report studied on energy conservation policies in indonesia
TRANSCRIPT
REPORT
Studied on Energy Conservation Policies in Indonesia :
Policy Target, Strategy, and Barrier
January 2014
Adrian Danar Wibisono
Intern Student
Directorate General of New Renewable Energy and Energy Conservation
(Electric Engineering, Faculty of Engineering, University of Indonesia)
I. INTRODUCTION
Today, energy crisis is one of the most critical issues besides water and food. During an
industry revolution, human start to use coal which is fossil energy and possible to produce and
transport easily, even easier than use human power or animal power. Since that, energy demand
always growing together with economic growth. Nowadays, there are 4 biggest sectors that
consume energy: industrial, transportation, household, and commercial. Industrial is the biggest
sector that consumes energy, which is showing us the strong relation between economic activity
with energy. The second place is transportation, and it shows us the strong relation between
human mobilization with energy too, and mobilization has relation to economic activity. Of
course easy to understand that commercial sector has relation to economic activity too, and
economic activity always related to development. The third place is household, which means
human activity nowadays, like using electrical equipment in every single thing in the house, very
dependent to energy too.
The problem is 85% of primary energy comes from non-renewable, and fossil sources
(coal, oil, etcetera). It means that we need more fossil energy to reach economic growth, but
fossil energy is limited and continues to decrease. In economic form, it means we must pay
higher prices when fossil energy starting run out. But energy issue is not only about the
economic growth, but also about the environment. Mining coal, oil, and other form of fossil
energy is always giving bad impact to the environment. When we use it (for example for power
plant or transportation), fossil energy also making pollution. Data from ESMAP (Energy Sector
Management Assistance Program) said that coal, oil, and natural gas are the most primary energy
that produce CO2 so much when we use it to produce electricity. We know that too much CO2 in
our atmosphere causes the greenhouse effect on our Earth.
Picture 1.1 Growth of Energy Needs
Because if we can’t and don’t want to stop the development, and also we live in the same
planet, so every country must contribute to solve the energy problem. We can solve it by two
ways, change the supply side and the demand side. Supply side means intervene the supply side
by increase new renewable energy share in the national energy mix below, which known as
diversification energy. Meanwhile demand side means intervene the demand side by to improve
efficiency in energy utilization from up-stream up to down-stream like industrial, transportation,
household and commercial sector, which known as conservation energy.
Energy conservation is an important issue for all countries in the world. Energy
conservation and energy efficiency are different, but in the same concepts. Energy conservation
is achieved when growth of energy consumption is reduced, measured in physical terms. Energy
Conservation, therefore, can be the result of several processes or developments, such as
productivity increase or technological progress. On the other hand energy efficiency is achieved
when energy intensity in a specific product, process, or area of production or consumption is
reduced without affecting output, consumption or comfort levels. Very simply, energy efficiency
means using less energy to perform the same function. Energy conservation also has a relation to
energy management. Energy management is a structured approach designed to manage energy
usage and reduce energy costs, raising productivity and creating a better work environment. So
energy conservation can be reached by use energy management in all of demand section to create
energy efficiency. During the term of country, conserving energy is how to increase development
but also decreasing the energy consumption and save the environment.
Indonesia also has a same interest about conserving energy. Indonesia is not only facing
economic growth, but also population growth. Our estimation of average GDP each year is about
6.1%, and estimation of average population growth each year is about 1.1%. Energy demand
growth is dependent to GDP and population growth. We estimate energy demand will grow
about 7.1% each year. To measure energy conservation, we can use energy elasticity. Energy
elasticity is the ratio between the growth rates of energy consumption with economic growth. If
we have smaller the elasticity, we can be more efficient use of energy in a country. Indonesian
energy elasticity in 2009 is still quite high at 2.69. In comparison, according to the International
Energy Agency study in 2009, Thailand elasticity is 1.4, Singapore 1.1 and developed countries
ranged from 0.1 to 0.6.
If Indonesia can’t consume energy more efficient and decrease energy elasticity, in 2019
Indonesia might be a net energy importer. Of course it is a big problem because it means
Indonesia failed to create the energy security. So, conserve energy is very important to solve this
problem. Also Indonesia energy mix is dominated by fossil energy, like coal, natural gas, and oil.
Related to the president’s commitment on G20 Pittsburgh & COP15 and also presidential
regulation no 61 & 71 year 2011, Indonesia must reduce CHG emission in 2020. Energy sector
contributes about 30 million tons, and can be reached by developing new and renewable energy
and implementing energy conservation by all sectors.
Picture 1.2 President Commitment on G-20 Pittsburg
It is not only about the president’s commitment, but also saves Indonesia environment. Indonesia
still has so much room for energy efficiency. Industrial, commercial, transportation, and
household sector are potential to be more efficient about 15-30%.
Picture 1.3 Potential of Energy Conservation in Various Sector
This report is a policy description, which means an analysis about existed policy. In this
report, the writer will discuss about current energy efficiency and conservation in Indonesia.
First part is an introduction to explain why energy efficiency and conservation got to attract
attention from the world. The second part will continue with energy efficiency and conservation
policy and target including law, regulation, etc. The third part is talking about strategies to
increase energy efficiency and conservation, for example about the program, D&R, subsidy,
incentive, public awareness, education & training, standards, and international cooperation. This
part also discusses about the comparison between Indonesia and Japan energy conservation
policy. After that, fourth part will continue with energy efficiency and conservation development
challenges. And the last part is the summary and outlook.
