by a33RadM | Dec 13, 2022 | Report, Report Democracy Energy
First Edition, November 2022
The issue of energy access and transition has been one of Indonesia’s main concerns ever since it had committed to its emissions-reducing NDC as agreed in the Paris Agreement. However, up until now, Indonesia is still one of the biggest coal exporters in the world; and Indonesia’s energy source is still mainly dominated by fossil fuels. The strategies to slowly transition into renewable energy consists of two methods: the phasing out of coal fueled power plants and investments in renewable energy facilities. Unfortunately, even that has its own set of problems. Even in areas located near power plants, many villages in Indonesia still lack access to electricity. Economy wise, the phasing out of coal power plants led to a concern of how the existing workforce will adapt to the change, considering that there has yet to be a concrete plan to tackle this problem. The existing power plants and renewable energy projects also harbor an environmental concern: construction and production often bring harmful damage to the environment and to the health of the community living around the area.
One of the concepts that is in line with our focus in fighting for environmental sustainability and climate justice is the concept of Energy Democracy. In order to explain this concept to realizing equitable energy in Indonesia to policy makers in the future, we from the Action for Ecology and People Emancipation (AEER) have prepared a Policy Brief document to convince policymakers to adopt the policy recommendations offered.
by a33RadM | Nov 23, 2022 | Press Release, Press Release Coal & Biodiversity
This press release has been published on kompas.com, 11 November 2022, 17:59 WIB
Aksi Ekologi dan Emansipasi Rakyat (AEER) assesses that ASEAN’s achievements in saving the climate crisis are still lacking.
AEER biodiversity and climate researcher Ilham Setiawan Noer, on Thursday (10/11/2022), said Southeast Asian countries’ dependence on fossil energy would hinder the target of saving the climate and global biodiversity.
Whereas ASEAN is essential for protecting global biodiversity because it covers 20 percent of worldwide flora and fauna species, 30 percent of global coral reefs, and 35 percent of global mangrove forests.
In addition, four countries in Southeast Asia are among the 25 global biodiversity hotspots, and three countries are among the 17 mega-biodiversity countries in the world, namely Indonesia, Malaysia, and the Philippines.
All ASEAN member countries are also registered as parties to the Convention on Biological Diversity (CBD).
Based on the ASEAN Biodiversity Outlook 2 report issued by the ASEAN Center for Biodiversity (ACB), it is stated that there are three levels of target achievement, namely green, which means most ASEAN countries achieve the target, yellow means half of ASEAN countries, and red means less of half of ASEAN countries. As a result, of Aichi’s 20 targets, only one was green, 12 were yellow, and seven were red.
This condition shows that efforts to save biodiversity in the ASEAN region have yet to be maximized.
The ASEAN Biodiversity Report was issued as a result of monitoring the progress of achieving the 2011-2020 biodiversity saving (Aichi Biodiversity Target).
In addition, the report “The 6th ASEAN Energy Outlook 2017-2040,” published by the ASEAN Center for Energy (ACE) states that in the Business as Usual scenario, ASEAN’s total primary energy supply will continue to grow by 40 percent in 2017-2025 and most of dominated by fossil fuels. Ilham explained the dominance of fossil fuels also occurs in total energy consumption, with a value reaching two-thirds of total primary energy consumption.
Previously, countries in the world committed to achieving the temperature increase limit of 1.5 degrees Celsius declared in the 2015 Paris Agreement.
This commitment aims to prevent a worsening climate change that could exacerbate drought, hunger, and conflict worldwide.
“How is the relationship between the target of saving climate and biodiversity with fossil energy? The high dependence of Southeast Asian countries on fossil energy will trigger an increase in greenhouse gas emissions in the atmosphere, which will hinder the achievement of the global temperature rise limit of 1.5 degrees Celsius. This condition will exacerbate global climate change,” said Ilham.
“Fossil energy, especially coal, will threaten biodiversity in the form of habitat degradation and deforestation, habitat fragmentation, air and water pollution, and an increase in earth’s temperature,” he added in a written statement received by Kompas.com, Friday (11/11/2022) .
Ilham also stated that fossil energy in Indonesia is currently dominated by coal.
Based on a study conducted by AEER entitled “Coal Mining Threats to Biodiversity in Kalimantan”, it is said that out of 35 coal mining companies, 23 companies are classified as high threat category, ten companies are classified as medium threat category, and two companies are classified as low threat category.
Currently, Southeast Asia is still a promising market for coal commodities at a time when developed countries have started to abandon coal and are campaigning to switch to renewable energy.
Demand for coal imports in Southeast Asia is predicted to increase to 250 million tons in 2035 compared to 2020 of 150 million tons.
