Indonesia is on the brink of an energy revolution. But with emissions still growing, its energy-mix trajectory has become the subject of heated debate, with renewable startups jostling for space with legacy industries such as coal.
For clean-energy proponents, the recent inclusion of a “New and Renewable Energy Bill” in the national priority legislation list has seemed like a breath of fresh air. The bill is expected to act as a legal roadmap that will accelerate the energy transition in Indonesia.
However, amid the existence of various other policies that clearly favor the coal industry, the question remains as to whether the bill will really overcome the barriers to change in Indonesia.
Analyzing the bill
The rationale for the New and Renewable Energy Bill was laid out in an academic white paper published in the Indonesian Parliament’s document repository. The aim, it stated, is to provide more legal certainty for energy transition – touting renewable energy as the nation’s future, replacing the use of fossil fuels for industrial needs, as well as power generation.
But somewhere between the publication of the white paper and the drafting of the bill itself, much of the original intent has been lost. Indeed, in its current form, the bill has the potential to generate more problems and confusion than it resolves.
While the white paper focused squarely on driving renewables such as wind and solar, these are downplayed in the bill in favor of an outsized emphasis on what is obliquely termed “new energy.”
This terminology encompasses nuclear and various types of coal derivatives including coal gasification, coal liquefaction and the conversion of coal to methanol. Looking closely at the draft of the bill, it seems as if this “new energy” will become Indonesia’s main feature in its plan.
As it stands, the Renewable Bill risks becoming a Trojan horse for distinctly non-renewable sources such as nuclear and coal.
This is less transition, more same old.
Moreover, while the white paper largely frowns on the potential of nuclear power in Indonesia, the draft bill champions its development. This can be seen from the insertion of a separate chapter in the draft of the bill to address institutions, business licensing and the supervision of nuclear power.
This insertion comes out of left field. Even Indonesia’s national energy plan only mentions nuclear energy as a last resort. As such, this sudden push for acceleration needs to be scrutinized closely. Especially since nuclear energy has fallen out of favor globally due to its propensity for delays and cost inflation.
More broadly, the bill is silent on some of the detailed planning required if Indonesia is really to catalyze a transition to clean energy. This includes tackling critical areas such as the need for more transparent monitoring systems, the development of a clear plan for licensing, as well as a detailed strategy to guide the utilization of Indonesia’s renewable energy sources.
The heavy reliance on “new energy” sources is in large part why the bill falls short on addressing many of the key issues, including energy governance, equity and environmental sustainability in Indonesia.
Around the world, countries are rapidly transitioning to clean power, not just as a response to the climate crisis, but because it makes good economic sense. In many countries, an enlightened policy has driven the prices for solar and wind even below that of coal.
Indonesia is blessed with many of the natural advantages that should allow us to be on the cutting edge of the energy transition. But without a significant overhaul of the draft, the bill currently on the table will fail to chart the course for a future powered by clean, safe and cheap renewable energy.
We should not let another opportunity pass us by.