January 6, 2023
JAKARTA – President Joko “Jokowi” Widodo declared late last month in his 2023 Economic Outlook address that this year would be one of economic resilience and structural transformation. He emphasized transitioning to green energy as a key policy to enhance economic resilience and competitiveness in the long run.
Indeed, with an initial funding commitment of US$20 billion over the next 3-5 years, the Just Energy Transition Partnership (JETP) in Indonesia, which was launched at the Group of 20 Leaders’ Summit in November 2022, will help Indonesia pivot from fossil fuels and simultaneously generate new and green economic opportunities.
The JETP lays out an achievable emissions trajectory for Indonesia. First, it caps power sector emissions at 290 megatons (Mt) of CO2 by 2030, around 19 percent lower than the previously set baseline of 357 Mt. This year also marks the peak of power sector emissions, seven years ahead of schedule, on the way to achieving net zero by 2050, or around 10 years ahead of the previously agreed schedule.
Second, the partnership restricts the development of captive coal plants while seeking to accelerate their retirement so that more renewable energy can power the grid. According to Presidential Regulation No. 112/2022, renewable energy will be possible when it becomes affordable at prices similar to or lower than fossil alternatives and reliable, meaning that it can meet baseload demand.
Opportunities and challenges abound. On the one hand, the JETP can help solve Indonesia’s energy trilemma of security, affordability and sustainability through empowering communities in resource-rich but electricity-poor regions. On the other hand, how can Indonesia deliver on this gargantuan task without sacrificing economic growth, or worse yet, incurring unaffordable debt?
In our view, the biggest obstacle lies in our dependency on coal-fired power plants. We need to somehow replace carbon-intense coal electricity without increasing the cost of electricity generation, which will be passed on to consumers. Relying on energy subsidies to dampen consumer prices are even worse, because it takes away state funding from better use in areas such as education, health services and basic infrastructure that are persistently lacking in these unelectrified areas.
In theory, replacing coal should not be too difficult if it is imported or sourced at market prices. However, resource nationalism implies that coal mined in Indonesia should be used primarily for domestic consumption and, according to one interpretation of sovereignty, need not adhere to global market prices. The government’s domestic market obligation (DMO) policy mandates miners to supply coal to the country’s coal-fired power plants at a fixed price, which is currently below the prevailing global equilibrium.
In effect, unless an affordable substitute is found, replacing coal can ignite political debate about our deep-seated understanding of resource sovereignty.
Luckily, tropical Indonesia is blessed with abundant biomass potential. If done right, biomass power plants can help achieve development goals beyond electricity generation. Biomass can be sourced using a variety of methods: planting fast-growing biomass crops on degraded and nonproductive land, gathering plantation and agriculture waste and converting municipal solid waste into useable fuel.
Undoubtedly, this fuel will have to be produced in a sustainable way and in line with international environmental, social and governmental (ESG) standards. A biomass production supply chain can also be developed around state forests without deforestation, if strict safeguards are put in place.
The first safeguard that needs to be put in place should be on how to plant biomass crops nationwide. It is important to introduce communities to biomass crops as a regenerative farming practice. Biomass production across the country can be driven by the fast-growing, leguminous species Gliricidia sepium, or Mexican lilac, locally known as gamal.
Native to Central America, gamal was introduced to Indonesia long ago and is commonly planted by communities to serve as a living fence, to protect terraces against erosion and as fodder crop. Gamal is not considered invasive or problematic like some other fast-growing species, but it is yet to generate economic value beyond its present use.
Gamal can provide sales of woody biomass for cofiring and local electricity generation, as well as provide additional livestock feed, if needed. These benefits are of great interest to local communities and can create a new rural economy.
Besides gamal, bamboo can also be used to promote soil carbon sequestration and to produce biomass feedstock, as has been demonstrated by a community-based biomass power plant pilot on Mentawai Island, West Sumatra. In Indonesia, bamboo is ubiquitous and can be found along rivers, villages, roadsides and open fields.
Bamboo is also suitable as an energy source where it grows, as it is socially acceptable, has a small ecological footprint and can be grown on marginal land, supported by a legal framework as a community-based plantation commodity, categorized as a non-timber forestry product (NTFP). As a member of the grass family, it also has an excellent growth rate with fast post-harvest regeneration and rarely needs replanting.
Under sustainable growing conditions, each hectare of bamboo can absorb up to 30 tons of CO2 equivalent annually.
Through the establishment of short rotation biomass crops such as gamal and bamboo, communities all over Indonesia can participate in biomass cofiring programs and actively contribute to the JETP. Building community-based biomass power plants in underdeveloped regions will also ensure that local communities will gain immediate economic benefits from the abundant natural resources surrounding their villages. Furthermore, the creation of these new economic activities will also reinforce efforts to safeguard and restore landscapes at the local level while reducing greenhouse gas emissions at the regional level.
The second safeguard that must be put in place is ensuring that biomass crops are planted with the active participation of local residents as landowners, crop growers or both. This participatory approach will make sure that nobody will be marginalized in this industry. Local residents can still decide what crop to plant where in their community.
Meanwhile, the government plans to grant community titles for 12.7 million hectares of land to communities living in and around forests. These titles will allow them to use NTFPs, practice agroforestry, operate tourism businesses and practice selective logging in designated production zones. The 60 million people who live within 1 kilometer of state forests across the country still rely, at least partially, on the land for their livelihoods, such as for NTFPs and smallholder agriculture, and managing or working on plantations.
The government also hopes to reduce the deforestation rate by giving communities land use rights through its social forestry program.
The last safeguard is to make sure that every biomass power plant, big or small, ultimately implements negative emission technologies (NETs). The three most common NETs used in the bioenergy sector are biomass gasification, biogas digester and bioenergy with carbon capture and storage (BECCS). Biomass gasification plants and biogas digesters have been in use in Indonesia since 2014. The lessons learned from those projects have also been shared widely among practitioners, academics and decision-makers.
The opportunity to scale up NETs is wide open, especially for use in underdeveloped regions.
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The writers are lecturers at the Center for Energy Security Studies of the Indonesia Defense University. The views expressed are personal.