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Unfolding Stories
Indonesia needs renewable energy law to pave way for cleaner energy
It is high time that Indonesia passed a renewable energy law to provide the necessary legal certainty for accelerating renewable energy development and to commit to its energy transition.
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G
iven its abundant renewable energy potential, Indonesia has set an ambitious target of increasing the share of renewable energy (RE) to 23 percent of the national energy mix by 2025. As of the end of 2020, however, the RE share had reached just 11.51 percent, well below the initial target of 13.4 percent set by the New and Renewable Energy and Energy Conservation Directorate (EBTKE).
The COVID-19 pandemic has indeed slowed progress on several renewable energy projects. But the lengthy process of drafting a regulatory framework on renewable energy has contributed significantly to the snail’s pace of Indonesia’s energy transition compared to other Southeast Asian countries such as Vietnam.
The new and renewable energy bill (RUU EBT) has been on the table for almost four years since it was initiated by the Regional Representatives Council (DPD), in cooperation with the Indonesian Renewable Energy Society (IRES). Several public consultations have been held to gather the people’s aspirations. Eventually, House of Representatives Deputy Speaker Eddy Soeparno announced that deliberation of the bill would begin in June 2021.
Regulatory support for renewable energy is desperately needed, since it will significantly impact the country’s renewable energy targets. There are several ways the bill can help Indonesia achieve its renewable energy target.
The renewable energy regulations fall under several ministries. For example, fiscal schemes like tax incentives and tax allowances are regulated under the Finance Ministry, while the Environment and Forestry Ministry regulates the environmental impact analysis (AMDAL). This silo effect has resulted in complicated bureaucratic red tape and uncertain regulatory frameworks that discourage developers.
Not only do RE developers have to deal with multiple government agencies to obtain a series of required permits, but they must also risk their investment in light of the legal uncertainty. Enacting a renewable energy law would provide a strong legal basis for RE development that is not open to easy intervention, as well as a solid foundation for other derivative regulations.
The upcoming bill would support the recent RE-related regulations by tackling the silo effect and prioritizing RE-generated electricity over fossil fuel energy.