II. ENERGY EFFICIENCY & CONSERVATION POLICY AND TARGET
Indonesia has started to concern with energy conservation for a long time ago. Since
1981, energy conservation is one of energy policy priorities, beside intensification and
diversification. The background is Indonesia’s incomes decrease after the end of oil-shock. In
1980, Indonesia is an oil net exporter. Oil-shock increases the oil price, and as an oil net exporter
country, Indonesia got the benefit of it. But when oil price decrease, Indonesia realized there is a
big problem about the national energy policy which so dependent on oil and also not efficient in
using it. This three main issues (intensification, diversification, and conservation) always appear
even government renews the energy policy in 1987, 1991, 1998, and 2003.
After that, in 2006 President released the Presidential Decree No 5/2006 about the
National Energy Policy. In this Presidential Decree, the President gives instruction to reach
energy elasticity less than 1 in 2025. In 2007, Indonesia Parliament released Law No 30/2007
about Energy. In energy conservation issue, this Law orders about at least 3 rules. First,
government, energy producers and energy consumer are responsible for implementation of
energy conservation. Second, energy conservation is required from upstream to downstream
activities. Third, the government will provide incentive and disincentive for energy efficiency
and conservation implementation. From the legal aspect, Law No 30/2007 more effective than
Presidential Decree No 5/2006. Because constitution said that the Law (Undang-Undang) is
higher than Presidential Decree, and also possible to detailing Law No 30/2007 in Government
Regulation.
As the long term energy demand, on the year of 2025 energy demand will be 2.162
million BOE if it’s managed by business as usual, while if energy conservation applied on the
demand side by 17%, energy demand can be reduced to 1.796 million BOE in 2025. Energy
efficiency in 2025 targeted to be 17% in total for 4 sectors, industrial sector 6,9%, commercial
sector 0,7%, transportation sector 7,4% and household sector 2%2.
Picture 2.1 Energy Conservation Policy Target
As a mandate of the Law No 30/2007, government released Government Regulation No
70/2009. This Government Regulation regulates the energy conservation more specific. There
are 5 main parts of this Government Regulation:
1. Responsibility
There are 3 stakeholders that responsible for energy conservation
a. Government : formulating policy, enhancing capacity building, etcetera
b. Private Sector : conduct energy conservation measures in all stages of activities,
utilize energy efficient technology, produce service and production output
efficiency
c. People : follow the energy conservation rules
2. Implementation of Energy Conservation
Transportation
Household Commercial
Industry
2020
Energy conservation on demand side (17%)
9%
1026 Mil BOE
43%
42%
7%
2162 Mil BOE
1796 Mil BOE
739 Mil BOE
1393 Mil BOE
Transportation
Household Commercial
Industry
Bussiness As Usual
Energy conservation should be implemented in all stages of activity, such as
energy supply, energy business, energy utilization, and conversion of energy resources. It
is also about how to plan, select the installation, and operate efficient of supplying energy.
This report tries to leveling the technique of energy conservation:
a) Use the most efficient design (system) with high cost,
b) Choose the equipment that makes the process more efficient (supporting
equipment) with medium cost, and
c) Operate it as efficient as possible (operation) with low or no cost.
The regulation also separates energy management to 3 main parts: cultivation of
energy resources, exploration of energy sources, and exploitation of energy sources. In all
of that part must apply efficient technology. After that, this Government Regulation gives
the mandatory of energy management for large energy user (more than 6000 TOE). The
energy management must be done by choosing the energy manager, make the energy
conservation program, do the energy audit frequently, give a recommendation after
energy audit, and give the report to the minister or governor.
There are the special terms of energy conservation of energy resources. That
energy conservation of energy resources includes but not limited to the priority energy
resources, the amount of energy resources that can be produced, and restriction of energy
resources that in a given time can’t be cultivated. The process and taxonomy of energy
management as an implementation is shown in this flow diagram:
Picture 2.2 Taxonomy Energy Management
As a part of Government Regulation, the implementation also related to many
regulations which has a lower position on legislation, such as :
a) Minister Energy and Mineral Regulation (MEMR) No 12/2012 about fuel saving
b) MEMR No 13/2012 about electricity saving, and
c) MEMR No 14/2012 about energy management.
d) It also relates to Presidential Instruction No 13/2011 about water and energy
saving.
3. Standard and Labeling
The objective of standard and labeling regulation is introducing energy saving level
as a guidance for consumer and to promote energy efficiency. In simple, the regulation is
implementing the energy efficiency standard and labeling. Because some machine or
electronic is not efficient and consume energy too much. By giving a standard government
can guarantee that the product is saved, and by labeling, government can minimize the
inefficient things are used extensively.
Implementation of energy performance standards on equipment energy utilization is
done by standardize by SNI (National Standard) and also labeling the level of energy
efficiency. This regulation was detailed by MEMR No 6/2011 about Energy Labeling for
CFL. With this labeling, we can classify the CFL product based on its efficiency. The
principle of efficiency is how to get the same work with the minimum energy. This table can
show us about the classification:
Table 2.1 Labelling of CFL
4. Facilitation, Incentive, and Disincentive
The principle of giving facilitation, incentive, and disincentive is to push and
catalyze especially for commercial or industry that use more than 6000 TOE and
producer of energy-saving equipment. The facilitation is providing information access of
energy efficient technology and consulting service on energy efficiency measures. The
criteria of energy conservation measures are quantity of energy consumption or energy
elasticity.
