 and be functional until 2030. .
2023 could be a turning point for Indonesia, with growing international support for the country's energy transition efforts. Several clean energy projects will start operating in 2023, such as the Patuha geothermal power plant in West Java (55 MW), the Pyusangan and Asahan hydropower plants in Aceh and North Sumatra (45 MW and 174 MW) and the Sirata Floating Power Plant. The season. Solar power plant in West Java (145 MW).
To encourage other renewable energy projects, the government should provide tax breaks and clarify and simplify the business process for renewable energy investments.
Also, regulations and incentives for installing rooftop solar panels in residential and commercial areas should be improved so that more people start using clean energy at home.
Making green hydrogen a reality
Green hydrogen is a clean fuel produced from renewable energy sources. Reducing emissions is important in electricity-intensive industries such as steel mills and cement plants.
Currently, Indonesia is starting to develop a green hydrogen industry. The government has set a target of 328 MW of green hydrogen production by 2030 and will increase it to 52 GW by 2060.
But there are some obstacles such as high cost of production and lack of supporting infrastructure.
By 2023, the government must take several steps to overcome these obstacles. They should draw up a detailed plan and develop supporting policies for the development of the green hydrogen industry. This not only saves production cost but also attracts domestic and foreign investment.
Second, the government should launch pilot projects to prove that the hydrogen industry is a good investment. This year, Pertamina (a state-owned company) plans to produce 100 kilograms of green hydrogen per day at Ulubelu Geothermal Lampung.
Prosperous nickel industry
The nickel industry is central to the electrification of transport and nickel is one of the main raw materials for the production of electric vehicle batteries.
Indonesia has the largest nickel deposits in the world. Unfortunately, most nickel is still exported as raw material.
In order to increase the price of nickel raw material, Indonesia has started to limit the export of nickel ore to fulfill its ambition to become the "king" of electric car battery producers in the world. But the policy has been hampered by a trade dispute with the European Union.
The government must act to achieve this objective by resolving disputes with the European Union. A thriving domestic nickel processing industry could drive sustainable economic growth and support the electrification of vehicles.
So far, government efforts to combat nickel have been lukewarm. Currently, nickel ore is only converted into semi-finished products with no added value.
By 2023 this year, the government must present a clear nickel treatment plan that focuses on end products such as batteries or electric vehicle components.
Indonesia has the potential to achieve net zero emissions by 2050 under the Paris Agreement. Hopefully this will lead to more sustainable economic growth.
