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Energy and Non-Traditional Security (NTS) in Asia pp 89–117Cite as

An Environmental Perspective on Energy Development in Indonesia

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Part of the book series: SpringerBriefs in Environment, Security, Development and Peace ((BRIEFSSECUR,volume 1))

Abstract

Indonesia faces an energy trilemma on the energy security, climate change goals and energy poverty fronts. Policies that focus exclusively on one prong of the trilemma may lead to unacceptable consequences in the others. Conceiving the predicament as a trilemma will encourage a more unified approach to its problem solving. Successful management will require a search for policy complementarities—the likeliest source of which may be the renewable energy sector—that allow the country to move forward on all three fronts. A reform of its bureaucracy to address implementation gaps in its energy policy will also be needed. The reduction in transaction costs associated with the implementation of Indonesia’s energy policy could be used as a broad criterion when considering these necessary changes.

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Notes

  1. 1.

    The Government of Indonesia, “The Geography of Indonesia”, at: http://www.indonesia.go.id/en/indonesia-glance/geography-indonesia.html (29 June 2011).

  2. 2.

    Fiscal Policy Office (Ministry of Finance); World Bank, “Phase 1 Assessment of Emissions—Key Findings”, in: Low Carbon Development Options for Indonesia, at: http://www.esmap.org/esmap/sites/esmap.org/files/factsheet04.pdf (16 March 2011).

  3. 3.

    See Allard, Tom, “Indonesia Goes to Ground for Energy”, in: Sydney Morning Herald (1 May 2010), at: http://www.smh.com.au/environment/energy-smart/indonesia-goes-to-ground-for-energy-20100430-tzbv.html (16 March 2011).

  4. 4.

    For PLN’s full profile, see “Company Profile”, at: http://www.pln.co.id/eng/?p=102 (12 August 2011).

  5. 5.

    “Potret Keadaan Hutan Indonesia Periode 2000–2009” (The Picture of Indonesia’s Forests 2000-2009), in: FWI (Forest Watch Indonesia) (27 July 2011), at: http://fwi.or.id/?p=306 (31 August 2011).

  6. 6.

    WWF-Indonesia commenced a climate and energy programme in 2003 whose work, until the writing of this chapter in 2011, has increasingly gained recognition both nationally and internationally. The first author served as a director in this programme between 2007 and 2010. Between late 2010 and early 2011, he served as advisor to WWF-Indonesia and was involved in the energy governance research of Indonesia that was led by Professors Neil Gunningham and Peter Drahos of the ANU.

  7. 7.

    Energy elasticity is defined as the percentage change in energy consumption to achieve 1 % change in national GDP.

  8. 8.

    Ardiansyah, Fitrian; Wardhini, Indra Sari; Suhud, Muhammad, “Road to Copenhagen: Helping Indonesia Advance as its Emissions Decrease”, in: The Jakarta Post (27 October 2009), at: http://www.thejakartapost.com/news/2009/10/27/road-copenhagen-helping-indonesia-advance-its-emissions-decrease.html (16 January 2012).

  9. 9.

    “World Crude Oil Prices”, in: US-EIA (U.S. Energy Information Administration) (17 June 2011), at: http://www.eia.gov/dnav/pet/pet_pri_wco_k_w.htm (28 June 2011).

  10. 10.

    Under the Suharto regime, which was anxious to maintain social stability, there was an emphasis not only on food but also energy security. As in a number of other developing countries, the central government subsidised the price of a variety of energy products, including low-octane gasoline, kerosene, diesel, liquefied petroleum gas (LPG) and electricity, with the aim of ensuring that energy was cheap and available (Agustina et al. 2008, p. 12). As long as the price of oil was low and the value of the rupiah relatively high, the subsidies remained modest. However, the Asian financial crisis of 1997 resulted in a substantial fall in the value of the rupiah even as the price of crude oil rose substantially in the early 2000s. Fuel subsidies increased markedly from 1998 to 2000 following the sharp depreciation of the rupiah relative to the US dollar, peaking in 2000 and accounting for 28.6 per cent of total spending (Agustina et al. 2008, p. 12). In 2008, fuel and electricity subsidies together reached US$20.5 billion (Agustina et al. 2008, p. 3).