For incentive, the government gives it for 2 main targets:
a) Large energy users (large energy users mean user that consume more than 6000
TOE each year), and
b) Energy-saving equipment manufacturer.
The incentive will be given if large energy users can decrease specific energy
consumption at least 2% every year in 3 years. And for manufacturer of energy-saving
equipment, incentives will be given if their product appropriate benchmark and match
with the standard.
There are many forms of incentive for large energy users:
a) Tax facilities for energy saving products;
b) Breaks, reliefs, or exemption of local taxes for energy‐saving products;
c) An import tax facility for energy‐saving products;
d) Low‐interest financing for investment in energy conservation;
e) In accordance with existing laws and regulations, and or
f) Energy audit in partnership paid by the government
Meanwhile for energy-saving equipment manufacturer, the form of incentive is:
a) Tax facilities for components/spare parts and raw materials used for
manufacturing energy‐saving products;
b) Breaks, reliefs, and exemptions, of local taxes for components/ spare parts and
raw materials used to manufacture energy‐saving products;
c) Import tax facilities for components/spare parts and raw materials used to
manufacture energy-saving products;
d) Low‐interest financing for investments in order to manufacture energy saving
products
Picture 2.3 Flowchart for Large Energy Users
Disincentive will be given for large energy users if they:
a) are not choose energy manager
b) don’t make energy conservation program
c) don’t do energy audits frequently
d) don’t execute the energy audit recommendation, and
e) don’t give the report about the energy management execution.
The form of disincentive is:
a) memorandum
b) announcement in mass media
c) penalty, and
d) reduction of energy supply.
Picture 2.4 Flowchart for Incentive and Disincentive
Target and form of facility, incentive, and disincentive is shown in this table :
Table 2.2 Facility, Incentive, and Disincentive
Type Target Form
Facility
Energy Users
Information access and consultation services Manufacturer of Saving Energy
Equipment
Incentive
Large Energy Users
Tax facilities for energy saving products; Breaks, reliefs, or
exemption of local taxes for energy‐saving products; Import
tax facility for energy‐saving products; Low‐interest
financing for investment in energy conservation;, and
Energy audit in partnership paid by the government
Producer of Saving Energy
Equipment
Tax facilities for components/spare parts and raw materials
used for manufacturing energy‐saving products; Breaks,
reliefs, and exemptions, of local taxes for components/
spare parts and raw materials used to manufacture energy‐saving products; Import tax facilities for components/spare
parts and raw materials used to manufacture energy-saving
products; Low‐interest financing for investments in order to
manufacture energy saving products.
Disincentive Large Energy Users Memorandum, announcement in mass media, penalty, and
reduction of energy supply
5. Direction and Supervision
The form of direction is conducting training, technical assistance, energy
efficiency dissemination, and facilitation R&D on energy efficient technology.
Meanwhile the form of supervision is implementing energy manager, program, energy
audit, etc. for industries and commercial. It is also has relation to MEMR No. 13/2010
and MEMR No.14/2011 about standardization for energy manager.
The role of Energy Manager is to:
a) Implement energy conservation plan which would include, establishing targets and
energy conservation program, formulating the energy efficiency operating
procedure and executing energy audit.
b) Implement energy conservation which would include implementing energy
conservation programs, carry‐out recommendation of energy audit result; and
increase employee awareness and motivation regarding energy conservation
c) Monitor and evaluate, which includes taking measurements, making notes, prepare
reports and recommendation on improving the execution of the energy conservation
program.
An energy manager is obliged to have a competency certificate in accordance to
regulations and law.
The structure of the regulation of energy conservation can be shown in this table:
Table 2.3 Regulation that Related to Government Regulation about Energy Conservation
Law No
30/2007
about
Energy
Government
Regulation
No 70/2009
about
Energy
Conservation
Responsibility -
Implementation
MEMR No 12 /2012 about fuel saving
MEMR No 13/2012 about electricity saving
MEMR No 14/2012 about energy management
Related to : Presidential Instruction No 13/2011
about water and energy saving
Standard &
Labeling
MEMR No 6/2011 about Energy Labeling for
CFL
Incentive and
Disincentive MEMR No 14/2012 about energy management
Direction and
Supervision
MEMR No. 13/2010 and MEMR No.14/2011
about standardization for energy manager.
III. STRATEGY TO INCREASE ENERGY EFFICIENCY AND CONSERVATION
Technically, energy conservation policy is operated by the Ministry of Energy and
Mineral Resources, at the Directorate of Energy Conservation. The draft of RIKEN (Master plan
of the National Energy Conservation) identified 20 energy conservation programs that would
implement 5 policy mandates. The 5 policy mandates are:
1) Establish energy use efficiency targets in the regulations mandated by Law
2) Increase sustained social awareness campaign on energy frugality culture
3) Mandate the implementation of energy management in large users of energy
4) Implement use of technologies and energy systems that are energy efficient from the
energy supply side to final use of energy
5) Implement incentive for energy frugal equipment and energy users
After identifying policy and target about energy efficiency and conservation, in this part we will
discuss about operational strategies to implement policy and reach the target. The scope of
discourse is about what have done and what have not been done. Of course knowing what have
done is easier than to identify what have not done. So first of all, we will see the comprehensive
view about energy efficiency and conservation.
