Energy and Environment in Indonesia

Anjar PriandoyoEnvironment Dept. University of York

Confidential30 November 2016

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Agenda

• 1. Introduction• 2. Methodology• 3. Energy in Indonesia

– Power Generation Sector– Industrial Sector– Transportation Sector– Household Sector

• 4. Air Pollution and Impact– Particulate Matter– Greenhouse Gas Emission– Human Health– Regional and Global Impacts

• 5. Discussion– Policy Design Challenge– Policy Implementation Challenge– Energy Transition Challenge

Introduction

700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100

Portuguese1512-1575

Dutch1602-1942

British1811-1816

Japanese 1942-1945

Indonesia 1945IslamHindu Buddha

Indonesia Transition 700-2000The history of Indonesia is the history of exploitation of natural resources

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Why energy and environment research is Important?

5th largest exporter of Natural Gas

1st largest exporter of Coal

40% world Geothermal Reserves

2nd largest Palm Oil, Cacao, Rubber Exporter

3rd largest Tropical Forest (60% of country’s land)

2nd largest Tin Producer

4th largest Nickel Reserves

4th largest Bauxite Producer

110th Human Development Index (0.68)

117th GDP per Capita ($3,500)

107th Corruption Index

4th largest population (250 mill)

1.2% Population Growth

16th largest economy ($800 bill)

6% Economic Growth

15th largest energy cons.(200 Mtoe)

4.1% Energy Consumption Growth

73th Energy Sustain. IndexWEC, IEA 30th

Low Energy p. cap. 800 KgoeRank 104th

Low Electrify (80%) Rank 108th

Low Renewbl (8%)Rank 30th

112th Environment Index (EPI)

8th largest GHG emitter 800 Mt CO2e

20th worst pollution WHO 102 PM

Question: What is the characteristics of energy development in Indonesia?

Environment Policy

Energy Policy

Indonesia, a paradox of plenty

Development: A Paradox of Plenty

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Why energy and environment research is Important?Energy Development

Index (IEA)

Household Indicator

Community Indicator

Share of Population with electricity access

80% & per cap. residential electricity consumption 620Kwh

Share of modern fuels within residential

sector

Per-capita public electricity

consumption

Share of Productive uses in total final

consumption

Environment Burden Disease (WHO)

Indoor Air Outdoor Air

Solid Fuel Use% Households 72%

45,300 death/year

Mean Urban PM 10114 ug/m3

32,300 death/year

Energy MixScenario ???

Coal Oil Gas Renewable

Industry Household Transportation Other

Question: What is the lowest impact energy scenario

Based on Source

Based on Sector

??????

Based on Transition Strategy

Energy Stack(Parallel)

Energy Ladder(Sequential)

Improve Energy Access

Reduce Air Pollution

Avoid Dangerous GHG

Improve Energy Security

Question: What is the link between energy and air pollution

Sustainability: Energy and Environment Link

Methodology

Current gap is mainly in the area of Renewable energy, scenario analysis and impact analysis (n = 165). It also identified that in the recent year there are increase on energy related research

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Energy

Energy Renewable

Environment Pollution

Environment GHG

Economics of Energy

Political Energy

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Energy in Indonesia

Indonesia has a low utilization of renewable energy, the dominant energy sources are oil 41%, coal 30%, gas 21% with renewables only accounting for 8%. By sector, the biggest energy consumption is industrial 34%, followed by households, 30% and transportation 30% as of 2012

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Primary Energy Supply 2003-2013 by Type

Average Growth 3.8%, Primary Energy Supply 228 Mtoe

Coal Oil Gas Hydro Geothermal Biofuel Biomass

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Oil

Equi

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nt (M

toe)

30%

41%

21%

8%

8% Renewable Energy92% Fossil Fuel Energy

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Industrial Sectors

• Between 2003-2013 the average growth of energy consumption in the industrial sector was 4.5% where cement, fertilizer, and food are the biggest industries consuming 20%, 19% and 18% of the energy respectively.

• In the past, the growth of the industrial sector, particularly for mineral, chemical and metal products during the period of 2000-2005, was quite slow and even negative for some industries. Since 1998, after the global economic crisis, investment in these types of industries has been very limited.

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Final Energy Consumption – Industry Sector

Average Growth 4.5%M

illio

n To

n O

il Eq

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lent

(Mto

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Coal Gas Oil Other &RE ElectricityBiomass

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Household Sector

• Household sector still depend on the biomass• Kerosene usage is decreasing, due to the use of LPG (LPG transition)

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Final Energy Consumption – Household Sector

Average LPG Growth 21%, Electricity 8%, Kerosene -19%

71%

13%

14%

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Ton

Oil

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nt (M

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Gas Kerosene LPG ElectricityBiomass

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Power Generation Sector

• Indonesia has an electricity capacity of 50 GW as of 2014, where 70% of this capacity is owned by PLN (Perusahaan Listrik Negara) a state owned company. The average annual growth of power plants in Indonesia is 7.3% per year.