The three countries that are the biggest consumers in Southeast Asia are Indonesia, the Philippines, and Vietnam. Coal consumption in these three regions has increased by 150 percent over the past 20 years.
Furthermore, Ilham explained currently, ASEAN countries still need to be able to properly implement the target to reach the temperature increase limit of 1.5 degrees Celsius.
According to him, out of 10 ASEAN countries, as many as three are classified as critically insufficient or very inadequate and very critical, namely Singapore, Thailand, and Vietnam.
One country is classified as highly insufficient or very inadequate, namely Indonesia.
Meanwhile, six other countries still need to have an assessment from the Climate Action Tracker, namely the Philippines, Cambodia, Laos, Myanmar, Brunei Darussalam, and Malaysia.
Ilham thinks that ASEAN countries need to strengthen their commitment to saving the climate and biodiversity.
He added The Land Gap Report 2022, issued by landgap.org, states that tree planting, afforestation, and reforestation alone are not enough to reduce global greenhouse gas emissions.
Currently, emission reduction contributions are needed from various sectors, including the fossil fuel-based energy sector.
“As one of the countries with the largest production and consumption of fossil energy in the world, Indonesia needs to be a pioneer in Southeast Asia in ending dependence on fossil energy and must immediately switch to renewable energy,” he explained.
Ilham said the Government of Indonesia must make a serious commitment to preventing temperature rises above 1.5 degrees Celsius by reducing the use of coal-fired power plants in Indonesia to 10 percent in 2030 and ultimately stopping it in 2040.
by a33RadM | Nov 9, 2022 | Review, Review Climate & Energy Finance
Energy Transition Mechanism and Early Retirement of Coal Fired Power Plan (CFPP)
The global climate crisis is getting worse if there is no concrete effort in overcoming it. Since the Paris Agreement was signed in 2015, nearly 200 countries have committed to addressing the climate crisis and pursuing efforts to strengthen climate mitigation, adaptation and climate finance. Paris Agreement encouraged countries that ratify the agreement to reach global peaks of greenhouse gas emissions as soon as possible and recognizes that peak emission reductions will take longer for developing countries. Indonesia as a developing country has committed and renewed its Nationally Determined Contribution (NDC) target on September 23, 2022 by increasing its own emission reduction target from 29% to 31.89% in the latest NDC. Meanwhile, the emission reduction target with international assistance also increased from 41% to 43.20%.
Based on the 2021-2030 Electric Power Supply Business Plan (RUPTL) document, the projected total greenhouse gas emissions in Indonesia from the energy sector in 2030 in the Business as Usual 433 million tons of CO2. The results from the use of coal energy contribute to emissions of 298.9 million tons of CO2 out of a total emission of 335 million tons of CO2 or equivalent to 89% in 2030 under a low carbon. Thus, the transition from fossil energy to Renewable Energy (RE) and the development of renewable energy-based public transportation is needed as an effort that must be taken by Indonesia in reducing greenhouse gas emissions.
One of the energy transition efforts from fossil energy to RE is the Energy Transition Mechanism (ETM). This program is a commitment from the Asian Development Bank (ADB) for climate action in the Asia Pacific region. Indonesia is one of several countries that are collaborating on climate action using ETM in the form of early retirement of CFPP and also the transition to cleaner energy. The ETM partnership itself was launched on November 3, 2021 in Glasgow in conjunction with the agenda for the Conference of the Parties (COP 26 Glasgow). Currently, the State Electricity Company (PLN) plans to gradually stop the operation of CFPP to achieve Net Zero Emission 2060.
There are three options for CFPP early retirement funding schemes presented in the introduction to ETM, namely 1) the acquisition model focuses on acquiring the CFPP in terms of capital and ownership, 2) the synthetic model focuses on providing direct investment to the CFPP owner to be managed by the owner in retiring his CFPP, and 3) the portfolio model focuses on providing funds to third parties (financiers) in managing funds for early retirement. Quoted from the Climate Investment Fund-Acceleration Coal Transition (CIF-ACT), ADB together with the PLN plan to apply early retirement to 9 CFPPs before 2030. However, early retirement activities are carried out at CFPPs, most of which have been operating for a long time (more than 10 years) so that the implementation of early retirement will not be optimal.
The Ecological Action and People’s Emancipation (AEER) recommends that the early retirement of CFPP should be carried out on new CFPPs operating for less than two years, not CFPPs that have been operating for a long time. Naturally, outside of the ETM program, a cessation of operations must be carried out on CFPPs that are considered “quite old” due to the declining performance of environmental pollution control, not up-to-date, and already having a return on investment value. In addition, AEER also recommends that early retirement projects need to be applied to CFPPs that have a negative impact on biodiversity and CFPPs sourced from coal mining with a high level of risk on biodiversity.