  11. 11.

    Suharmoko, Aditya. “Govt Likely to Increase Fuel Subsidy: Minister”, in: The Jakarta Post (7 August 2010), at: http://www.thejakartapost.com/news/2010/07/08/govt-likely-increase-fuel-subsidy-minister.html (16 March 2011).

  12. 12.

    Kertiyasa, Martin Bagya, “Maret, Subsidi Energi Rp32,3 Trilyun” (March, Energy Subsidy Rp32.3 Trillion), in: Okezone (14 April 2011), at: http://economy.okezone.com/read/2011/04/14/20/445920/ (15 April 2011).

  13. 13.

    “Indonesia Overtakes Thailand in Car Sales”, in: The Independent (1 August 2010), at: http://www.independent.co.uk/life-style/motoring/indonesia-overtakes-thailand-in-car-sales-2040988.html (16 March 2011).

  14. 14.

    “Indonesia May Ban Low Quality Exports from 2014”, in: Bloomberg (24 January 2011), at: http://www.steelguru.com/raw_material_news/Indonesia_may_ban_low_quality_coal_exports_from_2014/187736.html (16 March 2011).

  15. 15.

    President Susilo Bambang Yudhoyono has announced plans for Indonesia to become the world’s leading geothermal nation, with 44 plants to be built by 2014 and its 4,000 MW capacity rising to 9,000 MW by 2025; see Allard, Tom, “Indonesia Goes to Ground for Energy”, in: Sydney Morning Herald (1 May 2010), at: http://www.smh.com.au/environment/energy-smart/indonesia-goes-to-ground-for-energy-20100430-tzbv.html (16 March 2011).

  16. 16.

    “Share of Total Primary Energy Supply in 2008: Indonesia”, in: IEA (International Energy Agency) (2010), at: http://www.iea.org/stats/pdf_graphs/IDTPESPI.pdf (16 March 2011).

  17. 17.

    As to China’s resource relationship with Indonesia, see Chaney, Joseph; Wee, Sui-Le, “Indonesia’s Resources Appeal Grows on China”, in: Reuters (17 February 2010), at: http://www.reuters.com/article/2010/02/17/us-dealtalk-indonesia-resources-idUSTRE61G2K220100217 (16 March 2011); for a general, but somewhat dated energy profile, see “Indonesia Energy”, at: http://wn.com/s/indonesiaenergy_old1/ 16 March 2011.

  18. 18.

    “Indonesia”, in; Indonesia Energy Info (July 2004), at: http://wn.com/s/indonesiaenergy_old1/ (16 March 2011); Alfian; Fox, David, “Indonesia LNG Exports to Fall to 362 Cargoes This Year”, in: Reuters (18 January 2011), at: http://www.reuters.com/article/idUSL3E7CI0UK20110118 (16 March 2011).

  19. 19.

    PERTAMINA is Indonesia’s state-owned oil and gas company. For the company’s full profile, see “Company Profile”, at: http://www.pertamina.com/index.php/home/read/company_profile (12 August 2011).

  20. 20.

    “Raft of New Deals as Japan and Indonesia Agree LNG Terms”, in: Business Monitor International (March 2008), at: http://www.oilandgasinsight.com/file/63096/raft-of-new-deals-as-japan-and-indonesia-agree-lng-terms.html (16 March 2011).

  21. 21.

    “Snapshot of Electrification throughout ASEAN”, in: Asian Trends Monitoring (29 July 2010), at: http://www.asiantrendsmonitoring.com/2010/07/29/snapshot-of-electrification-throughout-asean (16 March 2011); Barbotte, Daphné, “Country Spotlight: Indonesia”, in: REEEP (5 September 2010), at: http://www.reeep.org/index.php?id=443&special=showHotTopic&iHotId=861&sQuiteName=news&iQuiteId=436 (16 March 2011).

  22. 22.

