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Renewable energy, energy conservation can help Indonesia reach climate change targets: new WB study

December 9, 2010

Jakarta, December 9, 2010 – A new World Bank study on sustainable energy in East Asia says a greater use of natural gas can help the Indonesian government reach its target of reducing greenhouse gas emissions by 26 percent by 2020. Winds of Change: East Asia’s Sustainable Energy Future, a study funded by the Australian government through AusAID, also suggests that a shift in emphasis from coal to renewable energy would help quicken the pace of Indonesia’s move to a more environmentally sustainable energy path. Energy use is Indonesia’s second largest source of emissions, and one of the fastest growing. On a business-as-usual path, Indonesia’s energy-related emissions will dominate by 2030.

“Indonesia has the advantage of having the world’s largest geothermal resources and the region’s richest natural gas reserves  in switching to a clean energy path,” says World Bank Senior Energy Specialist Xiaodong Wang, who authored the study.“The Indonesian government has the political will to strengthen its energy security and increase utilization of renewable energy sources.”  World Bank Country Director for Indonesia, Stefan Koeberle adds, “A sustainable energy future is not only good for the global environment, but also has substantial local development benefits for Indonesia to improve local air quality, enhance energy security and create jobs.”  

“The study’s recommendation to diversify Indonesia’s energy mix with renewable energy sources is in line with the Indonesian government’s ‘25/25 vision’, in which we plan to have renewable energies fulfill 25 percent of the country’s energy needs by 2025,” says Directorate-General for New and Renewable Energy and Energy Conservation at Indonesia’s Energy and Mineral Resources Ministry, Luluk Soemiarso“Under this new vision, Indonesia endeavors to make national energy use more efficient through a strengthening of energy conservation policies, and by diversifying its energy sources.”  

As funders  of the East Asian energy study, AusAID commends Indonesia’s commitment to tackling climate change. “A top priority in Indonesia and Australia’s climate change cooperation is finding cost-effective ways to tackle this challenge and explore options that can help Indonesia successfully reduce emissions from deforestation and forest degradation,” said AusAID Infrastructure Counselor, Ben Power. ”Pursuing low carbon growth options such as increased use of renewable energy sources will be important for Indonesia to achieve its targeted 26 per cent reduction in greenhouse gas emissions.  Indonesia has also set a more ambitious target of a 41 per cent  reduction in emissions with the support of international partners, such as Australia.

The study notes that energy conservation is a cost-effective short-term option to addressing the current power crisis in Indonesia, enhancing energy security, and mitigating climate change. Existing policies that recognize the benefits of efficient energy usage include the 2003-2020 National Energy Policy; Energy Blueprint 2005-2025; and the recently approved Electricity Law No. 30/2009. These policies, the report says, would need to be beefed up with detailed guidelines and action plans – such as strict energy performance standards and financial incentive schemes – to ensure successful implementation. 

A further step to ensuring a secure and sustainable energy sector would be for Indonesia to continue its policy of reducing fossil fuel subsidies and shift them to green subsidies. Despite the best of its intentions – i.e. protecting the poor, the current fossil fuel subsidies actually end up benefiting the rich more.

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