This report is translated version of the original report which has been presented and published by Katadata/Katadata Insight Center. Read the original report in Bahasa Indonesia, here: Decarbonization of the National Electricity Sector Towards Net-Zero Emissions
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The electricity sector plays an important role in the energy transition to prevent worsening climate change.
The definition of climate change refers to long-term changes in temperature and weather patterns. According to the National Aeronautics and Space Administration (NASA), the earth’s surface temperature in 2022 will increase by 0.89 °C compared to the annual average temperature during the period between 1951-1980. It should also be noted that in the last decade, the earth’s surface temperature has been 0.65 – 1.02 °C higher than the temperature in the 1951-1980.
Greenhouse gas (GHG) emissions are the main cause of climate change. One of the GHGs is produced by burning fossil energy to support human activities. Even though there are currently alternatives to using renewable energy, its use is still very small compared to the use of fossil energy. Without mitigation efforts, the increase in earth’s surface temperature will continue in the future.
Countries around the world understand the importance of GHG emissions reduction, as it began with the Kyoto Protocol in 1997 and then strengthened in the Paris Agreement 19 years later. In the Paris Agreement, all countries in the world agreed to limit global warming to a maximum of 1.5°C. If it goes above the 1.5°C limit, the frequency of major floods, droughts, food crises and other disasters due to extreme weather will increase drastically.
These efforts are stated in the GHG emission reduction target set for each country as Nationally Determined Contribution (NDC) for the 2020-2030 period and Net Zero Emission (NZE) target before 2100.
Indonesia’s contribution to global mitigation efforts
Climate change mitigations require efforts to drastically reduce global GHG emissions. Global emissions need to go down to negative levels, which means massive GHG removal from the atmosphere is needed to achieve NZE. Indonesia, as a country that is committed to reducing GHG emissions, has set an NDC target of emissions reduction of up to 29% by 2030. This plan was then revised by increasing the NDC target to 32% and a vision to achieve NZE more quickly, by 2060.
Efforts to mitigate climate change must not disregard the principle of justice. Developed countries have enjoyed the yield of carbon-intensive economic activities and contribute highly to climate change. As a developing country, it is unfair if Indonesia carries the responsibility for climate change mitigation on a par with developed countries.
The same applies domestically. The NZE transition must not deepen the social or developmental gap between regions.
For Indonesia, these challenges only emphasize the importance of mitigation efforts as well as adaptation to climate change. The NZE transition formula needs to to narrow the development gap within the country. In addition to implementing the development mandate, this approach will help create the precondition for effective adaptation efforts.
Analysis on Decarbonization Scenarios of National Electricity Sector
To contributie to Indonesia’s NZE transition agenda, Katadata took part in launching the Future of Energy (MDE) Initiative by the International Institute for Applied Systems Analysis (IIASA) in partnership with the World Resources Institute (WRI) Indonesia and the Indonesian Business Council (IBC). The MDE Initiative aims to popularize the results of in-depth analysis of various Net-Zero transition scenarios to address the challenge of equitable climate change mitigation.
MDE analysis focuses on the electricity sector due to its large contribution to GHG emissions (75% globally and 44% for Indonesia in 2020), which makes it a priority sector for determining the success of NZE.
In its initial effort, MDE outlined various scenarios for decarbonization of the national electricity sector. These scenarios are based on various levels of ambition to reduce GHG emissions. The more drastic the reduction target in GHG emissions, the higher the responsibility Indonesia assumes in the tackling the global challenges.
MDE analysis shows that decarbonization scenario of the electricity sector through zero emissions level can be achieved with relatively affordable additional costs, namely by increasing the overall costs of the electricity sector by around 5-26%.
However, these additional costs are not without conditions. There are at least three supporting factors, which, although not easy to implement, must be met in order to realize effective mitigation and adaptation efforts.
First, optimal planning and implementation is needed. The construction of power plants and additional network infrastructure need to be aligned with the potential of renewable energy resources as well as location and timing of where electricity supply is needed.
Second, decarbonization’s impact is shifting the cost structure in the electricity sector. Although the overall cost of the electricity sector rose by 26%, the cost of using fossil fuels in the electricity sector will potentially decrease by 80% until the end of the 21st century (US$ 3.6 – 5.9 trillion).
On the other hand, due to rapid construction of generator capacity, the cost of construction and operation of generator and electricity networks increases between 29-34% (US$ 5.7 – 6.6 trillion) in the same period.
The rapid development of generator capacity is not without reason. In the NZE scenario, electricity generator will be dominated by solar panels, which have a limited operational time (capacity factor). that when sunlight is available during the day. Therefore, a larger generating capacity is needed. Apart from being a challenge, this precondition is an opportunity to build a new mainstay sector of the national economy using the momentum of the NZE transition.
Lastly, by 2050, the cost of generating solar panels is projected to drop drastically from current rate. Although the cost of generating electricity using solar panels has fallen by 85% in the last 10 years, the sustainability of this trend remains an uncertain assumption and requires joint efforts from all parties to be realized.
Push and pull in determining NZE’s level of ambition
To bring national NZE agenda (both in 2050 and 2060) into reality is a very ambitious determination. Although many developed countries have set earlier NZE targets, the national NZE agenda is more significant because it is based on Indonesia’s historical contribution to climate change – which is more limited than in developed countries.
Thus, it is very important that Indonesia is not going to the direction of to pursuing negative GHG emissions. Even though it is needed at the global level, reducing GHG emissions to negative will level Indonesia’s climate change mitigation obligations with developed countries, thereby contradicting the principle of Common But Differentiated Responsibilities.
Apart from that, reducing the national electricity sector’s GHG emissions to negative levels will require massive use of biomass. MDE analysis estimates the need for biomass of up to 70 million m3 for the NZE target in 2050 (while national Industrial Plantation Forest production output is currently around 45 million m3) to be used in biomass-based power plants combined with Carbon Capture & Storage (also known as BECCS technology ). Apart from being difficult to realize, the use of biomass on this large scale threatens the existence of natural forests and puts extraordinary pressure on other land resources.
The importance of combining climate change mitigation and adaptation efforts is also reflected in cost efficiency. The additional costs resulting from the NZE transition can be maintained if combined with equal distribution of electricity supply between regions. This means that efforts to equalize access to electricity are in synergy with climate change mitigation because the utilization of renewable energy resources is spread evenly throughout the country.
Details of the MDE analysis can be studied further through map visualization and infographics available on masadepanenergi.id website.