July 21, 2022
JAKARTA – Our energy system is broke. Fossil fuels are causing irreparable climate damage and pollution. High fossil fuel prices inflict energy poverty, the loss of industrial competitiveness and leave people worried about their energy bills.
Supply chain challenges and the most recent geopolitical turmoil have reminded us about the costs to economies profoundly intertwined with fossil fuels.
Only radical action and a fast-track transition to renewables can fix our energy system. At the Group of 20 Summit in Rome last year, leaders agreed to collectively step-up climate action and pledged to stop the financing of coal power. Now is the time that the G20 can show leadership by taking concrete steps and act collectively to accelerate green growth.
Indonesia’s G20 priority to promote renewables for a sustainable recovery is the right way forward. Besides, it is the main way forward to decarbonize our world in line with Paris Agreement goals. Renewables are available in all countries, offering a way out of fossil fuel dependencies while driving energy security, economic growth and new jobs.
With its untapped potential for renewables, Indonesia can become a veritable frontrunner for energy transition in G20. In support of Indonesia’s net zero roadmap, the International Renewable Energy Agency’s (IRENA) upcoming Indonesian Energy Transition Outlook clearly shows the country’s ability to reach net zero ahead of time through a significant scale-up of renewables covering two-thirds of its energy demand in 2050. Solar PV alone could grow from 1 gigawatt (GW) today to over 500 GW in 2050 with coal power being gradually phased out over the next two decades.
It is true that investing in transition brings tangible socio-economic and welfare benefits to people. It grows the global economy and creates 85 million energy transition-related jobs worldwide by 2030. Over 26 million additional jobs in renewable energy alone and largely offsetting job losses in fossil fuels industries.
While market opportunities for renewables are huge, so are investment needs to capitalize on energy transition benefits. IRENA estimates investment in Indonesia will have to double current levels, to US$70 billion annually till 2050.
But countries investments in renewables are paying huge dividends. The 109 GW of renewable additions last year in non-Organisation for Economic Development and Co-operation countries, with lower costs than the cheapest coal-fired power plant, will save the power sector at least $5.7 billion annually over their project lifespan.
Ambitious, far-sighted policies and investment decisions can harness today’s cost-competitiveness of renewables to the benefits of people’s energy bills. Our Indonesia outlook for example sees the countries costs for solar PV to almost halve by 2050, making the business case to resolutely replace coal with renewables even stronger.
This follows the incredible cost decline for solar energy of over 80 percent that we have witnessed over the last 10 years in Asia and around the globe. More coal will not only jeopardize net zero, but also create a high risk of stranded assets.
Investment efforts do not stop at governments alone. International co-operation and multistakeholder involvement will be critical to finance the global energy transition, transfer innovation and unlock project funding. At IRENA, we are committed to play an active role in mobilizing renewable investments.
I particularly look forward to hosting our first regional investment forum in September as part of Indonesia’s G20 agenda in Bali. The forum brings together policymakers, companies, and investors from G20 and ASEAN to encourage policies, make investment accessible and prepare renewable projects on the ground.
Getting the energy transition done is a huge undertaking and needs all hands-on deck. I call on regional, multi-lateral development banks, funds, and the private sector to join us in channeling the necessary investment toward renewables in emerging economies and support a successful Indonesian G20 presidency.
*** The writer is director general of the International Renewable Energy Agency (IRENA).