• Coal power plants have the biggest share with 46% (Fig 5.) and an annual growth of 9.3%. Gas power plants account for 19% of total capacity with a 10% annual growth and diesel oil power plants have a 11% share. Renewable energy’s share is low with hydro-electric at 9.9%, geothermal at 2.6% and other renewables less than 0.5% [3]. The impact of power plants on air pollution has been studied extensively indicating the increasing trend of the potential impact of power plants on human health

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Electricity

PP Type Shr. Grw.

Coal 46.7% 9.3%

Gas + Coal 19.3% 10%

Oil (Diesel) 11.6% 2.3%

Gas 8.6% 8.3%

Hydro 9.9% 4.4%

Geothermal 2.6% 3.9%

Renewable 0.5% <2%

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Air Pollution

• Data collected between 2006 and 2012 from 33 provincial capital cities in Indonesia show a rising trend in air pollution concentrations. NO2 increased in those areas with dense populations, while SO2 concentrations tend to be high in industrial areas ranging between 11-21 g/m3 where in residential area around 10-19 μg/ m3

• The growth of air pollution in Indonesia is exceeding the rate of economic growth. By the end of 2022, the emissions of CO2, NO2 and CH4 are projected to increase by 731%, 664% and 497%, while economic output of growth, at 263%, is expected to be much less.

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Greenhouse Gas

• Indonesia plans to reduce GHG emission by up to 26% or about 0.76 giga-tonnes (Gt) CO2e by 2020 [25]. This is in contrast to studies that suggest GHG emission will grow most rapidly in Asia, including Indonesia [26]. This increase in GHG emission is mainly driven by changes in consumption per capita and the growth of population [27].

• GHG mitigation scenarios have been developed with an emphasis on agriculture and forestry [28], [29], [30]. Urban sectors have also been identified as a major source of emissions and therefore targets for emission reductions [31]. Moreover, studies also indicate that emission reductions can be achieved by various options from energy efficiency to renewable energy. The option to be adopted will depend on the current energy system, the availability of resources and geographic region in which emission reductions are planned [26]

Impact of Energy Transition 1990-2010GHG Growth & Energy Consumption

• The gas and coal rebirth age begin in the period 1980-2000

• There is significant growth of domestic coal consumption

Impact of Energy Transition 1990-2010GHG by Sector

• There is significant growth of domestic coal consumption, especially in electricity/energy generation

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Particulate Matter

• In Indonesia, one of the most critical air pollutants is particulate matter (PM) which can reach very high concentrations in cities and more widely during episodes of forest burning [18] [19]. Indonesian authorities also begin to show a motivation to understand the characteristics of PM pollution across Indonesia with several cities initiating monitoring of air quality for PM around the end of the 1990s [20].

• Studies of air pollution have been performed in various locations in Jakarta [21], Central Java [22], East Java [23], South Sulawesi [18] and South Sumatera [24]. Studies indicate a range of results depending on the location. According to one study, the PM2.5 concentration in five cities in Indonesia in 2011 ranged from 7.7 - 18.4 μg/m3 [20]. This number is higher than WHO recommendation of 10 μg/m3 annual mean.

• Another study in 2011 indicated that the PM2.5 concentration for industrial sites in Jakarta ranged from 15 - 42 μg/m3 while at a residential location it ranged from 9 - 36 μg/m3. The source apportionment of fine particulate matter in the residential area quantified the following contributors to PM2.5 pollution: lead industry mixed with road dust (12%), diesel vehicles (30%), oil and coal fired power plant (26%), road dust (17%) and biomass burning mixed with road dust (15%). [21]

• A study in 2014 in Makassar, South Sulawesi indicated that the average PM10 concentration was 32.9 μg/m3. This was lower than concentrations measured in more developed cities like Bandung 61.0 μg/ m3 and Serpong 51.8 μg/m3 [18]

Historical PM 10 and PM 2.5

• Indonesia is one of the most polluted country in the world

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Policy Design Challenge

Designing an energy and environmental policy in Indonesia faces several challenges such as • Geographical challenge• Prioritization of energy source challenge.

– Prioritization can be based on sectors, choices between renewable or fossil fuel and economic investment.

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Policy Implementation Challenge

• Ineffective monitoring of the policy and enforcement of laws associated with the policy are often the root cause of unsustainable development

• Strengthened environmental and resource use policies are required and the environment impacts, especially on air pollution, of all policies require more attention

• effective governance is also required in order to successfully address the environmental problems of Indonesia [24].