Energy conservation is an issue with many aspects that continue to evolve. It helps to
view information about energy conservation in these groups and sub-groups:
the primary grouping is by energy end-use sector
within each end-use sector, there are sub-groups of information that are targeted to the
practitioners in those sectors
also within each end-use sector, there are sub-groups of information that relate to the
equipment and materials used in that sector2.
For simplicity, we can identify 2 kinds of classification: user sectors and levels of detail.
a) Classification by sectors : household, transportation, industrial, commercial, etcetera
b) Classification by levels of details : system, sector, segment, end-use, technology, and
equipment
This mind map can help us to combine the classification by user sectors and classification by
levels of detail.
Picture 3.1 Mindmap of Energy Conservation Strategy
This mind map will help us to identify what have done and what have not been done.
A. What Have Done (and Ongoing) and Achievement
To find what have not been done we must know about what have done by government.
The major data are obtained from APEC Report: Peer Reviewer of Energy Efficiency in
Indonesia. The ongoing and current programs are:
1. Creating Policy and Regulation
Making policy and regulation are the fundamental issues of energy conservation. In
part 2, we have already discussed about existing policy and regulation. Government
Regulation No 70/2009 is the main regulation that will be breakdown in MEMR. It is also
about preparing a policy on energy efficiency in industrial, household, and transportation
sector. For example, Ministry of Mineral and Energy preparing MEMR about labeling AC,
refrigerator, etc.
2. Raising Public Awareness
Public awareness pertaining to energy conservation is promoted by the MEMR,
regional government, and state owned energy/electricity company, private companies, and
NGOs. The public awareness campaign is by means of public advertisement, printed
materials, and the web, and also through seminars and workshop.
MEMR has not a specific number as a parameter to scoring this policy. From the
mass media, many experts and internal of MEMR said that campaign program is not really
effective yet because it doesn’t significantly contribute to increase energy elasticity and
intensity. But MEMR have already create any picture/poster, video, discussion forum,
etcetera as an implementation of this strategy.
3. Energy Management
Energy management is a mandatory of Government Regulation No 70/2009 to be
implemented by energy users that consume energy more than 6000 TOE per year. The
energy management must be done by choosing the energy manager, make the energy
conservation program, do the energy audit frequently, give a recommendation after energy
audit, and give the report to the minister or governor.
In 2012, MEMR have already facilitate to implement energy management in 806
large energy users (industry and commercial). It’s exceeded the target (797 large energy
users). Implementing energy management in large energy users is one that MEMR very
concern. Because they use the number of large energy users which has been facilitated by
MEMR as a parameter, one of three parameter besides decrease energy intensity and
decrease carbon emission.
Related to this issue, MEMR also has cooperation with United Nation Industrial
Development Organization (UNIDO). UNIDO promote ISO 50001 Energy Management
Standard. The target is some industry, specifically textile, chemical, pulp & paper, and food
& beverages. Mostly energy consumption of this type of industry is under 6000 TOE, but of
course depends on scale of the industry itself. To promote the implementation of ISO 50001,
which now become SNI 500001, government, especially MEMR and Ministry of Industry,
must socialize it to the industry that consume more than 6000 TOE. UNIDO gives 2 days
training for free to some industry to train their employees to become capable to be energy
manager. Now, ISO 50001 become SNI 50001, as a Indonesia National Standard.
Picture 3.2 Energy Management Cycle
a. Partnership Program for Energy Conservation
The Government–Private Sector Partnership Program for Energy Conservation is
designed to encourage industry and commercial building to implement energy efficiency and
conservation measures, through participating in a free energy audit program provided by the
government. Industrial and commercial building need to qualify to participate in the
program; sign an agreement to execute the energy audit recommendations, and report over a
certain period. This strategy is related to energy management.
b. Certification for Energy Manager and Auditor
The most important point of certification is an enactment of a competence standard
for energy manager and auditor, and also by Establish HAKE (Association of Energy
Conservation Expert) as a Certification Institution for Energy Manager. The data of the
number of certification that has been given is :
Table 3.1 Number of Energy Manager and Energy Auditor
Year Certification Total
Energy Manager Energy Auditor
2012 50 0 50
2013 20 20 40
Total 79 31 110
The criteria of certification are already existing (Kep.321/MEN/XII/2011 for energy
manager of building and Kep.323/MEN/XII/2011 for energy manager of industry).
Picture 3.3 Certification Procedure
c. Education and Training
Government officials could receive training on energy conservation at the Centre for
Training and Education of the MEMR and participate in energy conservation training abroad
through bilateral programs and other international cooperation. This strategy relates to
certification for energy manager.
4. Incentive and Disincentive
The detail about incentive and disincentive regulation has been explained in the
second part. The program or execution of that is repairing mechanism of fiscal incentive,
incentive for import duty of energy efficient appliances, etcetera. The program also will
assess a financing scheme for energy efficiency implementation and assess criteria for energy
efficiency appliances and implementation of energy conservation which will receive
incentive and disincentive.
