Jakarta. President Joko "Jokowi" Widodo has issued a new presidential regulation that stops issuing licenses for new coal-fired power plants to boost the development of new and renewable energy sources in Indonesia.
The 2022 Presidential Regulation about Acceleration of Renewable Energy Developments unveiled on Wednesday also requires the energy minister to draw up a roadmap to accelerate the termination of all coal-fired power plants before 2050.
Still, the regulation leaves some loopholes that still allow companies to build new coal-fired power plants over the next few years. For one, coal-fired power plant projects that have secured their permits before the presidential regulation will be allowed to continue. Also, coal-fired power plants integrated with any projects listed in the government's National Strategic Projects list will be allowed to proceed.
The exempted committing over plants must fulfill several requirements, the regulation stipulated. That includes committing to reducing greenhouse gas emissions within ten years since they started operation by at least 35 percent compared to the typical coal-fired power plant emissions in 2021.
The regulation said that to achieve the emission reduction target, the exempted coal-fired power plants could develop new technology, buy carbon offsets, or mix their power generation with renewable energy. The power plants also have to agree to cease operation by 2050.
President Jokowi also requires Perusahaan Listrik Negara (PLN), the state-owned utility company that holds a monopoly for electricity distribution in Indonesia, to accelerate the termination of coal-fired power plants under their control.
Coal currently accounts for 38 percent of Indonesia's total energy mix, while renewable energy only accounts for percent. The remainder comes from oil fuels, primarily used in transportation, and natural gas.
By 2060, Indonesia wants to have no emissions at all. According to the BP Statistical Review 2021, Indonesia released 575 million metric tons of carbon dioxide into the atmosphere in 2020, a 7.4 percent decrease from the previous year.
Fuel Subsidy Diversion
The presidential regulation contains a clause stipulating that the government can now provide financial support for renewable projects through blended finance sourced from the state budget or other sources.
Fahmy Radhi, an energy observer at the University of Gajah Mada in Yogyakarta, said the government would move in the right direction if it started allocating the current fuel subsidies spending for developing new renewable energy sources.
"I think it is correct. Because without subsidies and incentives, the development will be slow like today. Developed countries, such as Australia, also allocated subsidy funds for new and renewable energy sources until they can commercially be produced. After that, they can be slowly weaned off," Fahmy said.
Komaidi Notonegoro, the executive director of the energy think tank ReforMiner Institute, said the main challenge faced by Indonesia in developing new and renewable energy sources was cost.
"Generally, it's still expensive, about 1.5 - 2 times [of fossil energy cost]," Komaidi said. He urged the government to divert some of the fuel subsidies for renewables, "as long as the duties and obligations government in protecting the poor's buying power can be ensured," he said.