Indonesia’s current development path cannot be maintained due to unsustainable
exploitation of natural resources, investment in high carbon processes, and inefficient energy sources, which endanger people’s health and the environment. Continuing along this path would further destroy natural resources, limiting growth, job
creation, and poverty eradication. The government of Indonesia will shift the
economic system by measuring not only GDP growth but also environmental
sustainability, resource efficiency, and social equity. By forging a low-carbon
development pathway, Indonesia can deliver better growth, jobs, health, and living
standards for all citizens. A sustainable long-term plan can deliver an average GDP
growth rate of 6% per year, which is higher than the current business as usual
pathway. It is clear that a low-carbon plan will provide an immediate win-win
solution for Indonesia’s economy, for its local citizens and the global environment.
It is no longer economical for Indonesia to invest in coal. Currently, 66% of
Indonesia’s total primary energy supply comes from coal, gas and oil. After
accounting for local air pollution costs, the cost of new renewable energy is
competitive with that of new coal projects. The costs of renewables are falling
quickly and will fall further as Indonesia rapidly realizes economies of scale.
Renewables will quickly become the least expensive form of electricity generation
in Indonesia, even without considering local air pollution costs.
Geothermal energy has been given a high priority in the National General Energy
Plan (Rencana Umum Energi Nasional/RUEN) because Indonesia’s ample geothermal resources mean that the country could position itself as a world leader in this
technology. Despite low average wind speeds, the potential for wind energy is also
significant. Solar photovoltaics (PVs) show the largest potential for energy generation. In the electricity sector, the state-owned national electricity provider,
Perusahaan Listrik Negara (PLN), must balance government targets with commercial considerations. PLN issues revised ten-year plans annually (the Rencana Usaha
Penyediaan Tenaga Listrik—RUPTL). The 2017–26 plan estimates that new PLN
projects will add 15 GW of RE capacity by 2027, but this falls considerably short of
the government’s target of 45 GW. The national energy plan set a target of 115 GW
of installed electricity capacity by 2025, almost doubling the 60 GW of capacity
installed in 2016. Under the current policy framework, the majority (60%) of such
capacity would be satisfied by coal. The RUPTL forecasts 20 GW of new coal
capacity and 12.8 GW of RE capacity by 2027. PLN aims to increase electricity
capacity in the proximity of coal mines. These “mine-mouth” power plants can
decrease operational costs significantly because they eliminate the need for coal
transportation and storage.
Increasing the pace of renewable energy development to meet the goal of a 30%
share by 2045 would lead to lower costs and better health for Indonesians. As a
member of the G20 and the fourth largest greenhouse gas emitter in the world, the
steps taken by Indonesia will matter not only to the country but also to the world.
Indonesia could reduce GHG emissions by almost 43% by 2030, surpassing
Indonesia’s current conditional national climate action plan. It could also reduce
extreme poverty to 4.2% of the population and avoid 40,000 deaths each year
by 2045.
230
M. Osaki et al.
exploitation of natural resources, investment in high carbon processes, and inefficient energy sources, which endanger people’s health and the environment. Continuing along this path would further destroy natural resources, limiting growth, job
creation, and poverty eradication. The government of Indonesia will shift the
economic system by measuring not only GDP growth but also environmental
sustainability, resource efficiency, and social equity. By forging a low-carbon
development pathway, Indonesia can deliver better growth, jobs, health, and living
standards for all citizens. A sustainable long-term plan can deliver an average GDP
growth rate of 6% per year, which is higher than the current business as usual
pathway. It is clear that a low-carbon plan will provide an immediate win-win
solution for Indonesia’s economy, for its local citizens and the global environment.
It is no longer economical for Indonesia to invest in coal. Currently, 66% of
Indonesia’s total primary energy supply comes from coal, gas and oil. After
accounting for local air pollution costs, the cost of new renewable energy is
competitive with that of new coal projects. The costs of renewables are falling
quickly and will fall further as Indonesia rapidly realizes economies of scale.
Renewables will quickly become the least expensive form of electricity generation
in Indonesia, even without considering local air pollution costs.
Geothermal energy has been given a high priority in the National General Energy
Plan (Rencana Umum Energi Nasional/RUEN) because Indonesia’s ample geothermal resources mean that the country could position itself as a world leader in this
technology. Despite low average wind speeds, the potential for wind energy is also
significant. Solar photovoltaics (PVs) show the largest potential for energy generation. In the electricity sector, the state-owned national electricity provider,
Perusahaan Listrik Negara (PLN), must balance government targets with commercial considerations. PLN issues revised ten-year plans annually (the Rencana Usaha
Penyediaan Tenaga Listrik—RUPTL). The 2017–26 plan estimates that new PLN
projects will add 15 GW of RE capacity by 2027, but this falls considerably short of
the government’s target of 45 GW. The national energy plan set a target of 115 GW
of installed electricity capacity by 2025, almost doubling the 60 GW of capacity
installed in 2016. Under the current policy framework, the majority (60%) of such
capacity would be satisfied by coal. The RUPTL forecasts 20 GW of new coal
capacity and 12.8 GW of RE capacity by 2027. PLN aims to increase electricity
capacity in the proximity of coal mines. These “mine-mouth” power plants can
decrease operational costs significantly because they eliminate the need for coal
transportation and storage.
Increasing the pace of renewable energy development to meet the goal of a 30%
share by 2045 would lead to lower costs and better health for Indonesians. As a
member of the G20 and the fourth largest greenhouse gas emitter in the world, the
steps taken by Indonesia will matter not only to the country but also to the world.
Indonesia could reduce GHG emissions by almost 43% by 2030, surpassing
Indonesia’s current conditional national climate action plan. It could also reduce
extreme poverty to 4.2% of the population and avoid 40,000 deaths each year
by 2045.
230
M. Osaki et al.