5. Standard and Labeling
Standardization is a mandatory for any product (in this case which related to energy
conservation) to protecting the consumers from hazardous products. There is some
standardization (SNI) which has been regulated, such as:
o SNI T-14-1993-03 : Technical Planning Procedures Energy Conservation In Building
o SNI 03-6196-2000 : Procedures on Building Energy Audit
o SNI 03-6197-2000 : Energy Conservation in Building Lighting Systems
o SNI 03-6389-2000 : Energy Conservation in Buildings Building Sheath
o SNI 03-6390-2000 : Energy Conservation in Buildings Air System Administration
Building
o SNI 04-6958-2003 : Label Level Energy Saving Electric Power Utilization for
Household and Similar Purposes
o SNI 03-6572-2001 : Design Procedures for Ventilation and Air Conditioning System
In The Building
o SNI 03-6575-2001 : Procedures At Artificial Lighting System Design Building
o SNI 03-6759-2002 : Design Procedure for Energy Conservation In Building
The energy labeling program is intended to provide information to consumers about
the energy efficiency level of a product, as well as to encourage manufactures to increase the
level of energy efficiency of products that they produce. Indonesia currently has an energy
labeling system that uses a star‐rating system of 4 stars, which also includes information
about the absolute energy efficiency of the product. The energy labeling program in defined
in RIKEN.
In 2011, Indonesia launched an energy labeling for compact fluorescent lamps (CFL),
by Ministerial Regulation No. 06/2011 regarding Applying Energy Saving Label for Self‐
Ballasted Lamp. Indonesia also has energy performance testing standards (EPTS) for select
electrical appliances/devices, which are established as Indonesia National Standard (SNI).
The purpose of these standards is to specify technical requirements for energy efficiency and
safety, and for the purpose of energy labeling.
There is a progress of labeling some appliance. Energy efficiency labeling has 3
steps: testing procedure, energy efficiency criteria, and certification. Based on data from
BPPT in 2011, until now there is only CFL that has been certificated and labeled.
Table 3.2 Labelling Planning
6. Pilot Project : EE Street Lighting
There is a pilot project of energy conservation: EE Street Light. The 3 main activities are:
Developing standard for street light system
Promoting energy efficient technology in street light
Developing guidelines for implementing energy efficient technology street light
7. Clearing House Energy Conservation
This program tries to make an information center for energy efficiency and energy
conservation. The pilot energy-saving office is on the 5th floor of Gd. Annex Directorate
General of Electricity.
8. International Cooperation
The MEMR has bilateral and regional/multilateral international cooperation
specifically on energy efficiency and conservation. Some of the international cooperation
involves multiyear programs.
Bilateral Indonesia –Denmark (DANIDA) – Energy Efficiency in Industrial, Commercial
and Public Sector (EINCOPS)
Bilateral Indonesia-Netherland (NL Agency) – Energy Potential Scan (EPS)
Bilateral Indonesia-Japan (JICA & NEDO) – Demand Side Management
Multilateral with UNDP – Standard and Labeling
Multilateral with UNIDO – Energy Management Standard
Multilateral with ASEAN – Energy Efficiency and Conservation – Sub Sector Network
(EE&C SSN)
The other Donor Agency such as International Copper Association, etcetera
B. What Have Done and What Have Not Been Done
After identifying the existing strategy of energy conservation, we can classify it to mind
map. Creating policy and regulation and international relation are related to the whole
system of energy conservation. We can say that because both of it has a far-reaching effect, no
matter in what sectors or what level it is. Actually, both of it relate to any others program.
Creating public awareness is really strategic especially for household, because there are only 2
main issues in household: use of energy efficient appliances (lighting, water heaters, air
conditioners, refrigerators, TV, etc.) and energy saving behavior. Energy efficient appliance is an
external factor in the house, which means approach must be done to the producer, not the
consumer. The only way to approach energy efficiency in the household sector is making people
have energy savings behavior by raising their awareness.
Related to energy efficient appliances, use some standard and labeling are effective to
make sure that all appliances which was sold to the consumer in all sectors meet the criteria of
energy efficient appliances. In other word, the appliances (machinery things, electronic things,
etcetera) which not efficient enough and doesn’t meet the efficiency criteria can’t be sold by the
producer. This program will reach all appliances in technology levels in all sectors, depending to
its type.
But actually Indonesia is a bit late to do it because China and other country are already
doing it. It causes so many inefficient appliances which can’t be sold in the country were
exported to Indonesia. Even Indonesia already has labeling regulation about the CFL, but
unfortunately there are so many appliances which not been standardized and labeled yet. The
government also can give incentive for the manufacturer of energy-savings equipment. Giving
incentive will catalyze them to produce more energy-savings equipment. Then, energy-savings
equipment will be a lot on the market. In the long term, this policy will decrease the Indonesia
energy elasticity faster.
Picture 3.4 Analysis of Mindmap of Energy Conservation Strategy
Industrial and commercial sectors have a similar characteristic: many consumers with
large consumption. Large energy consumer (consume more than 6000 TOE every year) always
comes from both of them. The issue is not how much they consume energy, but how efficiently
they use it then consequently can reduce energy demand. There are many strategies to do it, such
as make clearing house (center information for energy conservation) and force them to do an
energy audit frequently and make an energy conservation program based on it.
Table 3.3 Potential of Mitigation Action
The challenge is how making them want to do it. So government must give incentive
for large energy users who run it and give disincentive for large energy users who don’t run it.
There are about 600 industries whose use energy more than 6000 TOE every year and still far to
reach all of industries (about 600). Besides incentive and disincentive, energy audit and
conservation program also need an energy manager who must have capable and competence in
this field. To increase number of person who meets the criteria, education and training is a
strategic program. A certification program for energy manager also makes it more complete.
From the mind map, we can see that by leveling (system, sector, etcetera), energy
conservation strategies in Indonesia is fairly complete. But by sector (household, transportation,
etcetera), transportation is the sector which not be touched well by the energy conservation
policy and regulation. Whereas, the transportation sector is the most potential sector for energy
conservation (about 35%). Energy conservation program which has been targeted to
transportation sector is a pilot project of EE Street Lightning. Beside it, there still no other
strategic program in transportation sectors (such as providing public transportation, use biofuel,
etcetera), at least based on information from the Ministry of Energy and Mineral Resources.
