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Part 1: Barriers of Indonesia’s slow clean energy transition

Updated: Jan 24, 2021

Hello, this is Cynthia from Think Team!

These days, I have been working on managing one of the European Commission project, TIPPING+ that is involved. This project aims to provide empirically grounded and robust knowledge of the critical concept of Social-Ecological Tipping Points (SETPs ) to contribute to a successful clean energy transition in coal and carbon-intensive regions like Indonesia. There are multiple social dimensions and perspectives that this project will look at: social, cultural, policy and governance, and economic dimensions. For Indonesia's case study, we focus on how the progressive clean energy transition in the electricity sector and how household biogas could contribute to increasing renewable uptake.

Perhaps our CEO already gave some hints through his blog here that Indonesia is one of the last countries that have increasing coal use for the last decade. You may also notice that more countries already pledged by law to aim zero carbon emissions, such as Sweden, France, the United Kingdom, China, Japan, and South Korea. However, less than half the world’s countries stand behind the “start” line of zero carbon emission commitment in which the energy sector is perceived to have the biggest contribution towards decarbonization. How about Indonesia, then?

It’s been 200 days from the date of the TIPPING+ kick-off; the more I explore, the more exciting yet challenging this topic is. Along the process, I got opportunities to engage with myriad stakeholders (e.g. government, NGOs, companies) to collect their perspectives on the ongoing clean energy transition in the country. From this, I think we should understand the barriers hindering Indonesia's decarbonization. In this blog, I will pinpoint economic barriers that I often capture whenever the stakeholders are asked the causes why they think Indonesia is considerably slow in a clean energy transition. The answer is “clean energy is still considered expensive!”. This perspective is not only applied to the local community as the users but also the governmental agencies.

For those who do not have clue why there are some causes that I learned from the stakeholders, we engaged as shown in the figure below.

Firstly, the externalities cost of coal is not included in the cost structure of coal use. For instance, waste management and health risk born by the local community due to its air pollutants (e.g., carbon monoxide, sulfur, and particulates). Secondly, like other fossil fuels, coal is still subsidized by the government. The government spending on fossil fuels is comparatively higher than other productive sectors like health and infrastructure. This trend was slightly changed by the current president, Jokowi Widodo to push more economic growth through infrastructure and education development since 2015. However, the position of coal as the backbone of electricity supply remains dominant ( at least 54% of the total electricity supply in 2019). Also, there are still planned new coal power plants are still at least at the construction stage. This implies Indonesia might still rely on coal at least for the next 20 years.

Indonesian Government Subsidy on Energy compared to other sectors (USD Billion)

Another cause is the domestic technological development of clean energy is not yet mature enough thus importing seems the only way of the provision. By doing this, the additional cost is required (e.g. tax, transportation costs, etc) before the technology is implemented. On the other hand, the purchasing power of the community is still uneven. Some stakeholders mentioned that there is still a segment of the community who do not really care about the electricity sources as long as they could get the ‘cheap’ electricity. These four causes lead to renewable cannot beat the position of fossil fuels then eventually leads to the reluctancy in adopting clean energy. I can assure you there are still many reasons why Indonesia is considerably slow moving towards clean energy transition. Perhaps, I will put it in my upcoming blogs 😉

So, do you think Indonesia could suddenly shift toward a clean energy transition to catch up? TIPPING+ project will try to answer this question by collaborating with other 20 case studies from other parts of the world. Please look forward to more updates about the project. 😊

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