FPCI SPOTLIGHT #1

Indonesia & its Pledge
Trilemma of Responsibility: Conference of the Parties 26

Written by:
Athar Raihan Muhammad (Head of Research and Analysis at FPCI Chapter UNDIP)
Muhammad Fatih Khudri (Research Fellow at FPCI Chapter UNDIP)
Paulino Deo Pramana Barus (Research Fellow at FPCI Chapter UNDIP)

Coal, as one of the dearest and closest substances in our economy as it is in our anthropological history as of today, has also become the main substance of various roundtables and discussion around the globe over its ability to power the world. Widely used as the world’s main energy and electricity source, today it remains one of the most economically efficient substances amongst various other methods of energy production In addition, gasification and coal liquefaction can produce gas and liquid fuels that can be easily transported and stored, and various other benefits. However, as history progresses, the seemingly efficient source of prosperity started to pose its bad backs, as its significant impacts towards global climate were revealed. Coal is the biggest contributor to anthropogenic climate change. Coal burning accounts for 46% of worldwide carbon dioxide emissions and 72% of total greenhouse gas emissions from the electricity sector. Further impacts can increase global temperatures and clearly have a negative impact on the earth. (End Coal, n.d)

This has clearly received the attention of the Conference of The Parties (COP) which is in the same time series as the UNFCCC. Focusing on COP 25th and COP 26th, then an agreement was reached on dealing with the impact of this coal. At COP 25th, the World Coal Association responded positively to the Paris Agreement, as an opportunity to renew commitments to finance low emission technologies. However, it does not mean the transition from coal. Rather it is a transition to technologies that achieve zero emissions, such as carbon capture, use and storage (CCUS). At COP 25th, WCA will continue to advocate for policy equality for all low emission technologies, including HELE (high efficiency, low emissions) coal and CCUS, in addition to calling for greater action against CCUS. The adoption of these technologies will be key to the transition to clean energy, and the real implementation of the Paris Agreement, and so on. (World Coal Association ,2021). Furthermore, at COP 26th,calling on the world to reduce carbon dioxide emissions by 45%. Through the Glasgow Climate Pact, efforts are called to accelerate towards the gradual cessation of coal-fired power plants. (Human Rights Watch, 2021)

So how does Indonesia respond to this? As a coal exporter, and the 7th largest coal power producer in the world, with an estimated profit of $38 billion in the first half of 2021, it seems very difficult to make the transition to renewable energy that is more environmentally friendly and cleaner. In addition, coal, which is still one of the main energies in Indonesia’s economic development, and the lives of its people, will certainly be a dilemma for the Indonesian government in facing such a decision. So from this, this becomes a problem and needs to find a way out and can be solved. Though beforehand, let’s take a step back to see how the world around us progresses with the narrative.

The World’s Story

As one of the implementations of the Paris Agreement, states that are concerned, are united in fulfilling their commitments. Through the World Meteorological Organization (WMO) and partners, initiated the development of the Integrated Global Greenhouse Gas Information System (IG3IS) (WMO, 2020). This organization aims to serve those who are willing and able to take action to reduce greenhouse gas and pollutant emissions. IG3IS, more or less succeeded in helping the handling of greenhouse gasses. Like the UK, which managed to reduce greenhouse gas emissions by 43% (Tarasova, BIG IG3IS Science Team and WMO Research Department, n.d). Then there’s the Indianapolis Flux Project to measure sources of CO2, and CH4 to achieve high temporal resolution at both spatial resolutions, and others.In terms of progress and setbacks in international efforts to deal with climate change, it is possible to compare the results or efforts taken from COP 25 and COP 26. The goal of the COP itself, especially at COP 26, is to achieve net zero (Elementa, 2017).

First, clean energy is growing rapidly. Renewable energy from solar and wind combined generated 1.7% of global electricity in 2010 according to a World Resource Institution report. In 2020 this increased to 8.7%, a clearly significant development. On the other hand, renewable energy has fallen dramatically, due to technological developments and high production.

Second, renewal of emission pledges. More and more countries are proposing to increase their “Nationally Determined Contribution (NDC), i.e. the country’s pledge to reduce emissions. COP 26 is a big test because the Paris Agreement has a “Ratchet mechanism” that makes the countries concerned make even bolder goals to maintain the 1.5 C goal. It is hoped that from the commitments of countries committed to reducing gas emissions by almost three quarters or 72% of global emissions. If this plan is fully implemented, it will open a gap or a way to achieve the desired goals. But it’s all bullshit without action.