Based on the AEER research, coal mining owned by PT Berau Coal which is one of the biggest suppliers of coal for the CFPP is one of the mines that is included in the category of high threat to biodiversity. The results of the AEER indicate that, as many as 23 mining sites are classified as high threat to biodiversity, 10 mines are in the moderate threat category, and 2 mines are classified as low threat to biodiversity from 35 coal mines that are the object of study in Kalimantan. This report can be used as a reference to determine which CFPP whose coal source comes from coal mining located in areas sensitive to biodiversity .
In 2021, AEER also conducted a study on the impact of CFPP and coal mining on biodiversity on the island of Sumatra. The report states that of the 28 CFPPs studied, 12 CFPPs are in the high threat category to biodiversity, 15 CFPPs are in the moderate threat category, and 1 CFPP is in the low threat category. Based on this study, AEER recommends that the early retirement of CFPP on the island of Sumatra be carried out at CFPP Sumsel-8 because it has the highest threat and will only start operations in 2022. In addition, the CFPP that has the most negative impact on biodiversity are CFPP Sulut-3 and CFPP this new operation in 2021 so it is more appropriate to recommend early retirement.
Net Zero Emission and Renewable Energy Mix
Until 2022, the ETM in Indonesia will still focus on early retirement of CFPP, rather than the development of RE. The development of RE still does not have a clear funding scheme and program, and its development will only begin to be planned based on the 2022 Electricity Supply Business Plan (RUPTL).
Analysis of the Net Zero Emission Roadmap (NZE) suggests that Indonesia’s net zero target can be achieved through the application of renewable energy (by sustainable resources), energy efficiency, electrification, and grid interconnection. Energy efficiency and electrification are top priorities to reduce emissions. Indonesia will add a large amount of equipment, cars, machinery and infrastructure this decade with electrical technology. The new and renewable energy mix is one of the cornerstones in the energy transition process.
Indonesia has a target of renewable energy mix for electricity generation by the end of 2025 at 23%, and by 2050 at 31%. Based on the study report “Indonesia Energy Transition Outlook 2022” issued by the Institute for Essential Services Reform (IESR), the renewable energy mix until the end of 2021 only reached 11.2%. The IESR states that the development of renewable energy is still one fifth of the capacity that should be added every year to achieve the target of 23% by the end of 2025.
In the NZE Roadmap it states that the road to zero emissions requires more capital intensive, meaning that the energy transition process to renewable energy requires more funding. By 2030, investment in the promised scenario provides information that is approximately USD 8 billion higher per year than the business as usual (BAU) scenario, with investment in renewable energy generation and grids (USD 25 billion) more than current investment worldwide in the energy sector. Investment in energy efficiency rises to USD 10 billion per year by 2030, a fivefold increase today. Mobilizing this level of investment will require significant policy reforms as well as international support.
Based on the Press Release of the Ministry of Energy and Mineral Resources (MEMR) September 1, 2022, Rida Mulyana, Secretary General of MEMR stated that the acceleration of the energy transition in Indonesia requires an investment of up to 1 trillion US dollars until 2060 for RE generation and transmission. As a developing country, Indonesia needs support from other parties in funding towards accelerating the energy transition, namely funding from developed countries such as the G7 through the Just Energy Transition Partnership (JETP) scheme, bilateral support from Indonesia-Germany through the Green Infrastructure Initiative (GII), international finance such as the Asian Development Bank (ADB) or the other funding.
Energy Transition Funding
Carbon Zero Analytics (CZA) Report 2022 states that South Africa is a pilot project for developing energy transition funding where several developed countries are committed to supporting a fair transition to a low-carbon economy in South Africa. Just Energy Transition Partnership (JETP) sees France, Germany, the UK, the US and the EU (International Partner Group, or IPG) commit to providing USD 8.5 billion over three to five years to support South Africa’s national climate plan. The financing provided can be in the form of grants, soft loans (at lower interest rates than those available from commercial banks), through private financing, guarantees or technical support. The JETP program aims to phase out coal and accelerate the deployment of renewable energy in South Africa’s coal-dependent power system.