This is seen by check to Accountability Report Government Performance of MEMR that
transportation sectors are not prioritized by MEMR. Policy about transportation sector also
contradict each other: want to reduce use of subsidizing oil (premium) but permit to sell “cheap
car” in Indonesia. The government still inconsistent with their own policy by choosing to sell
“cheap car” than catalyze company that produce efficient car or natural gas vehicle and develop
mass transportation. Data from BPS (National Statistical Agencies) in 2011 said that the number
of private cars is 9.548.866, bus is 2.254.406, and motorcycle is 68.839.341. And land transport
consumes subsidize fuel more than 90%. It means that subsidize fuel majority was consumed by
private vehicle. Sell “cheap car” increase number of cars in Indonesia especially in the big city.
Of course it will create more traffic and inefficiency in the transportation sector. We can see data
in this table (NGV Global, 2011) that Indonesia is late to promote natural gas vehicle than
another country.
Table 3.4 Number of Natural Gas Vehicle
Country Initial Period of Development
Number of Natural Gas
Vehicles
Number of Natural
Gas Station
Iran 1995 2.859.385 1.574
Pakistan 1999 2.850.500 3.285
Argentina 1984 1.900.000 1.878
Brazil 1970 1.694.278 1.725
India 1993 1.100.000 571
China 1996 1.000.000 135
Italy 1930 779.091 790
Ukraine 390.001 285
Colombia 348.747 614
Thailand 1984 300.581 426
Indonesia 1995 4.137 11
There are two main reasons why transportation is still not have been managed well:
because it needs a high cost program and needs very good communication and coordination with
many stakeholders. The Directorate of Energy Conservation identified that in most cases, only
no‐cost and low cost recommended measures have been implemented. Based on this analysis, we
try to compare Indonesia energy conservation policy with Japan energy conservation policy.
Japan has started to implement an energy policy since 1979. It was established triggered
by Oil Crisis. Meanwhile Indonesia has (seriously) started to implement energy conservation
policy since 2009, when Government Regulation about energy conservation was established and
MEMR has a new Directorate General that implement energy conservation policy. By
comparison of Indonesian and Japan energy policy, we know that the both strategy almost the
same, except energy conservation policy in the transportation sector.
In Japan, the strategy of energy conservation in the transportation sector is obligation for
business operators make an effort and public disclosure of judgment standards :
Specified carriers (freight and passengers) (Fleet of vehicles: At least 200 trucks or at
least 300 railway cars for railroads, etc.)
o Obligation to submit medium and long term plans.
o Obligation to periodically report energy consumption status.
Specified consigners (Annual transport volume of at least 30 million ton-km.)
o Obligation to submit plans
o Obligation to periodically report consumption of energy related to consigned
transportation
Table 3.5 (a) Energy Conservation Policy in Transportation sector in Japan (b) in Indonesia
(a) (b)
Indonesia doesn’t have this kind of policy. Japan also has a policy to give incentive to
Eco Car reduction, similar with Low Cost and Green Car (LCGC) policy in Indonesia. But based
on Victoria Transport Policy Institute (VTPI) research, cleaner vehicle policy doesn’t always
better that mobility management to conserve energy in the transportation sector. Because giving
incentive to cleaner vehicle and make it cheap can increase the number of people that use the
vehicle in the street. It will cause traffic jam, and of course contradictive with energy
conservation target.
In case of Japan, mobility management is good enough. Japan already has so many public
transportation facilities in many kinds. The majority of its operating company is owned by the
government. If the public transportation is good enough, give incentive for cleaner vehicle will
not increase the number of vehicles significantly. In other words, the price of the vehicle will not
too sensitive with the number of vehicles, and of course not sensitive too with energy
consumption in the transportation sector. But in case of Indonesia, public transportation facilities
are not good enough. If government gives incentive to cleaner vehicle (LCGC), it will increase
the number of vehicles significantly, make more traffic jam, and increase the energy
consumption.
Picture 3.5 Japan Energy Conservation Policy
IV. ENERGY EFFICIENCY AND CONSERVATION DEVELOPMENT
CHALLENGE
On a policy, at least there are 2 main processes: drafting and implementation. After
making a policy become law and make more technical instruction to implement it, the next step
is identifying barrier and challenge when the policy tries to be implemented. In this report,
“barrier” is defined with some aspects which possible to make us fail to reach the policy goals.
And “challenge” is defined with some aspects which possible to make us fail when we try to
solve or break the barrier. In simple, the barrier is the problem itself, meanwhile challenge is the
problem of the solving action.
By using that definition, in this part we will discuss about the barrier and the challenge of
energy efficiency and conservation policy. Of course energy efficiency and conservation
program is created by identifying the barrier. Identify barrier is almost the same with identifying
a problem that must solve by a policy. Actually when we discuss about policy, we must identify
the problem in the first step. But this report is a policy description, so it is OK if we reverse the
process: explain the policy and check it by identifying the problem.
A. Barrier
1. Knowledge and understanding of the importance and benefits of energy conservation are
still limited.
Since elementary school, Indonesian student be taught that Indonesia is rich with natural
resources include fossil energy resources. So many Indonesian people think that they can
consume energy as much as they want. This way of thinking makes Indonesian people don’t care
about energy conservation and don’t want to change to energy-saving habit. This barrier can be
dealt with the raising public awareness program.