Third, the largest polluter in the world. After COP26, President Xi Jinping announced at the United Nations General Assembly (UNGA), in September that the country in the world will not build any more coal-fired power plants overseas. However, there is no commitment to reduce China’s booming domestic coal production. In 2020, China announced it would strive “to reach peak carbon dioxide emissions by 2030, and achieve carbon emission neutrality by 2060, as did Russia and Saudi Arabia.

Fourth, the participation of the United States returns to the COP. After Donald Trump left the Paris Agreement, and more. The latter, refers to global forecast of climate change itself, as 2014’s world status quo were projected to increase global temperature by 4 degrees celsius, and as of today’s effort, as apprehended by climate tracker, the world had managed to improve its pathway to 3 degrees celsius by the end of the century as efforts were poured into climate action (Climate Action Tracker, 2021). Thus the world has stated its reasoning, Indonesia on the other hand, offers a more unique position in the matter (The Independent, 2021).

As a state that pledges itself to diminish its contribution towards the rising temperature by the end of the decade, and as a nation that had just raised its bar in rampant coal production, Indonesia had become one of the spotlights of redundancy in the effort towards globalized mobilization of climate action. Such referral entitles itself towards the last elapsed Conference of the Parties (COP) 26, with the formulated Glasgow Climate Pact and its 71 points of promises signed on the 13th of November of 2021 and Indonesia being one of the 197 nations committed to the pact. The same Indonesia that had elapsed its target production of coal, one of the worst substances that is responsible in climate change, in 2021 itself numbering 625 million tons out of the target of 550 tonnage (Nangoy & Suroyo, 2021), by which clearly clashes with the pledge made within the pact. As it refers to the point 20 of Decision -/CP.26 “… including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies …” (UNFCCC, 2021) though as we speak as of today, how one shall posit itself a decree of critical opinion towards the issue, exploring the due regard and actions that can be done to stay true.

Indonesia’s Narrative

According to the Minister of Finance, Sri Mulyani Indrawati, there are four innovative policies that are being implemented by the government of Indonesia in order to overcome the challenges of climate change. Those four policies are Climate Change Fiscal Framework (CCFF), carbon pricing, Energy Transition Mechanism (ETM), and disaster pooling fund.

CCFF is the framework to formulate fiscal policies and to mobilize strategic funds aside from the national budget. The minister of finance said that it’s necessary to identify and analyze the National Determined Contribution (NDC) of Indonesia to reduce CO2 from whatever the source comes from. After identifying and analyzing it, then it’s possible to formulate a climate fiscal strategy.

Aside from CCFF, the government also introduced the policy of carbon pricing. This policy implements polluters-pay-principle, of which every business that pollutes must pay a price for the effect of pollution caused by them. “The polluters-pay-principle is very important. The goal is to so that economic activities from the community and the world can continue, but then also include elements of sustainability,” said the Minister of Finance. Carbon pricing itself consists of trading and non-trading instruments. Trading instruments include Emission Trading System (ETS) and Emission Offsets (Crediting Mechanism). Meanwhile, non-trade instruments include taxes or levies on carbon (carbon tax) and Result Based Payment (RBP).

Regarding the Energy Transition Mechanism (ETM), the Minister of Finance said that ETM would change the use of coal to new and renewable energy. “If we reduce coal even though the demand for electricity is increasing, especially if cars use electricity, stoves use electricity, then energy demand is not going down, instead it’s going up. This means that we have to substitute, replacing electricity from coal with renewable electricity, whether it’s water, geothermal, or solar, but this requires funds for investment,” said the Minister of Finance.

Lastly, the Minister of Finance also underlines the importance of disaster pooling fund policy to deal with high risk of disaster in Indonesia, including climate change. Disaster pooling fund itself is a mechanism for collecting funds by calculating disaster risk in an area. (Ministry of Finance, 2021)

To support Indonesia’s effort to achieve carbon neutrality, Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan attended the discussion forum Indonesia Green Summit 2021. At the event, he said that Indonesia needs to stop the usage of coal step by step and increase the target of renewable energy by 2030 by supporting the use of sustainable biofuel and electric vehicles. With the target set, he argues that the need for investment and technology is inevitable.

He then continued, “Indonesia will strike a balance between conservation and sustainable use of natural resources and the environment in order to contribute to efforts to mitigate the impacts of climate change for future generations of Indonesia and the world.” “I am very optimistic that Indonesia can achieve its carbon-free target for two reasons. First, technological advancements will continue to develop, secondly, good financial support because the Indonesian economy will be much better than now,” he added.