    ESDM, “Second Phase of Electricity Crash Program and Development of Transmission and Distribution Networks”, in: The Free Library (2009), at: http://www.thefreelibrary.com/Second+phase+of+electricity+crash+program+and+development+of…-a0198850375 (16 March 2011).

  23. 23.

    Dewan Nasional Perubahan Iklim (DNPI) or National Council on Climate Change (NCCC) is an institution set up by President Susilo Bambang Yudhoyono in July 2008 to coordinate climate change-related activities within Indonesia. The council is specifically tasked with the role of convening different stakeholders in Indonesia to create consensus around the opportunities and challenges related to climate change.

  24. 24.

    Ardiansyah, Fitrian, “Indonesia’s Energy Dilemma”, in: The Jakarta Post (7 July 2010), at: http://www.thejakartapost.com/news/2010/07/06/climate-solutions-indonesia’s-energy-dilemma.html (16 March 2011).

  25. 25.

    National Energy Foundation, “Background Information: How Does Burning Coal Affect the Environment”, at: http://www.coaleducation.org/lessons/twe/envi.htm (29 June 2011).

  26. 26.

    See Presidential Instruction No. 5 of 2006 on National Energy Policy.

  27. 27.

    See Government Regulation No. 1 of 2007 on Income Tax Facilities to Investment Activities in Specific Industries and Particular Regions.

  28. 28.

    See Ministry of Forestry Regulation No. 117/PMK.06/2006 on the Credit for the Development of Biofuel Energy and Plantation Revitalization.

  29. 29.

    Vaidyanathan, Gayathri, “Counting the Carbon Cost of Peatland Conversion”, in: Nature (7 March 2011), at: http://www.nature.com/news/2011/110307/full/news.2011.139.html>?s=news_rss (29 June 2011).

  30. 30.

    In their analysis, Koh and Wilcove (2008, p. 62) assessed that between 1990 and 2005, oil palm cultivated areas in Indonesia increased by 3 million ha.

  31. 31.

    Exploration rights were granted as follows: the Jaboi field in Aceh was awarded to a consortium led by PT Bukaka Teknik Utama; the Sorik Marapi field in North Sumatera to a consortium of Tata Power and Origin Energy; the Muara Laboh field in West Sumatera and the Gunung Rajabasa field in Lampung to PT Supreme Energy; the Jailolo field in Halmahera to Star Energy; the Sokoria field in Flores Island to Bakrie Power; the Tangkuban Parahu field in West Java to PT Indonesia Power; the Cisolok field in West Java to PT Rekayasa Industri; the Tampomas field in West Java to PT Wijaya Karya; and the Ungaran field in Central Java to PT Golden Spike Energy Indonesia; see Alfian, “Indonesia Geothermal Program Hung Up on PLN Pricing Delay”, in: The Jakarta Post (22 October 2010), at: http://www.thejakartapost.com/news/2010/10/22/indonesia-geothermal-program-hung-pln-pricing-delay.html (16 March 2011).

  32. 32.

    “Follow the Money: $400 Million Indonesian Commitment Has Players Scurrying”, in: Geothermal Digest (29 March 2010), at: http://geothermaldigest.net/blog/2010/03/29/follow-the-money-400-million-indonesia-commitment-has-players-scurrying/ (16 March 2011).

  33. 33.

    Padden, Brian, “World Bank Invests $400 Million in Indonesian Geothermal Energy”, in: Voice of America (23 March 2010), at: http://www.voanews.com/english/news/World-Bank-Invests-400-Million-in-Indonesian-Geothermal-Energy--88906002.html (16 March 2011).

  34. 34.

    ADB financed the plant as one of 12 subprojects under its Renewable Energy Development Sector (REDS) Project, aiming to increase the electricity output from Lahendong geothermal plant to 158 GWh (gigawatts hour) annually into PLN’s Minhasa system of North Sulawesi; see World Bank, “ID-PCF-Indonesia Lahendong Geothermal Project” (25 August 2009), at: http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=64290415&theSitePK=40941&menuPK=228424&Projectid=P096677 (16 March 2011).

  35. 35.

