Indonesia

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Background

The OECD Clean Energy Finance and Investment Mobilisation Programme (CEFIM), along with the International Energy Agency, are assisting the Indonesian Government’s efforts to develop a domestic ETS through a series of technical Focus Group Discussions (FGDs). Building on international experience and OECD/IEA work, these FGDs will make deep-dives into a variety of critical aspects of the development of effective ETS schemes, relevant to the Indonesian context. These events will be taking place in Q4 2021-H1 2022. 

Overview

As a key driver of energy-related emissions, decarbonising Indonesia’s power system will be determinant to achieve the country’s climate objectives. Indeed, under its recently updated nationally determined contribution (NDC), Indonesia aims to reduce its greenhouse gas (GHG) emissions by 29% (or 41% with international support) by 2030 and achieve a net-zero emissions target by 2060. As the country’s second largest greenhouse gas emitter, the energy (and power) sector is to make a major contribution towards these emission reduction targets.

Given the size of the challenge, Indonesia has been taking key steps to promote a clean energy transition. Most notably, Indonesia implemented a coal moratorium for new plants starting in 2022 and is planning for a massive increase of low-carbon power generation until 2060. In total, this transition away from coal will require a whopping USD 1.165 trillion.

To support these measures, Indonesia is now looking to set a carbon price for the power and industry sectors in the form of a domestic ETS, with a view to helping stimulate and drive investment towards low-carbon energy sources. As an initial step, Indonesia ran a voluntary emissions trading trial in the power sector from March to August 2021. The results of the pilot will be used to inform the mandatory ETS.

In light of these issues, this first FGD discussed Indonesia’s goals and early progress on the implementation of the ETS trial and different international approaches to designing and implementing ETS schemes in the power sector. During the discussion, country experts shared their experience designing and implementing such schemes as well as highlighted lessons learned that could also be useful in the Indonesian context. An open dialogue, convening representatives from government institutions, development partners and other relevant stakeholders, was organised in the last part of the event to inform and identify priority areas for ETS development in Indonesia.

• Watch the video recording of the event 

Speakers

Opening remarks

• Wanhar, Director of Electricity Engineering and Environment, MEMR
• Cecilia Tam, CEFIM Programme Team Leader, OECD

Panel Discussion

Moderator: Hakimul Batih, Indonesia Programme Local Representative, OECD

• Emma Rachmawati, Director for Climate Mitigation, MoEF: “Indonesia’s climate goals: contribution of the power sector”
• Bayu Nugroho, Coordinator for Electricity Environment Protection, MEMR: “Indonesia's emision cap and trade in the power sector” 
• Syofvi Roekman, Director of Human Capital and Management, PLN: “Experience from the ETS trial”

Panel Discussion

Moderator: Jeremy Faroi, Indonesia Programme Co-ordinator, OECD 

• Kieran McNamara, Senior analyst, IEA: “International approaches to ETS scheme design in the power sector”
• Zhang Xiliang, Professor of Management Science and Engineering & Director, Institute of Energy, Environment, and Economy, Tsinghua University: “Lessons learned from China ETS scheme implementation”
• Insung Son, Research Fellow, Climate Change Policy Research Division, Korea Energy Economics Institute: “Lessons learned from South Korea’s ETS scheme implementation”