Jakarta – In a new white paper titled “Indonesia’s Net Zero Emissions Journey: The Impact of Clean Energy Targets on the Oil and Gas Industry,” Asia-focused consultancy YCP Group explores the changes taking place in the industry and the challenges it faces.
Amidst the increasing need for net zero emissions (NZE) initiatives, Indonesia’s oil and gas industry faces major challenges in maintaining its relevance in the era of renewable energy transition.
This white paper outlines challenges such as high investment costs and lack of education regarding the changes required to transition to renewable energy. It also offers potential solutions and a roadmap for the future development of the energy market.
“We encourage all stakeholders to be part of this pioneering movement in Indonesia and help shape the future of energy,” said YCP Partner & Country Manager Indonesia, Septian Waluyan, at the Leaders’ Breakfast on Thursday, July 25, which brought together leading practitioners and experts in Indonesia’s oil and gas industry to discuss the impact of the clean energy transition on the industry.
Over the past decade, the oil and gas sector has become Indonesia’s largest energy supplier, accounting for 33.4% of the total energy supply. However, the sector’s contribution to gross domestic product (GDP) declined by 2.6%, while other sectors grew by 4.2%.
Renewable energy demand is growing at a CAGR of 4.5%, especially for wind and solar energy, and is predicted to surpass oil and gas as the main energy source. Indonesia’s oil and gas industry remains a significant contributor to CO2 emissions.
Oil and gas companies produced 658,540 barrels of oil per day (bopd), which led to a 13.2% increase in emissions, totalling nearly 330.5 million metric tons. This figure shows the urgent need for more NZE initiatives to reduce carbon emissions from industrial activities.
Meanwhile, Managing Partner and CEO of YCP Management Services, Pilar Dieter, emphasized the importance of joint commitment between governments and the private sector to achieve NZE targets.
“Governments around the world have set ambitious Net Zero Emissions (NZE) targets, which in turn encourage the private sector and business community to make strong commitments to achieve these goals. Achieving critical NZE targets requires a mix of commitment, collaborative partnerships and technological innovation,” she said.
However, Pilar also cautioned that many good business plans can face obstacles, ranging from political and social resistance to economic degradation affecting their financial performance, leading to delays and revisions of their commitments.
Indonesia’s clean energy transition also offers significant growth opportunities for energy stakeholders and other businesses. Public and private sector players are expected to accelerate their efforts through public-private collaboration to achieve NZE goals.
With the challenges at hand, Indonesia’s oil and gas industry must adapt and innovate to remain relevant in the renewable energy era, while contributing to global efforts to reduce emissions and maintain environmental sustainability. (Hartatik)