    JICA’s contribution of ¥5,866 million (approximately US$70 million), beginning in March 2004, involved building a new plant with a 20 MW capacity that is due for completion in 2012; see JICA, “Major Projects: Lahendong Geothermal Power Plant Project”, in: JICA, at: http://www.jica.go.jp/indonesia/english/activities/activity13.html (16 March 2011).

  36. 36.

    “Pre-feasibility Study for Geothermal Power Development Projects in Scattered Islands of East Indonesia”, in: Engineering and Consulting Firms Association, Japan (March 2008), at: http://www.ecfa.or.jp/japanese/act-pf_jka/H19/renkei/wjec_indonesia.pdf (16 March 2011).

  37. 37.

    Alfian; Desy Nurhayati, “PLN Needs to Subsidize Geothermal Power”, in: The Jakarta Post (5 May 2010), at: http://www.thejakartapost.com/news/2010/05/05/pln-needs-subsidize-geothermal-power.html (16 March 2011).

  38. 38.

    “Indonesian Nuclear Power Proposals”, in: Nautilus Institute for Security and Sustainability (7 February 2010), at: http://www.nautilus.org/initiatives/aus-indo/aust-ind-nuclear/ind-np/contemporary/#introduction (16 March 2011).

  39. 39.

    Ibid.

  40. 40.

    Ibid.

  41. 41.

    Ibid.

  42. 42.

    Ibid.

  43. 43.

    “Mitsubishi Heavy Industries”, in: Nautilus Institute for Security and Sustainability (19 January 2010), at: http://www.nautilus.org/initiatives/aus-indo/aust-ind-nuclear/ind-np/muria/mitsubishi-heavy-industries (16 March 2011).

  44. 44.

    Nani Afrida, “Indonesia Will Not Develop Nuclear Power Anytime Soon: Minister”, in: The Jakarta Post (2 May 2010), at: http://www.thejakartapost.com/news/2010/02/05/indonesia-will-not-develop-nuclear-power-anytime-soon-minister.html (16 March 2011).

  45. 45.

    Alfian, “Indonesia Geothermal Program Hung Up on PLN Pricing Delay”, in: The Jakarta Post (22 October 2010), at: http://www.thejakartapost.com/news/2010/10/22/indonesia-geothermal-program-hung-pln-pricing-delay.html (16 March 2011).

  46. 46.

    Ardiansyah, Fitrian, “Magsaysay and the Environment”, in: The Jakarta Post (7 August 2011), at: http://www.thejakartapost.com/news/2011/08/07/magsaysay-and-environment.html (20 August 2011).

  47. 47.

    “Indonesia: Palm Oil Production Growth to Continue”, in: USDA (United States Department of Agriculture) (19 March 2009), at: http://www.pecad.fas.usda.gov/highlights/2009/03/Indonesia/ (16 March 2011).

  48. 48.

    “National Action Plan: Addressing Climate Change”, in: State Ministry of Environment (November 2007), at: http://www.uncsd2012.org/rio20/content/documents/Indonesia%20National%20Action%20Plan%20Addressing%20Climate%20Change.pdf (16 March 2011).

  49. 49.

    Melisa, Eka, “National Action Plan and International Partnership: Indonesia’s Response to Global Efforts to Improve the International Regime on Climate Change”, in: National Council on Climate Change (2010), at: http://www.crawford.anu.edu.au/accpforum/pdf/ppp/7_Melisa.pdf (16 March 2011).

  50. 50.

    “National Council on Climate Change: Low Carbon Development Strategies 03/06/2010”, in: Norway (7 July 2010), at: http://www.norway.or.id/Embassy/development/Indonesia/environment/National-Council-on-Climate-Change-Low-carbon-development-strategies-03062010/ (16 March 2011).

  51. 51.

    Lacey, Terry, “Bureaucracy Slows Indonesia Oil and Gas Development”, in: Asia Sentinel (12 January 2010), at: http://www.asiasentinel.com/index.php?option=com_content&task=view&id=2236&Itemid=226(16 March 2011).

  52. 52.

    “Indonesia’s Bureaucracy among the Worst in Asia: Survey”, in: Jakarta Globe (2 June 2010), at: http://www.thejakartaglobe.com/home/indonesias-bureaucracy-among-worst-in-asia-survey/378341 (16 March 2011).