In the Climate Finance Report, the G7 members confirmed their intention to move forward in JETP negotiations with Indonesia, India, Senegal, and Vietnam at COP 27. Three of the 4 countries are developing countries with the largest coal energy consumption in the world. The CZA report its 2022, it criticizes how the ongoing JETP process in South Africa lacks sufficient transparency and civil society engagement, limiting its effectiveness. Then, to make it more effective, CZA added that donors should prioritize grants and concessional financing in the JETP agreement to fund the most important elements of an equitable transition, such as support and retraining of workers. Indonesia, which will become one of the recipient countries of theJETP initiative, should also need to be accompanied by the government’s readiness to prepare clear policies and guidelines in carrying out early CFPP retirement.
The Government of Indonesia and the Federal Government of Germany have a partnership in the mission of fighting climate change under the name of the Green Infrastructure Initiative (GII). The GII is part of the Indonesia-Germany climate initiative which was agreed in the framework of the bilateral negotiations between the Indonesian-German government on October 1, 2019 in Berlin. One of the project implementations of GII is the construction of Urban Public Transport which is estimated to reach 4057 million EUR or equivalent to 61.8T Rupiah.
The Asian Development Bank (ADB) In its press release stated that the Energy Transition mechanism (ETM) pioneered by ADB has the potential not only to become a powerful tool in combating climate change, but also to reform the energy sector in Asia and the Pacific. The ETM aims to accelerate the decommissioning or reuse of fossil fuel generation while creating space and investment opportunities for renewable and clean energy technologies. Shutting down 50% of the coal fleet in ETM’s three pilot countries—Indonesia, the Philippines and Vietnam—could cut 200 million tonnes of CO2 per year, the equivalent of removing 61 million cars from the road. That would make it one of the largest carbon reduction programs in the world. This work will have far-reaching consequences, including changes in jobs, supply chains and infrastructure as countries transition from energy systems that rely on fossil fuels to systems based on clean energy.
In climate action, apart from trying to stop the use of fossil fuels as an energy source, it must also be oriented towards the development of renewable energy. ADB is considered not to have made development the main focus which should have been carried out with the early retirement of the CFPP simultaneously. This is illustrated in the Indicative timeline to operationalize ETM which illustrates that until Q4 2022 the focus of ETM is still on the technical funding of ETM for the technical early retirement of CFPP, which is also described in detail how the ACT Investment Program is.
Indonesia needs large funding in the development of new and renewable energy. At the G7 meeting in June 2022 in Germany, the President of Indonesia stated that Indonesia needs around 25-30 billion USD to switch to clean energy over the next eight years (until 2030). As a developing country, Indonesia needs international support to be able to transition to energy by developing new and renewable energy. Previously, at the 2021 G7 meeting, it was said that two new types of funding were planned for CIF in suppressing climate change in developing countries, including Indonesia. The two funding sources are Accelerating Coal Transition (ACT) and Renewable Energy Integration (REI). However, in the Energy Transition Mechanism (ETM) Introduction issued by ADB, it is stated that currently it is still focusing on the main work flow of ACT, while REI does not yet have a main work flow plan. Therefore, it is necessary to strengthen the commitment of ADB in the development of REI, because the development of renewable energy requires very large costs.
The development of renewable energy needs to be maximized to reduce the negative impacts of pollution and climate change that result in natural disasters. Reporting from Bisnis.com, the Minister of Finance, Sri Mulyani said that the annual state loss due to natural disasters reached Rp. 20 trillion, and was dominated by hydrometeorological disasters such as forest and land fires, floods, landslides, and tornadoes. So the consequence of this energy transition is not only a reduction in greenhouse gas emissions, but there will be many good impacts that accompany it such as minimizing the occurrence of disasters by mitigating climate change using Renewable Energy (RE).
Energy transition funding needs estimated in Indonesia are 25-30 billion USD until 2030, which is equivalent to a value range of 8-8.5 billion USD per year. Indonesia’s biggest challenge in the energy transition is how to meet these funding needs quickly. The funding that will be received by Indonesia in the Financing Plan (Indicative) as of 2022 is recorded at 800 million USD, with details of 150 million USD from ADB, 150 million USD from CIF, and another 500 million USD based on other funding sources. When compared, of course, the available funds with the number of needs are still very far in number, covering 2% of the total existing funding needs.
The need to cover Indonesia’s entire coal fleet by 2040, Indonesia will need 37 billion USD, or 1.2 million USD per megawatt, according to the analysis, which uses data from the Transition Zero called Coal Asset Transition (CAT). . President Joko Widodo said the government would close 5.5 GW of coal-fired power plants before 2030, at an estimated cost of 6 billion USD or equivalent to 94T Rupiah.
