Jakarta – The Institute for Essential Services Reform (IESR), in the launch of Indonesia Energy Transition Outlook (IETO) 2025 on Thursday, December 6, 2024, said that Indonesia’s fossil energy mix continues to rise while renewable energy growth is much lower. Even electricity supply from power plants has reached the highest level in the last five years, and energy intensity is still below the target set by the National Energy Policy (KEN).
The National Long-Term Development Plan (RPJPN) Law 2025-2045, with energy transition as one of its main objectives, seems to be countered by the new KEN, which lowers the renewable energy mix target to 17-19 per cent in 2025 and the target in 2045. In addition, since the launch of the 2021-2030 Electricity Supply Business Plan (RUPTL), which is claimed to be a green RUPTL, in fact it has not brought significant changes.
Most renewable energy generation projects that must be executed in 2021-2025 have not been auctioned, constructed and operated. By 2024, the renewable energy mix target will only be around 13.1 per cent, whereas the original target was 23 per cent by 2025.
IESR assesses that Indonesia’s energy transition is at a crossroads between continuing to accommodate the economic and political interests of the fossil industry or immediately shifting to renewable energy and building a low-carbon economy. IESR notes that indecision in determining the direction and pace of the energy transition could threaten the achievement of the net zero emission (NZE) target before 2050, as targeted by President Prabowo in his statement at the G20 Summit in Brazil while weakening Indonesia’s chances of becoming a major player in the global renewable energy market.
Similarly, the 2024 Transition Readiness Framework (TRF) observed that despite significant progress in the cost competitiveness of low-carbon technologies and fuels, the energy transition is still hampered by a lack of political commitment, unattractive regulations, and unsupportive governance.
Raditya Wiranegara, IESR Research Manager and co-author of IETO 2025 revealed that all sectors are still significantly dependent on fossil fuels, with the dominant use of coal, liquefied petroleum gas (LPG), and fuel oil (BBM). In the electricity sector, 81 per cent of its energy came from fossil energy in 2023. Not only that, power plants outside PLN’s business area (captive) grew in capacity to 21 GW in 2023, contributing to a 27 per cent increase in emissions in the same year. In addition, 87 per cent of households use subsidised LPG, with total subsidies reaching Rp83 trillion in the fourth quarter of 2024. Meanwhile, renewable energy only has a very small contribution to the energy mix. For example, in the industrial sector, renewable energy only contributes 6.52 per cent of the total energy used.
“The government needs to progressively reduce fossil fuel subsidies and shift the subsidies to the renewable energy sector. In addition, President Prabowo’s statement on the early retirement of coal-fired power plants by 2040 should be realised immediately, starting from the least efficient power plants instead of equipping them with CCS/CCUS technology. From our analysis, early retirement of PLTU Cirebon-1, for example, will require its carbon reduction cost to be around USD 31-40/tCO2e, lower than CCS ,which reaches USD 62-324/tCO2e. Additionally, the government needs to improve the supervision of captive power plants and encourage the industry to switch to renewable energy,” Raditya explained. (Hartatik)
