With Global Energy Crisis Looming, Energy Transition Efforts Need to be Accelerated

Name: With Global Energy Crisis Looming, Energy Transition Efforts Need to be Accelerated
Uploaded: 2022-11-13T15:03:25Z
Duration: 20 min 32 s
Description: G20 member countries declared their commitment to accelerate their energy transition efforts at the G20 Bali Summit.

G20 member countries declared their commitment to accelerate their energy transition efforts at the G20 Bali Summit.

AGNES THEODORA,

· 6 minutes read

NUSA DUA, KOMPAS — Despite being on the right track, commitments among nations to accelerate their energy transition processes have experienced speed bumps as of late due to the looming threat of a global energy crisis. Through next week's G20 Summit in Bali, these commitments to accelerate energy transition efforts will be echoed once again.

As President of the G20 this year, Indonesia will announce its commitment to work together to carry out a faster energy transition. The Indonesian Government itself has explored a number of collaborations towards this end through various funding schemes and through the private sector.

According to Energy and Mineral Resources Minister Arifin Tasrif, mechanisms for accelerating energy transition are still being prepared. With the threat of both a global energy crisis and geopolitical tensions on the horizon, the transition to new renewable energy (NRE) needs to be put back on track or even accelerated.

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"The current energy crisis is proof that we can no longer just depend on fossil energy," said Arifin at the 2022 BloombergNEF Summit, as part of the G20's series of events, in Nusa Dua, Bali, on Saturday (12/11/2022).

The G20 member countries, via an Energy Transition Working Group, voiced their commitment to accelerate the energy transition process through the Bali Compact Declaration or the Bali Common Principles in Accelerating Clean Energy Transitions. This joint consensus statement will be brought to the level of heads of state at the end of the G20 Summit, which is set to be held on November 15-16, 2022.

According to Arifin, the Bali Compact would provide a clearer picture of the road map for each country in making the energy transition.

“We can start calculating how much funding and technology will be needed, as well as what infrastructure should be built. More importantly, [we can figure out] what kind of cooperation we can achieve to encourage innovation and funding for developing countries," Arifin said.

When it comes to Indonesia, one of the main challenges it faces is the early retirement of its coal-based steam power plants. It won't be cheap for the power-generating sector to carry out an energy transition.

According to Arifin, there are still a number of serious obstacles that must be faced, especially when it comes to the financing needed to support energy transition projects in Indonesia and other developing countries. "In the context of replacing power plants with energy that is more environmentally friendly, it must be admitted that it is very difficult to get funding support," Arifid said.

Meanwhile, according to Architradi Priambodo, Deputy Team Leader of the Energy Transition Mechanism at the Asian Development Bank (ADB), current energy transition commitments are still on the right track, including in the Asian region. "Moreover, the threat of an energy crisis and the current volatility in energy costs further emphasize the importance of alternative energy," Architradi said.

A number of power plants set to be "retired" have been identified, along with how much it will cost to make an energy transition happen.

At the same time, he acknowledged that there was a tendency towards slower transitions due to the current global uncertainty. "We are on the right track. There is also a lot of momentum for the energy transition. However, we are not moving at the speed we should be moving," Architradi said.

Announcing cooperation efforts

Finance Minister Sri Mulyani Indrawati said the government had taken a number of steps to accelerate its energy transition efforts. A follow-up to the government's energy transition commitment will be announced by making public an energy transition funding cooperation project at the G20 Summit.

“I will not divulge everything because this is a commitment by heads of state. However, next week, we will announce a commitment to cooperation in the energy transition. We hope that the scale will be large enough to encourage international confidence in Indonesia's commitment to the energy transition," she said.

RENY SRI AYU ARMAN
Tolo' Power Plant in Binamu District, Jeneponto Regency, South Sulawesi, flanking the setting sun, on Wednesday (13/10/2021).

She added that the government had already sat down with state-owned electricity company (PLN) to prepare steps to end coal-based steam power plants. A number of power plants set to be "retired" have been identified, along with how much it will cost to make an energy transition happen.

As is known, Indonesia is committed to reducing greenhouse gas emissions in accordance with a nationally determined contribution (NDC) plan. Indonesia's original target was to reduce carbon emissions by 29 percent on its own and 41 percent with international support by 2030.

The target was then revised to be higher, just before this year's COP27 event. It went up to 31.89 percent for Indonesia to do on its own and 43.2 percent through international support by 2030.

Previously, during a speech at the opening of the B20 Summit Side Event in Nusa Dua, Badung, Bali, on Friday (11/11), Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said that Indonesia had managed to agree on a cooperation program with the United States (US) through the Just Energy Transition Partnership (JETP) scheme.

The results of this cooperation will be announced at the G20 Summit. President Joko Widodo is also planning to hold a bilateral meeting with US President Joe Biden.

According to Luhut, Indonesia's negotiations with the US were quite tough. When meeting with US Treasury Secretary Janet Yellen, Luhut said it would be unfair if the US asked Indonesia to both reduce carbon emissions at the same level when the emissions each country produced were far different.

MADE NAGI/POOL/AFP
Indonesia's Finance Minister Sri Mulyani Indrawati (left) greets US Treasury Secretary Janet Yellen during their bilateral meeting at the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, on July 15, 2022.

“I suggest to you: How about you lower [your carbon emissions], while we boost ours. Only after we are both at the same level will we lower our emissions together. That's just fair. She [Yellen] finally told me, that made sense," Luhut said.

Luhut added that there were four requirements that Indonesia put forward in its negotiations with the US. First is that policies on climate change should not interfere with Indonesia's fast economic growth. Second is that there has to be support in the form of low-cost and affordable technology.

Third is that energy transition must be done at the appropriate time. Fourth is that loans or financing provided to Indonesia to carry out its energy transition must come from countries with good credit ratings.

This article was translated by Prasiddha Gustanto

Editor:

NASRU ALAM AZIZ

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