Until now, there has been no notification regarding the nominal funding from JETP for Indonesia. Previously, JETP provided funding to South Africa of USD 8.5 billion last year. JETP funding for Indonesia can refer to the comparison of coal consumption between Indonesia and South Africa. Based on data from Worldometers, South Africa’s annual coal consumption reached 202,298,474,200 MMcf, while Indonesia’s was 102,623,737,100 MMcf. Based on this comparison, JETP is recommended to provide funding to Indonesia amounting to USD 4.3 billion.
Climate Investment Fund (CIF) pledged their CIFs Funding Program of USD 2 billion to start a program consisting of an Accelerating Coal Transitions (ACT) program of USD 1.5 billion and a Renewable Energy Investment of USD 500 million. The data shows that the focus of funding is still larger for ACT activities with the CFPP early retirement program. In fact, the development of RE itself also has a significant funding requirement.
The cost of discontinuing existing coal-fired power plants in Indonesia by 2040 is estimated at USD 37 billion. This does not include the costs of expanding renewable generation, upgrading transmission lines or ensuring a fair transition for workers and communities. The coal industry has cost the country USD 10 billion in the last 12 months due to its carbon emissions. On the other hand, the surge in coal prices in the midst of the energy crisis caused Indonesia as the largest coal exporter in the world to gain huge profits. The benefits from the windfall should be used as capital in the energy transition process towards cleaner and more equitable energy so that the losses caused by carbon emissions do not get bigger.
Considering the need for cost in developing renewable energy, apart from expecting international assistance, Indonesia itself is actually also capable of developing RE independently. In 2022, as reported by Investor ID, it was stated that PT Tamaris Hidro held a public offering of Tamaris Hydro I bonds with a maximum value of Rp 750 billion. As planned, the proceeds from the bonds will be used for investment in renewable energy development. Thus, the private sector has a great opportunity for the expansion of Hydroelectric Power Plants to support the 35 gigawatt (GW) program and the distribution of new and renewable energy (RE) with a minimum target of 23% by 2025, as well as supporting government programs in the plan to increase electricity capacity of 35,000 MW. which is stated in Presidential Regulation Number 04 of 2016.
by a33RadM | Nov 4, 2022 | Review, Review Mineral Transition & Public Transport
We as environmental organizations support all efforts in mitigating climate change and transitioning from fossil energy to renewable energy. One of them is the Green Infrastructure Initiative (GII) or Indonesian-German Initiative for Green Infrastructure.
The GII is a strategic bilateral initiative between the Government of Indonesia and the German Federal Government that has been agreed upon by both parties since 2019 in Berlin, Germany. Initially, The GII determined four provinces, namely West Java, Central Java, East Java, and Bali have been selected to be identified as potentials for investment projects and feasibility study development. Then in February 2022, the Government of Indonesia and the German Federal Government inaugurated pre-feasibility studies of 15 projects from West Java, Central Java, East Java, and Bali and also added two new GII provinces; Special Region of Yogyakarta and East Nusa Tenggara Province. The GII Projects are planned to will be taking place in 2023.
The GII’s background is Indonesia’s impressive socio-economic development over the past two decades has brought a substantial negative impact on the environment. The continuing lack of urban infrastructure has caused widespread congestion, and excessive pressure on electricity and water. This phenomenon leads to negative impacts on the environment and further increased emissions, caused by inadequate management. For example, only about 2% of Indonesian households are connected with water waste management, leading to fecal sludge leaking into the soil and river pollution. Meanwhile, the majority of Indonesia’s solid waste ends up in unsolicited landfills where untreated waste generates a huge amount of methane, a greenhouse gas that is 82% more potent than CO2. The continual growth of 6 major urban areas and the underdevelopment of public transportation leads to congestion that wastes 2.2 million liters of fuel and the loss of 6 million productivity hours each day.
The GII provides a five-year Financial Cooperation (FC) facility of up to EUR 2.5 billion to support climate-relevant infrastructure projects via subsidized and promotional loans through the German Development Bank (KfW) to promote green infrastructure in three thematic sectors: Solid Waste Management, Water and Wastewater Management, and Urban Public Transport.
Of all 15 proposed GII projects in the pre-feasibility study, six of them are in the Urban Public Transport sector, and four of the six projects are planned to use electric batteries which is the Battery Electric Busses (BEB). The four projects are:
- Bus Rapid Transit (BRT) – Bandung Metropolitan Urban Public Transport (Electric Bus) (Rp 1.1 trillion/ EUR 67 million)
- Surabaya BRT (Rp 1.5 trillion/ EUR 92 million)
- Corridor Petanglong (Greater Pekalongan) (Rp 735 billion/ EUR 45 million)
- Public Transport in Greater Solo: phasing out diesel fleets and Corridor Extension (Rp 1.9 trillion/ EUR 117 million)
The GII’s electrification plan for the Urban Public Transport sector needs to be supported. According to PLN, the transportation sector is the dominant CO2 emitter, the source of 78% of emissions in Jakarta. The Ministry of Industry targets the production of electric transportation to be 600.000 units of four-wheeled vehicles and 2.45 million of two-wheeled vehicles.The production of these electric transportations is expected to be able to reduce CO2 emissions by 2.7 million tons for four-wheeled vehicles and 1.1 million tons for two-wheeled vehicles.
