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Pertamina NRE to boost geothermal capacity with eye on carbon trade
The state-owned oil and gas giant's renewable energy arm is aiming to increase capacity at its geothermal plants to capitalize on future growth in both carbon credit demand and prices.
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Technicians inspect a steam separator on April 25, 2022 at the Lahendong Geothermal Power Plant belonging to state-owned energy giant Pertamina in Lahendong, Tomohon, North Sulawesi. (Reuters/Fransiska Nangoy)
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ertamina New & Renewable Energy (NRE), a subsidiary of state-owned oil and gas giant Pertamina, is looking to expand its geothermal capacity to over 1 gigawatt (GW) by 2025 in a bid to capitalize on the rising demand and future prices for carbon credit.
The price of carbon credit from geothermal and combined cycle gas turbine (CCGT) projects is currently estimated at US$4-5 per tonne of carbon dioxide equivalent (tCO2e).
The figure was expected to increase to over $20 per tonne of CO2e by 2035 and over $60 per tonne of CO2e by 2050, Pertamina NRE CEO John Anis said on Thursday during a presentation at the 48th Indonesian Petroleum Association Convention and Exhibition (IPA Convex) in Tangerang, Banten.
“Right now, we’re still developing geothermal capacity to over 1 gigawatt by 2025. Carbon credit and carbon trading will help this development,” said John, adding that he viewed carbon credit as an opportunity for the upstream energy sector, including geothermal.
Carbon credits, also called carbon offsets, are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases (GHGs), according to Investopedia, with 1 carbon credit allowing 1 tCO2e of emissions.
Read also: Certification headache for Indonesia's budding carbon market
Energy firms generate carbon credits through activities that reduce or remove GHGs from the atmosphere and in the case of renewable energy projects, they do this by producing clean energy.