2. Encouragement for Energy Conservation is still weak, because subsidy for energy is still
high
Related to the first one, awareness to energy conservation is also weak because the
subsidy for energy is high. In other terms, it means energy price is cheap. Of course that is good
if energy price is cheap. But the side effect is people feel no need to energy conservation. They
think that they can consume energy as much as they want as long as they are able to pay. This
barrier can be dealt with incentive and disincentive program for large energy users.
3. Electrical equipment on the market is still much to be inefficient.
Nowadays, almost every activity in every sector uses electrical equipment. With that
massive user, if the electrical equipment is not efficient, then it contributes to nation’s inefficient
energy consumption. The company can produce inefficient products just to make it as cheap as
possible. This barrier can be dealt with standardize and labeling the electrical equipment.
4. Ability to implement an Energy Management and Energy Audit is still weak
Both of energy management and audit are very strategic to reach energy efficiency and
conservation, especially for large energy users. Even everyone already understands about how to
important it is, but not all of them understand how to implement it. So, besides make regulation
to obligate the large energy users to do both, government also needs to help large energy users
who almost of them are private sector to implement by making clearing house, mentoring energy
program, and also standardized for energy manager.
5. Most of the energy efficient technologies are still imported
The presence of energy efficient technologies in local market is important to catalyze
energy efficiency and conservation program. If it is hard to find it, then the cost of energy
efficient and conservation program become high too. Import energy efficient technologies also
not a good solution because the price is still too high. This barrier can be dealt with give
incentive for a manufacturer of energy efficient technology.
B. Challenge
1. Implementation of Energy Audit results is still limited, therefore the ability to invest in
the field of Energy Conservation of energy is still low
This is the challenge of the implementation of the energy audit. The government already
makes a policy that supports to implement energy audit. But the challenge is limited time and
budget which means limited access to large energy users as a target.
2. Support from Financial institutions for Energy Conservation business is still weak
This challenge is related to the first one. The energy conservation policy is already
planned and become legal, but the budget is limited even from a financial institution. Apkenindo
with Investment Grade Audit (IGA) have the solution of this problem. They have a program that
support investment for energy conservation. The procedure is :
Picture 4.1 IGA Procedure
3. Financing institution/banking do not yet interested to finance the energy efficiency
Project (Business in energy efficiency is seen as uncertainty business)
Energy Services Company (ESCO) to support Energy Conservation is still limited.
Related to the budget, we know that limited access to accelerate the energy conservation activity
impact of bad investment climate. If the investment climate in energy conservation still that
weak, then the growth of ESCO also limited. If ESCO is still limited, then the energy
conservation activity will not grow so fast.
4. Standardization and labeling programs have not been fully implemented and functional
The challenge of standardization and labeling is almost the same, but the most challenge
is coming from labeling: lack of accredited testing laboratories, especially for refrigerators and
air conditioners. And also the problem is about range parameter of labeling. Range parameters
are only created by ideal terms, but not calculate the existing manufacturer. Then the effect is
existing manufacturer don’t want to use that labeling, which means make labeling program have
not implemented and functional.
5. Lack of coordination of stakeholders to implement energy conservation
Technically, the implementation of energy conservation must involve many stakeholders.
For example, for incentive, Ministry of Energy and Mineral Resources must involve the Ministry
of Finance. For standard and labeling Ministry of Energy and Mineral Resources is cooperation
with Ministry of Industry and Ministry of Trade.
Picture 4.2 Coordination in Standard and Labelling Policy
If there is no coordination between MEMR and Ministry of Industry, what will happen is
labeling has not been fully implemented because the parameter of labeling is not realistic just
like what have been explained in the previous point. It is similarly of lack of coordination
between MEMR and the Ministry of Finance, but the problem effect the incentive policy
implementation.
V. SUMMARY AND OUTLOOK
Summary
We can solve the energy problem it by two ways, change the supply side and the demand
side. Demand side means intervene the demand side by to improve efficiency in energy
utilization from up-stream up to down-stream which known as conservation energy. Energy
conservation can be reached by use energy management in all of demand section to create energy
efficiency. During the term of country, conserving energy is how to increase development but
also decreasing the energy consumption and save the environment.
As the long term energy demand, on the year of 2025, Indonesia energy demand will be
2.162 million BOE if it’s managed by business as usual, while if energy conservation applied on
the demand side by 17%, energy demand can be reduced to 1.796 million BOE in 2025. Energy
efficiency in 2025 targeted to be 17% in total for 4 sectors, industrial sector 6,9%, commercial
sector 0,7%, transportation sector 7,4% and household sector 2%. This table will show us about
the law and regulation that related to energy conservation:
Table 5.1 Regulation that Related to Government Regulation about Energy Conservation
Law No
30/2007
about
Energy
Government
Regulation
No 70/2009
about
Energy
Conservation
Responsibility -
Implementation
MEMR No 12 /2012 about fuel saving
MEMR No 13/2012 about electricity saving
MEMR No 14/2012 about energy management
Related to : Presidential Instruction No 13/2011
about water and energy saving
Standard &
Labeling
MEMR No 6/2011 about Energy Labeling for
CFL
Incentive and
Disincentive MEMR No 14/2012 about energy management
Direction and
Supervision
MEMR No. 13/2010 and MEMR No.14/2011
about standardization for energy manager.