However, the state’s mission to reduce emissions from the transportation sector and the GII project will be much more optimal if the energy source for electric transportation is low-carbon, not from fossil-fueled power plants, especially coal-based power plants (PLTU). According to RUPTL PLN data, in 2020, the total installed capacity of power plants in Indonesia is 62.449.20 MW, the majority, 51% of it, still comes from PLTU.
Because of the still high portion of coal in the power generating system to supply energy for public transportation which uses battery/electricity, the renewable energy project needs much help and support from many parties, from both Government of Indonesia and the International.
Therefore, we recommend that the GII program needs to include renewable energy development projects. With renewable energy as the main source of energy for the Urban Public Transport sector that will be built in the GII’s project, the project will be truly optimal in reducing emissions, not adding more the uses of fossil fuel/coal-based fuel which would increase emissions through power plants.
|Meiki W Paendong
WALHI West Java Executive Director
by Editor Aeer | Oct 19, 2022 | Review, Review Democracy Energy
In order to mitigate climate change, energy transition is one of the issues prioritized to be discussed in the G20 Presidency of Indonesia 2022. Indonesia needs to utilize the G20 Presidency of Indonesia 2022’s momentum to accelerate the energy transition to green energy. This is crucial because Indonesia has pledged to achieve emission reduction targets in 2030 which are to reduce its emission by 29 percent with business as usual (BAU), and by up to 41 percent with international assistance.
However, the G20 energy transition potentially fails to bring change. On September 2th, 2022 previously, the ministerial meeting of the G20 countries for energy transitions or the Energy Transitions Ministerial Meeting (ETMM) only produced a chair’s summary and the Bali Compact which both agreement’s implementation is voluntary. If these two agreements are agreed upon in the G20 summit, there will be no responsibility whatsoever on the part of G20 countries to actually implement them.
The coal energy mix in Indonesia also has yet to stop showing an upward trend In 2022, the amount of coal energy mix in Indonesia is 68.7 percent, an increase from 54.7 percent in 2015. Meanwhile, the amount of renewable energy mix in Indonesia is still 12.8 percent in 2022, even decreasing from 13 percent in 2015.
In addition, currently, energy management policy in Indonesia is still centralized in a very top-down manner, causing a lack of participation from civil society. Because of that, energy management practice in Indonesia has yet to be democratic, this is shown by the lack of even energy distribution and energy management that harms local communities one-sidedly instead of helping them. For example, inequality in accessing electricity and economic damage to local communities in East Kalimantan.
Meanwhile, the government has claimed to push the concept of just energy transition in carrying out the G20 energy transition. Therefore, the G20 energy transition needs to be ensured that it is carried out fairly by utilizing the concept of energy democracy.
Energy democracy is a social movement concept that advocates for renewable energy transition by rejecting energy agenda dominated by fossil fuels and claims back democratic energy access The goal of energy democracy is to respect local communities’ autonomy over energy resources and management, democratic decision-making, reject various forms of environmental injustice, and promote just energy transition.
Undemocratic energy management
Ecology Action and People Emancipation (AEER) Association has found various testimonies and complaints from local communities in East Kalimantan Province regarding undemocratic electrical energy management there. This is caused by uneven electricity distribution and the community’s interest is not involved in energy management. These testimonies were conveyed through a Forum Group Discussion carried out by AEER in July 2022.
Power outages are common in East Kutai Regency. Even several villages in the Districts of Kaubun, Sandaran, and Karangan have yet to be able to access electricity. The same thing happens in several areas of Kutai Kertanegara Regency. Due to electricity scarcity, the local community has to buy personal diesel generators and solar panels. Electricity can only be accessed by some people from the community who can afford it.
Ironically, areas that struggle to access electricity are located within the vicinity of coal mines, which are the main producers of electrical energy sources. East Kalimantan is the largest coal producer in Indonesia with a contribution of 40.10 percent of total coal resources in Indonesia.
How can the largest coal-producing area, with coal as the main source of electrical energy have difficulty accessing electricity? The answer lies in the centralized system for managing and distributing electricity.
