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Ensuring that the vital transition to sustainable energy systems takes place rapidly enough to keep the planet inhabitable requires the burden to be shared equitably among global stakeholders.

Indonesia has made creating a framework to deliver a fair energy transition a central focus of its G20 2022 presidency. As an emerging economy with burgeoning energy demand, Indonesia is cognizant of the need for a diversity of decarbonization paths and the financial structures to support them.

Domestically, Indonesia’s multi-pronged approach to climate action takes in EVs, biofuel, phasing out of coal and development of renewables, along with the protection of its vast forests, which are crucial for absorbing CO2.

Indonesia is already experiencing the impacts of climate breakdown itself, notes Minister of Energy and Mineral Resources Arifin Tasrif, “50% of its total biodiversity is at risk, 80% of its coral reefs are in severe condition because of warming sea-surface temperatures, sea level rise and other stresses.”

Working for an equitable energy transition
In November last year, Indonesia kicked off its historic first term of the G20 presidency by showing its own commitment to shifting to sustainability by signing an agreement with the International Renewable Energy Agency (IRENA) to create a comprehensive transition roadmap.

Meanwhile, in a series of G20 Energy Transitions Working Group (ETWG) meetings held since April this year, attended by energy ministers and other decision makers from member states, a wide range of challenges have been examined.

These include how to make the transition people-centered, carbon capture tech, energy security, renewables development, alternative fuels and nuclear power. The issue of how use the transition to help eradicate energy poverty through electrification, particularly as it relates to smaller developing island nations, was also addressed.

Developing countries as a whole are facing a proportionally heavier financial burden in the shift to a sustainable economy as many are heavily engaged in energy-intensive industries, and more reliant on coal for power generation. These nations are also some of the most susceptible to the impacts of climate change. Indonesia is determined to ensure such voices are heard and use its presidency, as ETWG Chair Yudo Dwinanda Priaadi explains, “to enhance ambitions towards inclusive, sustainable, clean and just energy transitions that leave no one behind.”

Electric vehicle hub
As part of the efforts to achieve a 29% cut in CO2 emissions by 2030 and carbon neutrality by 2060, the government has set an ambitious target of 2 million EVs on the road by 2025, and is currently ramping up infrastructure such as charging stations. Not content to stop there, the plan is to make the nation nothing less than an EV manufacturing hub for Southeast Asia.

Hyundai recently broke ground on a manufacturing facility in Indonesia set to turn out 130.000 EVs set by the Government of Indonesia. That figure may rise in the future, according to Choi Yoon Seok, president of PT. Hyundai Motors Manufacturing Indonesia.

EVs have been designated the official cars for the 2022 Bali G20 Summit in November and around 500 vehicles will be supplied by Hyundai.

The Korean auto giant is also investing in a large-scale EV battery plant in Indonesia with partner LG Energy Solution. Meanwhile, state-owned Indonesia Battery Corporation also attracted a major investment from LG this year, along with funds from Chinese companies, with the aim of meeting the growing demand for EV batteries. One reason it makes sense to develop this section of the EV supply chain domestically is that Indonesia is home to the world’s largest deposits of nickel, a key component in EV batteries.

Rather than export nickel for battery production and then import the finished product, says Yohannes Nangoi, chairman of GAIKINDO (Association of Indonesia Automotive Industries), “We invite investors, we invite the technology companies from outside the country to make the batteries in Indonesia.”

Harnessing the power of renewables
EVs are an important step toward decarbonization, but if the electricity used to power them is responsible for carbon emissions, they are not even half a solution. Energy generation systems need to shift away from using fossil fuels and renewables are playing a major part in that transformation.

Indonesia is implementing “massive renewable energy development” covering solar, wind, hydro, bio, ocean, geothermal, hydrogen, nuclear and storage systems, with the aim of it supplying 23% of the nation’s power by 2025, explains energy minister Tasrif. On its path to carbon neutrality by 2060, there will be gradual retirement of coal-fired power plants, conversion of diesel-powered plants to renewable projects and deployment of carbon capture technology.

National power company PLN is this year adding renewable capacity, with solar, geothermal, wind, and waste-to-energy plants, and has signed contracts to supply electricity from renewable sources to companies including Toyota, H&M and GoTo. Hydropower remains relatively untapped, though as President Joko Widodo noted last year, with more than 4,000 rivers, Indonesia has vast potential.

Protecting precious forestry resources
Another of Indonesia’s great natural resources are its expanses of rainforest, the third- largest in the world. Forested lands are crucial for absorbing carbon dioxide from the atmosphere and government initiatives have helped slash the deforestation rate, while reforestation programs are restoring tree cover to some areas. Deforestation has slowed to the lowest level in two decades, though there is no room for complacency in the fight to protect one of the world’s lungs.

In September, Indonesia and Norway revived an agreement under which the Scandinavian country will provide financial contributions to protection of the rainforests, based on the amount of carbon dioxide emissions prevented. Such an arrangement is aligned with the approach Indonesia is calling for in the energy transition, whereby a nation that has massively profited from fossil fuels over the decades shares the burden of an emerging economy as it decarbonizes.

The climate crisis cannot be ignored by any nation and needs international cooperation to create and implement the initiatives required to face its many challenges. Indonesia is working to facilitate cross-border approaches and be a pioneer for just, equitable and realistic solutions both in Southeast Asia and across the globe.

To find out more, visit investindonesia.go.id

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