Decarbonize Away Grills from Fire

Economic losses due to climate change could reach IDR 544 trillion. Efforts to reduce carbon emissions are still fragmented.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Dekarbonisasi Jauh Panggang dari Api

KOMPAS/AGUS SUSANTO

Air pollution in the Menteng area of Central Jakarta on Monday (9/5/2022) at 10:00 AM WIB. The air quality in Jakarta is still unfriendly for women and children.

Starting from 2019, the global average temperature has increased by 1.1 degrees Celsius, which is hotter than the pre-industrial period of the 1850s. The increase in temperature on the earth's surface is an indication of an increase in the concentration of greenhouse gases, including carbon dioxide (CO₂), methane (CH₄), and nitrogen monoxide (N₂O), which is trapped in the atmosphere.

Indonesia, as the world's largest archipelagic country, certainly feels the significant impact of the Earth's surface temperature increase. The fatal effects are felt by communities living on the front lines of areas affected by drought, floods, rising sea levels, forest and land fires, and so on.

The National Development Planning Agency (Bappenas) is projecting that the economic losses caused by the impact of climate change during the period of 2020-2024 will reach Rp 544 trillion. Without efforts to capture greenhouse gas concentrations or carbon emissions simultaneously, the economic losses suffered by this country will only continue to grow.

On the other hand, the Paris agreement in 2015 binds United Nations Framework Convention on Climate Change (UNFCCC) member countries, including Indonesia, to keep temperature increases below 2 degrees Celsius or ideally at 1.5 degrees Celsius by 2030.

Indonesia has conceptually planned to reduce carbon emissions as stated in the national contribution document (nationally determined contribution/NDC). With the NDC target, national carbon emissions in 2030 will be reduced by 31.89 percent without international assistance, and 43.2 percent lower with international assistance.

The results in the form of increased capacity of renewable energy mix are not yet visible. This is because the energy transition policy is still fragmented.

Energy transition

In fact, this year, there are at least three schemes that are being relied upon by stakeholders to pursue the realization of carbon emission reduction targets, namely by increasing the mix of renewable energy in primary energy, implementing carbon capture technology, and optimizing stock exchange carbon.

One of the steps taken by the government to achieve the NDC target is by striving to reach the 23 percent target for new and renewable energy (EBT) in the primary energy mix by 2025. Meanwhile, by the end of 2023, the EBT mix is still around 12 percent.

The Institute for Essential Services Reform (IESR) observes that the trend in renewable energy development tends to slow down, reaching only 0.97 gigawatts from the target of 3.4 gigawatts in the fourth quarter of 2023. This means that if this trend continues, Indonesia will not reach peak emissions due to stagnation decarbonization of the power sector.

Executive Director of IESR, Fabby Tumiwa, assesses that the result of the increase in renewable energy mix capacity has not been seen yet. This is because the energy transition policy is still fragmented. The relevant ministry still views climate change actions separately, instead of as an integrated system in one national development agenda.

"This consolidation phase seems to continue until the year 2024 before we begin the execution phase, when there is no drastic change in the political commitment," said Fabby.

Realizing that they are unable to meet the target for renewable energy in the primary energy mix, this year the National Energy Council (DEN), as the formulator of national energy policy, is targeting the approval of the new National Energy Policy (KEN) Government Regulation Draft (RPP). In this new policy, by 2025, the target for renewable energy in the primary energy mix will no longer be 23 percent, but rather 17-19 percent.

There was once great hope for the draft New and Renewable Energy Bill (EBET). This legislation includes, among other things, a mechanism for carbon economic value, ammonia as one of the new energy sources, and domestic component levels (TKDN) for renewable energy.

Unfortunately, the passage of the bill that was expected to be completed before the G20 Summit in Bali in November 2022, has continually been pushed back until the change of year 2024. On several key issues, the government's internal departments have yet to come to a consensus.

Up until now, there is no clear and well-developed strategy that aims towards sustainable development of renewable energy. Furthermore, this year's change in national leadership adds even more uncertainty to the energy transition agenda.

Technology implementation

Apart from the uncertainty of the energy transition, decarbonization steps this year will also be intensively carried out through the development of carbon capture, storage and utilization technology or carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS), in the mining and energy sectors.

Also read:Carbon Capture and Storage Technology is Considered a "Greenwashing" Practice

KOMPAS/TOTOK WIJAYANTO

Field personnel are monitoring the process of carbon dioxide (CO2) injection at JTB-161 well in the Jatibarang field, Indramayu, West Java, on Wednesday (26/10/2022).

CCS is a carbon capture and storage technology that prevents carbon emissions from being released into the atmosphere. As for CCUS, carbon is also utilized to increase oil and gas production.