The utilization of coal fossil energy in the centralized electricity system also causes the lack of local community participation in energy management, causing environmental damage and affecting the local community. In 2022 alone, there are several areas where floods and landslides occurred due to coal mining, such as in Kutai Kartanegara Regency, East Kutai Regency, Balikpapan City, and Samarinda City.
This environmental damage causes the presence of electrical power plants instead of bringing prosperity, they damage the local community’s economy. For example, in the Bontang Lestari Village, around 200 seaweed fishermen were affected and many changed jobs because their seaweed cultivation location was getting narrow and narrower and lost due to pollution caused by the electrical power plant, such as the spreading of coal dust from coal barges in ship lanes and the disposal of hot water waste into the sea.
Green energy alone, is it enough?
Centralized energy system and coal fossil energy are two problems that are opposed in energy democracy principles. Only focusing on transitioning fossil energy to green energy alone won’t be enough as long as the energy system is still centralized.
The local community in Poso Lake, Central Sulawesi, for example, still lack of access to electricity even though there is a hydro power plant in the area managed by a private company. Instead of providing electricity access, the hydro power plant damages the local environment and harms the local community’s economy. Dredging and damming activities on the lake have disrupted the livelihoods of the community, the natural ecosystem of local eels.
Local farmers, fishermen, buffalo herders, and indigenous people demand compensation due to environmental problems and the unjust energy practice experienced by them. They feel that they are not involved, from socialization to decision-making related to the destructive hydro power development.
Energy Democracy is the solution
Energy democracy encourages the decentralized energy management system, becomes more community-based, and utilizes green energy that is friendly to the local community’s environment.
An example of the practice of energy democracy can be observed from the community-based energy management of a micro hydro power plant in Cinta Mekar Village, Subang, West Java.
In operating the green energy power plant with a maximum capacity of 120 KW, the community is directly involved in the process of development, management, and distribution of electricity in the Cinta Mekar Village area. The excess electricity capacity produced by the micro hydro power will be sold to State Electricity Company (PLN). Its proceeds will be given back to the community in the form of community subsidies, like school fees for children of the village, health subsidies, or village community business capital managed by the community itself through a cooperative system.
Not only that, the community is listed as the owner of 50 percent of the proceeds of the Cinta Mekar micro hydro power plant and the other 50 percent is owned by the private sector or investors.
The management of the micro hydro power plant in Cinta Mekar Village is an example of a decentralized energy management practice that utilizes green energy. The local community can access the energy produced in their own area and develop their own economy because their environment is not damaged by one-sided decisions from outsiders.
The concept of energy democracy is important to be considered to be included in the discussion of a just energy transition. Energy democracy is in line with one of the strategic issues of energy transition in the G20 Presidency of Indonesia 2022, namely access to affordable, sustainable, and reliable energy.
This article is first published on Kompas.com: https://money.kompas.com/read/2022/10/18/135706226/demokrasi-energi-untuk-transisi-energi-berkeadilan?page=all#:~:text=Demokrasi%20energi%20adalah%20konsep%20gerakan%20sosial%20yang%20mengadvokasikan,fosil%20dan%20mengklaim%20kembali%20akses%20energi%20secara%20demokratis.
Kunny Izza Indah A (AEER Energy Democracy Program Coordinator)
Pius Ginting (AEER Coordinator)
by Editor Aeer | Oct 19, 2022 | Review, Review Climate & Energy Finance, Review Coal & Biodeversity
Elizabeth Mrema, Executive Secretary of the United Nations Convention on Biological Diversity (CBD UN), stated that more than 50 percent of the global economy depends directly on nature and ecosystems. Yet, these economic activities have resulted in the loss of incomprehensibly large areas of rainforests. As such, the business sector should prepare for greater supervision of nature-related risks.
This supervision is carried out as a consequence of the natural damage caused by the business and financial sector’s activities Mrema emphasized the business sector needs to implement a framework to assess and disclose nature-related risks, dependencies, and opportunities related to nature through collaboration with the Task Force on Nature-related Financial Disclosure (TNFD) (The Banker, 22 September 2022).
Alarming Biodiversity State
The current state of global biodiversity state is very alarming. According to the “Global Biodiversity Outlook 5” report published by CBD UN, the world has failed in efforts to save biodiversity, indicated by none of the targets in Aichi Biodiversity Targets were fully achieved. Aichi Biodiversity Targets were multiple targets previously set by CBD UN in efforts to save biodiversity in the 2011-2020 period.