  53. 53.

    Ardiansyah, Fitrian, “Renewing Support for Renewable Energy”, in: The Jakarta Post (2 February 2010), at: http://www.thejakartapost.com/news/2010/02/02/renewing-support-renewable-energy.html (16 March 2011).

Abbreviations

ADB:

Asian Development Bank

ANU:

Australian National University

APEC:

Asia–Pacific Economic Cooperation

BAPPENAS:

Badan Perencanaan Pembangunan Nasional (National Development Planning Agency)

CARR:

Centre for the Analysis of Risk and Regulation

CIA:

Central Intelligence Agency

CO2 :

Carbon dioxide

DEN:

Dewan Energy Nasional (National Energy Council)

DNPI:

Dewan Nasional Perubahan Iklim Indonesia (National Council on Climate Change)

EIA:

Energy Information Administration

ESDM:

Kementerian Energi dan Sumber daya Mineral (Ministry of Energy and Mineral Resources, Republic of Indonesia)

EU:

European Union

GDP:

Gross domestic product

GHG:

Greenhouse gas

GJ:

Gigajoules

GW:

Gigawatts

GWh:

Gigawatts hour

ha:

Hectares

HCVF:

High conservation value forests

IAEA:

International Atomic Energy Agency

IEA:

International Energy Agency

IFCA:

Indonesia Forest Climate Alliance

JICA:

Japan International Cooperation Agency

KW:

Kilowatts

LNG:

Liquefied natural gas

LPG:

Liquefied petroleum gas

mmboe:

Millions of barrels of oil equivalent

MtCO2e:

Metric tonnes (tons) of carbon dioxide equivalents

mtoe:

Million tonnes of oil equivalent

MW:

Megawatts

NAEA:

National Atomic Energy Agency

OECD:

Organisation for Economic Co-operation and Development

OHS:

Occupational Health and Safety

PERTAMINA:

Perusahaan Tambang dan Minyak Negara (state-owned oil and gas company)

PLN:

Perusahaan Listrik Negara (the state-owned electricity company)

PV:

Photovoltaic

REDD+:

Reducing Emissions from Deforestation and Forest Degradation Plus

REDS:

Renewable Energy Development Sector

RSPO:

Roundtable on Sustainable Palm Oil

tbd:

Thousand barrels per day

tons:

Metric tonnes

UK:

United Kingdom

UN:

United Nations

UNFCCC:

United Nations Framework Convention on Climate Change

US:

United States

USAID:

United States Agency for International Development

USDA:

United States Department of Agriculture

WWF:

World Wide Fund for Nature

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Acknowledgments

The authors would like to thank Muhammad Suhud and Iwan Wibisono for taking up the challenge of preparing and presenting the earliest version of this chapter in 2008 and Desak Putu Adhityani Putri for providing research assistance.

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Authors and Affiliations

  1. WEH Stanner Room #1.38, Crawford School of Economics and Government, The Australian National University (ANU), 132 Lennox Cross, Canberra, ACT, 0200, Australia

    Fitrian Ardiansyah

  2. National Research Centre for Occupational Health and Safety Regulation, RegNet, Research School of Pacific and Asian Studies, The Australian National University (ANU), Canberra, ACT, 0200, Australia

    Neil Gunningham

  3. Centre for Governance of Knowledge and Development, RegNet, Research School of Pacific and Asian Studies, The Australian National University (ANU), Canberra, ACT, 0200, Australia

    Peter Drahos

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  1. S. Rajaratnam School of Int. Studies, Centre for Non-Trad. Security Studies, Nanyang Technological University, Centre for Non-Trad. Security Studies, Singapore, 639798, Singapore

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Ardiansyah, F., Gunningham, N., Drahos, P. (2012). An Environmental Perspective on Energy Development in Indonesia. In: Caballero-Anthony, M., Chang, Y., Putra, N. (eds) Energy and Non-Traditional Security (NTS) in Asia. SpringerBriefs in Environment, Security, Development and Peace, vol 1. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-29706-9_5

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