FEATURE: Accounting of mitigation actions in the Indonesian energy sector
Xander van Tilburg and Lachlan Cameron of Energy research Centre of the Netherlands (ECN) talk about Indonesia’s energy challenge and the need for the a common accounting framework in the energy sector.
Indonesia is expecting significant energy growth in the coming decade(s). Based on the latest projections, and in line with development ambitions, energy demand is expected to grow by 6-10% annually. Realistically, fossil fuel production and consumption will dominate the Indonesian energy sector for the foreseeable future, but there are strong domestic drivers for increasing the share of new and renewable energy sources (currently only 6%).
At the same time Indonesia is the sixth largest emitter of greenhouse gases in the world (2012). At present, the energy sector is still responsible for 25% of emissions (with the majority of emissions are caused by deforestation and land-use change) and the share of energy related emissions is expected to grow significantly, in line with the high economic development projections and the expected expansion of coal production and consumption (IEA, 2015). Indonesia has positioned itself as a strong advocate of climate change action: it hosted the 2007 Conference of Parties to the UNFCCC in Bali and in 2009 it announced a voluntary emission reduction target of 26% by 2020 against business as usual (up to 41% with international support).
The challenge is therefore to accommodate the energy demand growth to power the development ambitions, while curbing greenhouse gas emissions and protecting environmental resources. This will require deliberate planning and coordination and a good understanding of ongoing and future mitigation actions in the energy sector. Such an understanding can provide the evidence base to assess, report, and select actions for implementation (and allocate resources accordingly).
The value of tracking information
From a climate change mitigation perspective it makes sense to track government actions that contribute to reducing greenhouse gas emissions in a central place. Tracking mitigation actions in the energy sector has several benefits. It helps to establish an overview of how these actions contribute to progress on both energy and climate ambitions. Tracking can articulate how actions yield development (co)benefits such as improvements in energy sovereignty, resource productivity, job creation, and reducing fiscal spending. It can help assess data sources, quality, and sensitivities, and it can identify overlaps between sectors and ministries and agencies. Lastly, it can strengthen the evidence base needed to make a convincing argument for (international) support for mitigation actions.
Energy related mitigation actions in national strategies and plans
Government actions with mitigation benefits in the energy sector come in different shapes and sizes: from policies and regulations, government run programmes and public procurement, to direct investments, and the development and implementation of (internationally) supported NAMAs.
Mitigation actions related to energy are coordinated/implemented across different ministries (e.g. Energy and Mineral Resources, National Planning, Public Works, Industry, and Agriculture), public financial agencies(e.g. the Indonesian Climate Change Trust Fund; ICCTF, and PT Sarana Multi Infrastruktur; PTSMI), and state-owned companies (e.g. the public utility PLN and oil and gas corporation Pertamina), with a key coordinating role for the Ministry of Energy and Mineral Resources (ESDM).
Indicators for tracking energy mitigation actions
Different stakeholders and audiences will be interested in different types of information. For example, the themes of climate, development and energy will often track different goals. The set of proposed indicators presented below is based on interviews with stakeholders, an analysis of the current strategies and plans related to energy and mitigation in Indonesia, and a number of international studies and initiatives:
- Overview: title and short summary of the action, coordinating government institution and contact details, implementing partners and support project details, and timeline of the action.
- Scope, ambition, and priorities: planned activities and scope, geographical priority areas, potential for transformational change (or paradigm shift), and link to existing policies and plans – both qualitative towards goals and where possible quantitative towards targets and ambitions.
- Energy: Supply side indicators including installed capacity and emission factor, electricity generated, and fuel generated or displaced; demand side indicators including energy savings.
- Finance: Capital requirements and (marginal) abatement costs, financing needs and mechanisms, contribution of public and private sector and international support, status of funding, and exit strategy.
- Environmental impact: direct/indirect contribution to emission reduction, adaptation and resilience potential, and impact on water, air, and soil quality
- Economic impact: end-user savings, subsidy reduction, and contribution to energy security (or energy sovereignty).
- Social impact: health, education, and job creation.
- Feasibility: implementing structure; financial, technological, and political feasibility.
Towards a common accounting framework
To allow ESDM to track and provide consistent and timely information on all energy mitigation actions, a Common Accounting Framework for Energy (CAFE) is being developedwith assistance fromexperts at the Energy research Centre of the Netherlands (ECN). This framework is a data structure that records information that is relevant to different actions, but with a common set of indicators. This is part of a CDKN supported work programme between ESDM and ECN that is collecting information and improving understanding of energy and greenhouse gas mitigation actions.
ECN is working with ESDM and other stakeholders to design the framework and appropriate metrics, conduct a pilot using energy efficiency actions, and then expand this to other energy activities. The final CAFE will:
- Help understand data sources, data quality and sensitivities,
- Show mitigation potentials and costs using a common approach
- Describe development impacts (e.g. energy security, jobs, or subsidy impacts)
- Describe practical details related to energy sector NAMAs (e.g. ease of implementation, implementing partners, policies etc.)
- Identify overlaps between sectors
This type of overview of current and planned actions can be useful for both domestic purposes (for example, comparing current activities to longer term goals such as the Medium Term Development Plan; RPJMN, or for prioritising new initiatives in the future) and also for international uses (for example, providing data on the mitigation impacts of different bottom-up actions as either an input to defining Indonesia’s intended nationally determined contribution; INDC, or its implementation in the coming years).
Image Courtesy: Curt Carnemark / World Bank