In the wake of a cabinet reshuffle, and with BP expanding its operation in West Papua, Indonesia believes it can reduce its dependence on fossil fuels.
On July 27, President Jokowi announced a cabinet reshuffle. He appointed Archandra Tahar as the nation’s new energy and mineral resources minister, replacing Sudirman Said. The president believes the move will strengthen the government’s performance and efficiency overall.
“I was shocked when the president appointed me to become the new energy and mineral resources minister,” Tahar told Kompas after being inaugurated by Jokowi. “I just spoke to the president about the problems that Indonesia is facing right now, which is oil and gas. From that discussion, I came up with a few solutions that could be applied in the country, based on my experience in the US.”
Tahar is an expert in the energy field. The Indonesian national spent more than 20 years in the fossil fuel sector as president of Petroneering, an oil and gas company headquartered in Texas. Prior to that, he earned his master’s degree and PhD in ocean engineering from Texas A&M University. The archipelago’s new energy minister also has a stake in several offshore oil fields. Jokowi expects Tahar to bring new technology to the nation in a bid to boost energy production, but also to ensure the nation’s energy future as a whole is secure.
Tahar acknowledged the president’s ambitious target to turn Indonesia into a nation with self-sustaining energy production. According to him, there are three ways to increase production locally. Indonesia will have to adopt new tech, develop its human resources, and implement a process for better accountability in all facets of the energy business.
Before the reshuffle, former minister Said pointed out that Indonesia had a dependency on oil and gas, offering up a few solutions of his own that would see the archipelago explore renewable alternatives. First, Said proposed a scale back of government fuel subsidies, which would result in higher fuel prices for consumers. Second, Said suggested that the nation seek to remove fossil fuels as Indonesia’s main energy source. He pitched an idea that would aim to make the nation cut coal consumption by 50 percent of the overall energy pie, while also lowering gas consumption to 25 percent. If done right, such a plan would free up the last 25 percent of the nation’s energy demand to be filled by renewable alternatives.
Following the reshuffle, it still remains unclear whether Tahar will follow through with the previous administration’s lofty vision to make one quarter of Indonesia’s energy renewable.
On the other hand, the International Energy Agency (IEA) supports the archipelago’s plan to make more environmentally friendly energy sources. That said, many proposals by former minister Said were met with opposition by IEA executive director Fatih Birol in an interview with The Jakarta Post.
Birol agrees that Indonesia should put some fuel-efficiency standards in place to reduce carbon emission from industries and vehicles. However, he also suggests that that the government first reduce its number of coal power plants. Birol believes that if Indonesia can handle these two things, “we will see a major cleaning up of the air in Indonesia.”
Birol says the government should make renewable energy its top priority, and open the sector up for foreign investment. His logic is that there are not many places in the world quite like Indonesia that are ripe for clean energy plays. The recently completed five-megawatt-peak solar power plant in Kupang is an interesting step towards a possible future of solar power in Indonesia. For power generated by ocean turbines, Indonesia is also attractive, as the country has a variety of coastal areas and different tidal conditions to work with.
According to the IEA, 6.5 million people around the world die each year from health risks associated with air pollution, with many of its root causes and cures to be found in the energy sector. A sizeable portion of this, the agency says, occurs in developing Asia and Africa. Reducing Indonesia’s appetite for fossil fuels is the best way to lower pollution, and therefore reduce premature deaths that are linked to it, says the IEA.
But as the number of vehicles continues to increase by 12 percent annually in Jakarta — an average 4,000 new bikes and 1,500 new cars a day — the government is also paying a hefty price. Traffic and road congestion costs the city roughly Rp.65 trillion (US$5 billion) per year.
Hermono Sigit works closely with Indonesia’s Ministry of Environment and Forestry. His job title is assistant deputy of degradation control for terrestrial ecosystems, and his job is to conduct field studies and report back to the government. Sigit also believes the archipelago can capitalize on its inherent potential for clean and renewable energy.
“Rather than using fossil fuels and coal as the main source of energy, Indonesia can use other things like geothermal as an alternative solution,” Sigit tells Indonesia Expat. “A few renewable energy solutions that can be applied in Indonesia include biogas from animal waste, micro-hydro, or solar for really large scale projects. Solar is a long-term energy source, and Indonesia can develop this solution, especially in the small villages.”
In recent years, the government created an ambitious programme that aims to add 35,000 megawatts to the nation’s power capacity come 2020. The plan hinges on foreign investment to expand the nation’s energy production capability at large.
Indonesia-Investments reports that London-based BP, one of the world’s leading oil and gas conglomerates, recently submitted its final investment development decision to expand the Tangguh liquefied natural gas facility in West Papua. Construction is estimated to cost around US$8 million, and the plant is designed to add 3.8 million tonnes of petrol per year to its existing operation. The expansion is slated to begin in the fourth quarter of 2016, and is projected to be complete by 2020.
Despite claims that Indonesia needs to curb its dependency on fossil fuels, authorities and the government have welcomed BP with open arms. Counterintuitively, the former minister Said (who wanted to make clean energy account for 25 percent of national consumption) claimed the BP expansion was indeed the solution needed to fulfil the local energy demand.
Indonesia’s state-owned electricity company Perusahaan Listrik Negara (PLN) is reported to be the largest customer. PLN will buy 75 percent of the liquefied natural gas produced by the expansion.
Archanda also says he will follow through with the president’s plan to build the Masela gas block oil refinery onshore in Indonesia. He is scheduled to hold meetings with stakeholders in the energy sector in the first half of August.
“I will ask them one by one about what assistance they need. If the Energy and Mineral Resources Ministry is not able to overcome the problems, I will discuss it with the president to seek a solution so that the programme will run well,” Tahar recently told reporters.