President Director of PT Pertamina (Persero) Nicke Widyawati said the company is fully committed to developing the CCS/CCUS project as the key to accelerating decarbonization. In 2024, Pertamina will continue their collaboration with Chevron in developing the CCS Hub project in East Kalimantan.

"The use of fossil energy in Indonesia is still dominant. This means that we are still producing significant emissions, therefore it is important to take CCS technology seriously," said Nicke.

Meanwhile, in the energy sector, PT PLN (Persero) will continue its review of the development of underground carbon storage facilities at 19 coal-fired steam power plants (PLTU) this year.

The President Director of PT PLN Indonesia Power, a subsidiary of PLN which operates in the electricity generation sector, Edwin Nugraha Putra, explained that the company had mapped large capacity fossil generators and their potential storage capacity. He said that the development of CCS was a step by the PLN group in supporting NDC Indonesia.

Unfortunately, Greenpeace Indonesia has a different view. Greenpeace Indonesia Forest Campaigner Iqbal Damanik assesses that the implementation of CCS/CCUS technology in the mining or energy sector can be classified as a greenwashing practice.

CCS (Carbon Capture and Storage) is considered ineffective because it requires a large storage space for a long time and needs to be transported to a disposal area which involves expensive processes. "Meanwhile, the practice of injecting carbon in the implementation of CCUS is suspected to have the main goal of extracting more oil and gas," he said.

Carbon exchange

KOMPAS/CYPRIANUS ANTO SAPTOWALYONO

President Joko Widodo pressed the touch screen to mark the launch of the Indonesian Carbon Exchange at an event held at the Main Hall of the Indonesian Stock Exchange in Jakarta on Tuesday (26/9/2023). On that occasion, President Jokowi also signed a monument as a sign of the launch of the Indonesian Carbon Exchange.

One of the fastest schemes deemed to maximize decarbonization efforts while increasing investment in ecosystem management is carbon trading.

On September 26, 2023, the Indonesian Carbon Exchange was launched to facilitate the trading of carbon credit certificates at a price of Rp 69,600 per ton, which then decreased to the last price of Rp 59,200 per ton. Throughout the period from September 26 to the end of December 2023, the trading value on the Indonesian Carbon Exchange reached Rp 30.9 billion with a trading volume of 494,000 tons of carbon dioxide.

Until the end of 2023, 71.95 percent of carbon remains unsold. Inarno Djajadi, the Executive Head of the Supervisory Board of the Capital Market, Derivatives Finance, and Carbon Exchange of the Financial Services Authority (OJK), admitted that the Indonesian carbon market is still modest in terms of demand.

Also read:Carbon Markets for the Energy Transition

"One of the reasons is that there is currently no corporate obligation or obligation for specific parties to have carbon credits. Transactions in the carbon market tend to still be voluntary," he said.

Before the arrival of the Indonesian Carbon Exchange, trial practice for carbon trading had been conducted by the Ministry of ESDM in the electricity generation subsector with prices ranging from 2 US dollars to 18 US dollars per ton. In the first phase in 2023, there will be 99 coal-fired power plants with a capacity of 33.5 gigawatts that will trade carbon credits with each other.

KOMPAS/HERU SRI KUMORO

Steam Power Plant (PLTU) Suralaya, Merak, Cilegon, Banten, on Monday (28/8/2023). PT Perusahaan Listrik Negara (Persero) or PLN is being sued by the Central Information Commission to release emission data generated by the operation of PLTU Suralaya in Cilegon, Banten, and PLTU Ombilin in Padang, West Sumatra, to the public.

Fabby Tumiwa believes that building a comprehensive carbon market ecosystem in Indonesia requires careful planning and implementation by the government, especially regulators and related ministries.

"The integration of the market must be implemented to achieve a single system and mechanism for determining prices, as voluntary parties currently dominate the market," he said.

It can be concluded that the carbon trading ecosystem in Indonesia still needs time to play a significant role in helping to reduce greenhouse gas emissions. The comparison with the current condition of Indonesia to that of established carbon trading ecosystems in other countries is like comparing earth to the sky.

Various schemes to pursue the realization of carbon emission reduction have yet to fully capture the desperate need to slow down global warming, as indicated by the fact that progress remains far from satisfactory.

Currently, almost a quarter of global greenhouse gas emissions are covered by carbon reduction instruments, both in the form of emission trading systems (ETS) and carbon taxes. In 2022, according to World Bank data, global revenue from carbon taxes and ETS reached the highest ever recorded at 95 billion US dollars.

Various schemes to achieve carbon emission reduction have not yet depicted significant progress in curbing the pace of global warming. In order to ensure the decarbonization process doesn't fall short, concrete and adequate actions are required to accompany the climate targets set forth.