Out-Law / Your Daily Need-To-Know

Indonesia has set its goal for achieving net zero emissions by 2060. In July the Indonesian government submitted its updated nationally determined climate goals to the United Nations.

Maritime affairs and investment minister Luhut Binsar Pandjaitan said he was optimistic the country could reach net-zero emissions by 2060 or “even earlier”.

According to a local news agency, the Energy and Mineral Resources Ministry expects the energy sector to reach net zero by 2060. By that time, renewable energy is expected to generate up 85% of the energy used, and nuclear power 14%. By 2030 coal will still be providing 62% of the country’s energy, with renewables supplying 36%.

Luhut said the government would need to invest $1.165 trillion to transition away from coal.

Renewables expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “There are some interesting though perhaps not unexpected messages coming through from Indonesia’s nationally determined contributions ahead of the 26th United Nation Climate Change Conference of the Parties (COP26). Carbon neutrality of 2060 matches the target set by China and reflects the economic growth of the nation. The cost involved in decarbonising is also predictably significant including the need to address stranded costs.”

“The country is however blessed with significant renewable energy sources including geothermal, and no doubt going forward technical and regulatory solutions have to be put in place to allow such resources to be commercialised to their full potential,” he said.

Indonesia also set goals on the use of energies including coal and biofuels in its report Long-term Strategy for Low Carbon and Climate Resilience 2050 which it submitted to the UN Framework Convention on Climate Change in July.

Indonesia's greenhouse gas emissions are expected to peak in 2030 and the role of coal will remain significant until 2050, especially in the power industry.

The report says replacing fossil fuel energy with renewable energy will leave fossil fuel energy “unexploited and remain left underground and become a stranded asset with some economic impact on the country". It points an alternative approach which is to continue using fossil fuels with carbon capture and storage (CCS) and other storage methods.

It estimates that cumulative loss of coal production between 2030-2050 will be around 2.4 billion tonnes while the cumulative value of opportunity loss of coal production will be around $218 billion.

It also highlights the “locked-in” phenomenon of fossil fuel-based power plants such as coal-fired power units. "Once the coal power plant is installed, it will be difficult to replace the plant with renewable ones as replacement of power plant that is already installed and operational will be costly and impractical".

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