APCEL Webinar Series: Energy, Climate and Environmental Issues in Indonesia – Indonesian State-Owned Companies and GHG Reduction Targets

On 12 June 2024, APCEL held a webinar on reduction of greenhouse gas (GHG) emissions by state-owned enterprises (SOEs) in Indonesia. This webinar is the second of a three-webinar series on energy, climate and environmental issues in Indonesia.

As they organise Indonesia’s main energy sources and sectors, SOEs – mainly Pertamina and PLN –  are crucial to Indonesia’s success in reducing GHG emissions. Currently, more than 60 per cent of the country’s electricity is powered by coal, while energy demand and population numbers are increasing. During the webinar, participants heard from four Indonesian panelists across government, industry and research sectors about the progress and challenges of implementation of renewable energy projects by SOEs. Dr Linda Yanti Sulistiawati, Senior Research Fellow at APCEL, moderated the discussion in a talk show format.

Prof Dr. Eng. Deendarlianto, S.T., M.Eng., National Research Council, spoke about the challenge of developing new markets and technologies to transform SOEs from oil and gas companies to innovative energy companies. These including the need for greater regulation, talent and government incentives. Currently, many large universities offer courses on renewable energy for students and the workforce, and there are research institutes for sustainability and innovation.

Mr Fabby Tumiwa, Executive Director, Institute for Essential Services Reform, shared that SOEs need financing to grow. International financing in turn requires strong environmental, social and governance (ESG) performance, which Pertamina (Indonesia’s oil and gas SOE) and PLN (Indonesia’s energy utility SOE) are making good progress on. There is pressure from the government, the public and especially the market (in the form of stringent criteria for financing projects) for SOEs to reduce GHG emissions.

Mr Dida Gadera, S.T., M.Sc, Deputy II, Food and Agribusiness, Coordinating Ministry of Economic Development Indonesia, explained that SOEs, fertiliser and sugar companies are key stakeholders in reducing GHG emissions. Bioethanol has been identified as a potential product for renewable energy and Pertamina is set to begin producing bioethanol from sugar cane. The state-owned enterprise banks will increase investment in green energy projects. He underlined that Indonesia’s net zero is on the right track, but most importantly the Government is highly committed to reach the target of Indonesia’s enhanced NDCs.

Mr S Suripno, Vice-President of Sustainability, Pertamina, said that Pertamina has a major ambition of being a leading global energy company with good governance. Pertamina is decarbonising its own operations (reducing Scope 1 and 2 emissions) and developing a low carbon business (Scope 3 emissions), in line with Indonesia’s nationally determined contribution (NDC) of net zero emissions by 2060 or earlier. Pertamina is currently the largest geothermal energy producer in Indonesia and is developing solar and biofuel capabilities, and has reduced CO2 emissions by 30% compared to baseline 2010 levels. Nevertheless, carbon capture, utilisation and storage (CCUS) are still important for the decarbonisation process, and requires collaboration from the government given that the cost of CCUS is high.

Participants posed a variety of questions ranging from increasing the pace of renewable energy adoption to just transition to the de-risking of renewable investments, which made for an active Q&A session. The panellists shared that Indonesia has a welcoming and conducive environment for investment under the Just Energy Transition Partnership (JETP), though the country cannot jump past gas and needs to follow through with the energy transition step-by-step.

Overall, there was optimism that Indonesia and its SOEs are working towards increasing the share of renewable energy in Indonesia, especially through bio-jet fuel and bioethanol.

Our next event in November 2024 will be on just transition in Indonesia. More details will be available in due course.

Quick Links

The following slides are available for viewing: –

• “The role of state-owned companies in Indonesia’s energy transition” by Prof Dr. Eng. Deendarlianto, S.T., M.Eng.; and
• “Landscape Approach and Energy Transition: Role of State-Owned Companies” by Mr Dida Gadera, S.T., M.Sc.