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THANK YOU

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Future Scenario

Coal; 30%

Gas; 21%

Oil; 41%

Renewable; 8% Coal; 30%

Gas; 22%

Oil; 26%

Renewable; 23%

Indicator 2010 2025 National Energy Policy

Primary Energy Supply 180 Mtoe 400 Mtoe

Energy Consumption per Capita 0.8 Mtoe 1.4 Mtoe

Electrification Ratio 81.6% 96.6%

Electricity Capacity 50 GW 115 GW

Electricity per Capita 620 Kwh 2500 Kwh

Renewable Energy Share 8% 23%

GHG Emission 1,800 Mt CO2e (2005) 29% Reduction (835 Mt)

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Air Pollution is 4th leading cause of death in 2013

23%

22%

15%

10%

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Energy Keyword 1996 – 2015 (Energy Planning n = 50 papers)Current Condition Gap Analysis

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Indonesia Exports & DestinationsSource: http://atlas.media.mit.edu/en/profile/country/idn/

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Why this is Important?

“…Energy transformation is needed to address the growing risks associated with accelerated environmental change.

Emissions from energy use contribute to multiple impacts on social and environmental systems in complex ways that are not always well understood…”Global Energy Assessment, 2012

Energy always become main political issues in Indonesia from fuel conversion (2007, 50 mill population), fuel subsidize (2014, 2.6% GDP), electrification (2015, 80%), renewable (2011, 8%)

Decision making on which energy policy that should be implemented is difficult, even conflicting (Mujiyanto and Tiess, 2013), (Gunningham, 2013), for example Greenhouse Gas Reduction vs 35,000 MW Power Plant Development

Inaccuracy of measuring the impact and potential of energy (Purwanto et al., 2015) including lack of study on energy industry implication to air pollution (Shrestha and O.P. Marpaung, 2002), (Spracklen et al., 2015)

1. What is the characteristic of energy development in Indonesia? What is the characteristic of energy consumption and energy supply? What is the characteristic of pollutant in Indonesia? What is the potential emission reduction that can be made between energy conservation and energy diversification policy?

2. What is the impact of energy development to air pollution in Indonesia?What is the impact of air pollution for human health? What is the impact of specific pollutant for human health and environment?

3. What is the best energy scenario that has the lowest impact to the air pollution in Indonesia?

Energy Transition

• Transition is the process of changes that can be defined as major changes in the way society works. Transition do not only involve changes in technology, but also changes in user practices, regulation, industrial networks (Geels, 2002)

• Energy transition defined differently by various researcher (Sovacool, 2016). For example the energy transition can be defined as:– Energy mix transition. A change in fuels (from wood to coal or coal to oil) and

their associated technologies (from steam engines to internal combustion engines). (Hirsh and Jones)

– Energy balance transition. The switch from an economic system dependent on one or a series of energy sources and technologies to another (from import dependent country to exporting country) (Fouquet and Pearson)

– Energy pattern transition. A particularly significant set of changes to the patterns of energy use in a society, potentially affecting resources, carriers, converters, and services. (O’Connor)

Energy Transition in Indonesia

• In Indonesia, energy transition and various factor that affecting transition have been identified by various researchers in several period such as

• 2000 period, Kerosene to LPG conversion (Sovacool, 2016), an energy mix transition.

• 2000 period, Private power development (Wells, 2007). Globalization led to Indonesia’s electricity market liberalization, an energy market transition from government owned to privatization.

• 2010 period, Low carbon growth to reduce GHG (Schwarz, 2010), an energy pattern transition, including the change in environmental expenditure (Vincent et al., 2002)

Energy Mix in Indonesia 1900-2010Energy mix is the composition of fuel source. The energy transition in Indonesia is rapidly happen, compare with other developing countries (Bee, 1984)

Historical Energy Growth 1980-2014

• Fourth most populated country in the world with more than 250 million citizens, average 1.2% population growth.

• Energy growth from period of 1980 to 2014 Indonesia is estimated to be 5-7% per year.

• Energy consumption around 200 MTOE in 2014 and estimated to be 400 MTOE in 2030

• Energy transition can be seen from energy mix composition. Energy mix reflecting the decreasing roles of oil and increasing roles of coal and gas.

• Renewable energy is still small compare with other fossil fuel energy, less than 5%

Projected Energy Growth 1980-2030

• Energy planning usually made with the assumption of constant fuel source mix.

• Projection made with LEAP starter pack, indicating the constant fuel source mix.

• The composition of fossil fuel estimated to be more than 95% and renewable remain around 5%

• Problem: Energy planning did not consider future energy transition

• Energy mix is official indicator in National Energy Planning of Indonesia. It is important to consider the fuel mix in any energy and environment planning

Historical & Projected Energy Growth 1900-2010

• In the last 100 years, there are four phase of energy transition in Indonesia from coal, oil, gas and renewable energy

• Energy consumption trend is increasing

• The transition trend is important to be used as factor in designing the future energy scenario