Jakarta – US company Air Products and Chemicals (APC) Inc.’s decision to withdraw from the coal gasification project consortium in Indonesia is correct according to the Institute for Essential Services Reform (IESR).
IESR Director Fabby Tumiwa assesses the Dimethyl Ether (DME) project in South Sumatra and the ethanol project with PT Kaltim Prima Coal (KPC) in East Kalimantan is not economically viable in line with rising coal prices and increasing investment costs by incorporating Carbon Capture and Carbon Capture Storage (CCS) technology.
“APC’s withdrawal from this project can actually save state finances in the future because it does not have to subsidise DME products whose production costs are more expensive than imported LPG,” said IESR Executive Director, Fabby Tumiwa in a recent statement.
APC’s withdrawal from the consortium of coal gasification projects in Indonesia will affect the plan to substitute LPG with 1.4 million metric tons/year of DME from coal gasification or equivalent to 1 million tons of Liquefied Petroleum Gas (LPG). For this reason, increasing the renewable energy mix and encouraging the conversion of gas stoves to induction electric stoves is the right step to overcome the failure of the DME project.
Tumiwa said at the same time the government must still try to reduce LPG imports which have reached 80% of supply in Indonesia, among others by encouraging the use of induction electric stoves.
Induction cookers will ease the burden on the state budget
Last year, the public criticised the plan to distribute induction cookers until it was finally cancelled due to problems with poor public communication. However, the program must be discussed again and its implementation supported as the use of induction electric stoves will also cut LPG imports which are a burden on the state budget.
Citing data from the Ministry of Energy and Mineral Resources (EMR), the majority of LPG is consumed by the household sector as much as 96%, the commercial sector 2.5% and the industry 1.5%. According to the Coordinating Ministry for Maritime Affairs and Investment, so far Indonesia has imported LPG worth IDR 80 trillion out of a total requirement of IDR 100 trillion. Meanwhile, the LPG subsidy provided by the government reaches IDR 70 trillion. LPG consumption in 2021 will reach 7.95 million tons, of which 6.4 million tons will come from imports.
Faris Adnan, IESR Researcher said, the costs incurred by the community when using an induction cooker can be 10-30% lower than using a gas stove. “If LPG is without subsidies, the operating costs of electric stoves are more economical by up to 47% per year when compared to operating costs for gas stoves,” he explained.
The government needs to increase the NRE mix ambitiously
Adnan said from the emission perspective, the electrification of cooking equipment will reduce greenhouse gas emissions if the renewable energy mix in Indonesia’s energy system is more than 50% by 2030. Every one million households using an electric stove can increase electricity demand by 1 TWh. For this reason, it is important that this additional electricity demand is supplied by renewable energy.
“In order for electric stoves to have at least the same emissions as gas stoves, the mix of renewable energy in power plants in 2030 needs to reach 54% and the coal mix down to 29%, so that electricity generation emissions become 0.415 kgCO2/kWh from 0.781 kgCO2/kWh. For this reason, the government also needs to ambitiously increase the mix of renewable energy in power plants and reduce the portion of coal in power plants,” he said.
However, Adnan added, when compared to using DME, emissions from electric stoves will be lower by 34% in 2025 and 46% in 2030. This calculation assumes that DME production facilities from coal are not equipped with carbon capture and storage technology, resulting in high emissions. If the 1.4 million metric tons/year of DME used for cooking is replaced by electricity, then in 2025 it is predicted to save emissions of 2.92 million tons of CO2 and 3.94 million tons of CO2 in 2030. In addition, transition 1, This 4 million metric tons of DME to electricity can increase electricity demand by 7.2 TWh per year. (Hartatik)
