In spite of the adverse impact from the excessive use of fossil fuels, Indonesia would be unlikely to meet the target of conversion to renewable resources as its dominant source of energy.
National Development Planning Minister Armida S. Alisjahbana said on Monday that fossil fuels would remain the country’s primary source of energy given the hefty cost of converting to renewable resources.
“I have to admit that at this point we have not managed to fully develop an incentive mechanism or the proper pricing policies needed to boost the use of renewable energy,” Armida said during the Third Indonesia Carbon Update.
Fossil fuel makes up 95 percent of the country’s energy sources, in fact the government pays subsidies for the use of fossil fuel. Data from the Energy and Mineral Resources Ministry said that renewable sources only contribute less than 5 percent.
President Susilo Bambang Yu-dho-yono has issued Presidential Regulation (Perpres) No. 5/2006 on national energy policy which aims to accelerate the use of new and renewable energy, citing climate change concerns.
In Vision 2025, designed by the Energy and Mineral Resources Ministry, the use of new and renewable energy is expected to reach 25 percent of the total by 2025, exceeding the 17 percent stipulated in Perpres. In Vision 2525, the use of coal is forecast to reach 32 percent, gas 23 percent and oil 20 percent.
Armida said the key to the expansion of renewable energy is changing the behavior of consumers. In the absence of proper incentives, disincentive mechanisms and pricing policies, such changes seem unlikely, she said.
“People, including those in the industrial sector, will only respond to incentives if we use the command and control mechanisms. But such mechanisms are not popular anymore,” she said.
Indonesia has pledged an emission reduction target of 26 percent by 2020 or 41 percent with international support.
In September last year, the government announced the national action plan for reducing greenhouse gas emissions (RAN-GRK).
“[The RAN-GRK] is a framework for mainstream climate change mitigation into the country’s development. We bring this national commitment to the local level,” said Armida.
Currently, 12 provinces have formulated regional action plans for reducing greenhouse gas emissions (RAD-GRK) through Governor Decrees (Pergub) based on local conditions.
To address climate issues, the government has taken a number of initiatives with international counterparts, including Japan.
During the East Asia Summit in November last year in Bali, Japan proposed the establishment of the East Asia Low Carbon Growth Partnership to promote low carbon growth in the region.
As a follow-up, Japan hosted the partnership’s first meeting called the East Asia Low Carbon Growth Partnership Dialogue in Tokyo in April this year.
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