The “Nature Loss and Sovereign Credit Ratings” report by Bennet Institute for Public Policy, Cambridge University, about 26 countries ranking in the “partial collapse of ecosystem services” scenario, Indonesia and China are the two countries that are predicted to experience a decline in their ability to pay credits due to the loss of plant and animal species. Twelve of 26 countries studied experience an increased risk of bankruptcy by more than 10 percent. This “partial collapse of ecosystem services” includes a 90 percent decline in ecosystem services in marine fisheries, illegal pollination, and tropical timber production.
This “partial collapse of ecosystem services” scenario will reduce economic performance, causing countries studied will have difficulty paying debts, burdened government budgets, and be forced to increase taxes, cut spending, or increase inflation. Indonesia, Malaysia, China, India, and Bangladesh are the five countries most vulnerable to bankruptcy due to the “partial collapse of ecosystem services” scenario.
the linkage between the finance sector and biodiversity
A number of global countries that ratified the Convention on Biodiversity are preparing for the Post-2020 Global Biodiversity Framework at COP15 which will be held in Montreal, Canada in December 2022. The framework will be used as a stepping stone toward the UN CBD’s vision in 2050, “Living Harmony with Nature”. One important thing that must be considered in achieving post-2020 global biodiversity protection targets is the linkage between the finance sector and biodiversity.
Currently, a “No Go” policy needs to be implemented for banks and financial institutions. The policy is carried out by prohibiting direct or indirect financing to every activity that fails to fulfill sustainability aspects which potentially causes negative impacts in areas prioritized for biodiversity. This policy’s goal is to prevent biodiversity loss, overcome climate change, and prevent zoonosis infection in humans.
Developing and developed countries need to increase financing to sustainability sectors. In Indonesia, Financial Services Authority (OJK) published “Green Taxonomy 1.0” in 2022 as a guideline for identifying economic activities that are harmful and not harmful to the environment. Green Taxonomy is expected to be able to accelerate energy transition financing which supports environment protection efforts, climate change mitigation and adaptation, and in line with Indonesia’s commitment to fulfilling net zero emission.
One obstacle that still often occurs is the lack of financing or investment that meets the sustainability aspect.
Improvements in Green Taxonomy also need to be carried out by removing the coal sector from the yellow category (not significantly damaging) even though in reality coal mining activities cause high disturbance to biodiversity Fossil fuel data investment in Indonesia Energy Transition Outlook (IETO) 2022 published by Institute for Essential Services Reform (IESR) in September 2021, shows that the electricity sector received a new investment of 3.61 billion USD or around Rp 51.4 trillion.
From those amounts, around 2.5 billion USD or Rp 35.6 trillion is the investment in fossil fuel-based power plants. In the same period, investment in renewable energy is only around 1.1 billion USD or around Rp 15.6 trillion from total investment and has never exceeded 2 billion USD or Rp 28.4 trillion over the past six years. Financing for mining is still very high. This mining supplies fossil energy raw materials massively.
According to the Ministry of Investment (BKPM), the Domestic Direct Investment (DDI) in Q1 2022 for the mining sector reaches 1.18 billion USD (around Rp 18.3 trillion) and was second only to the transportation sector. The Direct Foreign Investment (FDI) in Q1 2022 for the mining sector reaches 1.17 billion USD (around Rp 16.8 trillion) and was second only to the metal, metal goods, except machinery, and equipment Industry sector.
Indonesia needs to urgently decrease its dependency on fossil energy that negatively impacts biodiversity and nature, and accelerate the increasement of environment-friendly renewable energy uses. Nature-based Solutions (NbS) is important to be implemented to answer this problem.
According to International Union for Conservation of Nature (IUCN), Nature-based Solutions is described as “actions to protect, sustainably manage, and restore natural or modified ecosystems… simultaneously providing human well-being and biodiversity benefits”. It’s crucial to implement Nature-based Solutions in business activities that are potentially cause negative impact on biodiversity and nature.
The implementation of Nature-based Solutions needs support from financial institutions to achieve the Post-2020 Global Biodiversity Framework’s 15th: target “All businesses (public and private, large, medium and small) assess and report on their dependencies and impacts on biodiversity, from local to global, and reduce negative impacts and increase positive impacts to biodiversity”. Indonesia needs to accelerate the transition to renewable energy to encourage environmental improvements and prevent bankruptcy in the “partial collapse of ecosystem services”
This article is first published by Kompas.com: https://www.kompas.com/tren/read/2022/08/30/090711965/penyelamatan-keanekaragaman-hayati-terkait-dengan-pensiun-dini-pltu?page=all#page2
Ilham Setiawan Noer (AEER Biodiversity and Climate Program Coordinator)
Wulan Ramadani (AEER Climate and Finance Researcher)
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