The government is doing its best to achieve the target of carbon neutrality by rehabilitating mangrove land. One of them is through the national economic recovery program. In 2021, this program is targeted to be successful in rehabilitating mangroves covering an area of 150,000 hectares, the funds of which were taken from government funds, communities, and strategic partners.

At the same time, the Minister of Finance, Sri Mulyani Indrawati said, “We must educate about the issue of climate change, we must also believe that the world is able to avoid catastrophic situations due to climate change.” This kind of education, according to her, is required to be done for society from an early age and with the support of all policy makers and stakeholders. (Komunikasi, 2021)

Energy Trilemma

As prescribed to be the major loophole by various experts in the field as the clean energy transition trilemma. A three-point loophole, each representing multi-layered problems that would require not just a straightforward solution, but also a rigorous empowerment of various stakeholders in each layer. The pillars, as many called it, refers to the inferential balance of capacity, security, economic viability, and sustainability that had to be achieved appropriately to shift the encrypted dependence of society in their consumption of fossil fuels towards a more clean and sustainable energy.

The torque of the trilemma in Indonesia, can be inscribed as most relevant due to the general status quo of the nation itself. As one of the most rapidly developing states in south-east Asia, the nation imposed various unique challenges when it comes to the effort of shifting the basis of energy production and consumption (also described as energy mix or outsourcing percentage of each kind of energy production) stretching from unfriendly geographical status, human resource liability, and the crucial political endeavors that are required for such changes.

The viability of renewables in Indonesia, leadingly caused by its geographical conditions, had eventually resulted in one of the most prominent financial challenges in adopting RENA, the due regard of such predicament is the factual basis on how coal remains one of the most efficient for decentralized power generation financially. One relevant example of such challenge is the communal off-grid PV project in Muara Enggelam, East Kalimantan, such remote areas in Borneo with the only means of transportation is by boat, added with the fact that the components are only available in Jakarta, resulting in significant bloat in maintenance price, reducing the political will to adopt further off-grid systematics (ESDM, 2021).

“What will happen if the sun goes out? Or what will happen if the wind dies down?”

Such predicament however, in our current state of worldwide development, do by itself possess one best plausible answer. Such alternatives as many call it, The System of Systems by which refers to the fact that transition in a means of energy production and consumption would require not just the simplified signature of energy mix, but the overall revolutionization of the system that goes within, from production, storage, distribution, and even controlled consumption.

The stated pathway of system change is not an entirely out of the blue nor a new idea to be reckoned with, its position had been chosen to be strategized in many developed nations such as the European Union, inferring to their Roadmap to Strategic Energy Technology (SET). The EU, led by their commission of ETIP SNET had formulated a position paper of Systems of Systems (ETIP, 2021) that inherited the idea of system change in a more practical pathway of energy transition. The idea mainly revolves around answering the previous question and the trilemma of energy by revolutionizing how people and all stakeholders alike, consume and manage energy with the help of interconnectivity, A.I, big data, and other functions of IoT systematics.

In this occasion we can scheme the pathway of system change, in foreseeing a city powered by renewables, with energy mix outsourcing from both centralized plant and decentralized individual-consumer level solar panels. All of which, integrated through multi-energy grid architecture that is both controlled by consumer and producers alike, with the purpose of avoiding energy waste, controlling power usage, and storing excess energy production in reliable batteries — to imagine, those big gray block-like energy control panels in your home? — Replaced by a Wi-Fi based panel that lets you know how much exactly you’ve spent and saved in electricity.

Though however, a full systematic change such as stated, is a faraway path when it stands adopted in seemingly harsh rural areas around Indonesia alone. But it is important to make a footnote upon the importance of efficient adoption purpose of sustainable energy itself, by which are to push the transition of energy mix production as instated in point 20 of Decision -/CP.26 thus, with the factual consumption of energy were centered in development-heavy cities and island of Java, numbering more than 60% of the total energy consumption in Indonesia 2020 alone (PLN, 2020). Only rummaging in rural-centric transition would not result in the desired target.

The Yet Remained…

At this point, one of the major concerns of the whole article is still yet to be answered, “How can Indonesia settle its faith?”. In running for answers, especially in the matter of energy, a notion that foundationally builds society would and must require actions that are both multisector and multilayered with goals that are both long and short terminologically.

To put pledge into action requires will and cooperation, such entitlement is especially important for Indonesia as a state that is facing most of the transition trilemma. As the world’s 2nd largest coal exporter with 17% on the board, it is unjustifiable to put a handbrake on coal production and exports, though it is also important for Indonesia to position itself to the pledge of phasing down. Though the practical answer to the question still remains, the how in this matter, were still not enough.

Reference

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