Jakarta – The Institute for Essential Services Reform (IESR) said that the energy transition is an important foundation for Indonesia’s sustainable and competitive economic growth in the face of the adverse impacts of climate change that cause hundreds of trillions of rupiah in economic losses per year.
IESR Executive Director Fabby Tumiwa said that a low-carbon energy policy is an absolute requirement for Indonesia to get out of the middle-income trap. He made the statement in IESR’s written statement released on Wednesday, 30 July.
“The Bappenas study shows that if Indonesia does not immediately shift to low-carbon development, it could lose up to Rp 550 trillion in economic revenue due to climate change impacts,” Fabby said, referring to the Low Carbon Development Initiative (LCDI) study designed by the National Development Planning Agency (Bappenas) as part of Indonesia’s road map to a developed country.
According to Fabby, air pollution in urban areas such as Jakarta has even caused economic losses of tens of trillions of rupiah per year, mainly due to decreased productivity and increased public health burden. This condition makes it clear that emission reduction efforts must be part of the national economic development strategy.
Furthermore, Fabby emphasised the importance of implementing the Second Nationally Determined Contribution (SNDC) and increasing emission reduction targets as a policy foundation that encourages green investment. However, he also warned that investors will not come if there is no legal guarantee and clean governance.
“We have to build trust. It is not enough just to set targets, but also to eradicate corruption, provide regulatory certainty, and ensure the availability of renewable energy for the industrial sector,” he said.
Fabby said that currently, many global investors, including in the manufacturing and data centre sectors, are starting to make access to clean energy a key requirement before investing. If Indonesia fails to provide sufficient renewable energy, other countries such as Malaysia or Vietnam could be a more attractive alternative due to their lower emissions intensity.
On the technical side, Fabby also highlighted the importance of developing biomass, geothermal and rooftop solar power plants as economical and environmentally friendly energy transition solutions.
For biomass plants, he suggested that raw materials be taken from trees planted on critical land and processed into wood chips, with a distribution distance of no more than 30 kilometres from the PLTU. “If the distance is too far, it will increase emissions from transport,” he explained.
On geothermal development, Fabby reminded that Indonesia holds around 40 per cent of global reserves. However, many potential sources are located in forest areas, so harmonious regulations are needed to prevent environmental damage from their utilisation.
Meanwhile, the utilisation of rooftop solar panels is still not optimal despite being regulated in Presidential Regulation No. 22/2017 on the National Energy General Plan (RUEN). The regulation actually requires government buildings to allocate 30 per cent of their roofs and luxury buildings 25 per cent for solar panel installation.
He added that luxury homes with a building area of more than 100 square metres hold huge solar energy potential, which could even generate hundreds of gigawatts of electricity if harnessed collectively.
By harnessing the abundant potential of renewable energy and strengthening regulations that support low-carbon development, Indonesia has a great opportunity to reduce losses due to the climate crisis and, at the same time, create more resilient and equitable economic growth. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