There are 8 main strategies to increase energy efficiency and conservation: 1.Creating
Policy and Regulation; 2.Raising Public Awareness; 3.Energy Management; 4.Incentive and
Disincentive; 5.Standard and Labeling; 6. Pilot Project (EE Street Lighting); 7.Clearing House
Energy Conservation; 8.International Cooperation. But unfortunately, the transportation sector is
the most programs are still not touched by energy conservation policy except the EE Street
Lightning program.
In this report, “barrier” is defined with some aspects which possible to make us fail to
reach the policy goals. And “challenge” is defined with some aspects which possible to make us
fail when we try to solve or break the barrier. In simple, the barrier is the problem itself,
meanwhile challenge is the problem of the solving action. Barriers of energy conservation policy
are: 1. Knowledge and understanding of the importance and benefits of energy conservation are
still limited; 2. Encouragement for Energy Conservation is still weak, because the subsidy for
energy is still high; 3.Electrical equipment on the market is still much to be inefficient; 4.Ability
to implement an Energy Management and Energy Audit is still weak; 5.Most of the energy
efficient technologies are still imported. Meanwhile the challenges are: 1.Implementation of
Energy Audit results are still limited, therefore the ability to invest in; 2.Support from Financial
institutions for Energy Conservation business is still weak; 3.Financing institution/banking do
not yet interested to finance the energy efficiency Project (Business in energy efficiency is seen
as uncertainty business); 4.Standardization and labeling programs have not been fully
implemented and functional; 5.Lack of coordination of stakeholders to implement energy
conservation
Outlook
Depends on public policy analysis, the most fundamental thing about public policy is the
mission of the country. Indonesia’s mission is: protect all the people of Indonesia and the entire
country of Indonesia, promote the general welfare, the intellectual life of the nation, and
participate in the establishment of world order based on freedom, eternal peace and social justice.
Besides mission of the country, as a presidential country, the president’s vision is fundamental
too. Based on both of it, then government creates the strategy of energy sector, specifically
energy conservation sector. After creating strategy, then the government makes some policy or
law to support the strategy from a legal aspect. Program of energy conservation must be created
based on the policy or law.
From this report, we can conclude that Indonesia already has a good energy conservation
policy. Indonesia energy conservation policy is already stated since 1981, but the law about it is
still fairly new. It is reasonable because Directorate General of New, Renewable Energy and
Energy Conservation as the executor is fairly new too. Unfortunately the transportation sector
has not managed well by energy conservation policy. It is because energy conservation in
Indonesia still concentrated with no-cost and low cost strategy. Labeling of appliance is still
limited because of lack of accredited testing laboratories.
Overall, lack of coordination is the main problems to optimize Indonesia energy
conservation policy. Energy conservation policy needs strong coordination and coordination
because it has a broad scope. Bureaucratic culture and selfishness ministry will make the policy
not good and realistic enough, and also hinder the implementation of policies.
REFERENCES
[1] ESMAP (Energy Sector Management Assistance Program), 2012, Planning and Financing
Power Generation
[2] County Report : Development Of New Renewable Energy And Energy Conservation,
Kementerian ESDM, 2013
[3] Energy Conservation Policy and Program in Indonesia; Indonesia EBTKE Conference and
Exhibition 2012Jakarta, 18July 2012; Director of Energy Conservation
[4] Accountability Report Government Performance of Ministry of Energy and Mineral
Resources 2012
[5] Current Situation and Challenges in Energy Efficiency S&L Policy Development in
Indonesia; Presented at Shinagawa Prince Hotel, January 28th
2011; Dr Edi Hilaman
[6] Indonesian National Occupational Competency Standard, Table 1
[7] Maritje Hutapea; Energy Conservation Policy and Esco Development; Presented at Business
Forum #5 “Energy Efficiency Business Opportunity”
[8] Maritje Hutapea; Energy Efficiency and Conservation Policy in Indonesia; Presented in 2nd
Indonesia – Korea Working Group on New Renewable Energy and Energy Conservation, Bali
April 29th
2013
[9] Ir Maryam Ayuni; Policy Framework and Regulatory Instruments Energy Conservation and
Efficiency; Presented at Workshop: Opening the Potential for Energy Efficiency Investment in
Indonesia, January 31th
2012
[10] Policy and Strategy for Developing Energy Conservation Policies and Barriers or Problem
to be Solve; Presented at ECID-9 Program, Tokyo, Japan, September 4th
– 13th
2012
[11] Final Report : Peer Review on Energy Efficiency in Indonesia; February 13th
2012; Report
for the APEC Energy Working Group
[12] Energy Conservation Incentive Policy; Presented at Focus Group Discussion : Financing
Energy Efficiency Projects in Indonesia
[13] Dr Riant Nugroho; Public Policy : Policy Dynamics, Policy Analysis, and Policy
Management; 2012; PT Elex Media Komputindo
[14] Todd Litman, 2012, Comprehensive Evaluation of Transport Energy Conservation and
Emission Reduction Policies, Victoria Transport Policy Institute
[15] Todd Litman, 2009, Efficient Vehicle Versus Efficient Transportation, Canada, Victoria
Transport Policy Institute
[16] Agency of Natural Resources and Energy, Energy Conservation and Renewable Energy
Department, 2001, Energy Conservation Policies of Japan
[17] Tadashi Mogi, 2013, Energy Conservation Policies in Japan, Tokyo, Ministry of Economy,
Trade, and Industry