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Dark cloud over Indonesia’s pledge to achieve net zero emissions by 2060 – says IEEFA think tank
21/2/2024
Indonesia is proposing to reduce its renewable energy target from 23% to 17–19% in 2025, and 19–21% in 2030. It is a move that the Institute for Energy Economics and Financial Analysis (IEEFA) think tank says could ‘signal the government’s low commitment to the energy transition and prolong Indonesia’s high dependence on fossil fuels’.
The lowering of Indonesia’s renewable energy ambitions is at odds with the direction of travel of much of the rest of the world and the landmark agreement at COP28 which saw 123 other countries commit to a tripling of the world’s installed renewable energy generation capacity to at least 11,000 GW by 2030, transitioning away from fossil fuels, doubling energy efficiency improvements and accelerating methane-emission reductions.
It also runs counter to outgoing President Joko Widodo’s vow to achieve net zero emissions by 2060 or sooner, raising questions about whether that target will be met.
Currently, Indonesia’s National Energy Council (DEN) is working on updating the country’s National Energy Policy (KEN), which is slated for completion this June. The draft, which is under discussion with the House of Representatives, proposes reducing the national renewable energy target for 2025 from 23% of total energy to 17–19%, based on the new assumption that Indonesia can only increase the renewable energy portion of its energy mix by around 2–3% per year.
Similarly, for 2030, the draft KEN reduces the renewable energy target to 19–21%. ‘Such moves could signal low government commitment to the energy transition and prolong Indonesia’s high dependence on fossil fuels,’ comments Mutya Yustika, Energy Finance Specialist at IEEFA.
Yustika notes that the new draft policy target is not aligned with the government of Indonesia’s commitments under its Nationally Determined Contributions (NDC) submitted to the United Nations Framework Convention on Climate Change (UNFCCC). She also says that such backtracking ‘could jeopardise the $20bn Just Energy Transition Partnership (JETP) investment proposal being negotiated by the government with multiple donor governments, philanthropies and the private sector, in which Indonesia proposed to achieve a 44% renewable energy target by 2030, up from the previous 2022 target of 34%’.
According to IEEFA’s latest analysis, Indonesia has failed to meet its renewable energy target for the past five years, with incremental contributions to the primary energy and electricity generation mix increasing only 1–2% per year. The current share of renewable energy in the electricity mix is put at 13.1%, well below the 2023 target of 17.9%, with a capacity of 13.2 GW, 94.5% of which comprises hydroelectric, biomass and geothermal.
‘By reducing their targets, the government of Indonesia acknowledges that their current renewable energy delivery process is failing. As Indonesia prepares for a change in administration, with the outgoing President Joko Widodo’s term concluding in October, the nation is at a pivotal juncture,’ says Yustika. Elections took place in mid-February.
‘The incoming government needs to make new and extra efforts to ensure that even the reduced target is met. They must identify the root of the problem and make necessary adjustments to its policies, regulations and processes to support the energy transition. There are several challenges and issues that the incoming government needs to overcome,’ Yustika warns.
These challenges include the lack of a clear and consistent regulatory framework for renewable energy development, which raises concerns among investors and financial institutions; a need to better communicate the investment and job creation opportunities associated with wind, solar and battery storage; and the need for a clear and transparent process for project procurement.
