CLIMATE CHANGE IMPACTS & ENERGY INSECURITY:INDONESIA OVERVIEW

Asclepias R. S. IndriyantoIndonesian Institute for Energy Economics

“Mapping Causal Complexity in Climate Change Impacts and Adaptation”

Nautilus Institute & RMIT University Sydney Myer Asia Centre, University of Melbourne

21-22 November 2008

Presentation Outline

1. Indonesia Energy System

2. Energy Security and Sustainable Development

3. Indonesia and the Region

Final Energy Consumption 2006

0

50

100

150

200

250

300

350

IndustryHouseholdCommercialTransport

Other

Thousands BOE

Electricity

Oil Products

NatGas & LPG

Coal**

Biomass*

0

50

100

150

200

250

300

350

Biomass* Coal**

NatGas & LPGOil Products

Electricity

Thousands BOE

Other

Transport

Commercial

Household

Industry

*Mostly firewood **Including coal briquette Sources: Handbook Statistic Indonesian Energy Economics 2007, Ministry of Energy & Mineral Resources

• Industry: major energy user,

variety of energy sources

• Household: major energy consumer,

73% use firewood

• Transport: relies heavily on oil products,

usage of gas and electricity are

negligible

• Oil products and conventional biomass dominates final energy consumption

• Electricity share: 8% - 12%

Electricity generation is heavily dependent on oil products and coal

Primary Energy Mix

0%

20%

40%

60%

80%

100%

2005 withoutbiomass

BAU 2025 Target 2025 inPerpres 5/2006

Other NRE*

Geo

Coal

Gas

Oil

2005:

• 0.96 Million BOE without firewood1.23 Million BOE including firewood

• Oil share 49%, less than in the previous decade

• Other NRE = majority hydro

BAU 2025: • 3.26 Million BOE without firewood

(2.65 times the size in 2005)• Oil share reduces a bit, but remains

dominant• Coal share increase to 34.5%• Other NRE = majority hydro

Target 2025 (Pres Regulation 5/2006):

• Oil share shrinks to 20%

• Coal 33% and gas 30%

• Other NRE: biofuel 5%, coal liquefaction 2%, others 5%

Source: Presentation by Data & Information Center of MEMR, 5 Nov 2008

GOI estimates CO2/capita increase

from 1.54 in 2005

to 3.54 in 2025

Energy Infrastructure

• Economic development has been focused on Java– 60% of national population, 77% of electricity generating capacity (plus

7000MW coal plants under construction), interconnected electricity grid, gas transmission pipeline on Java & from Sumatera, etc

– Affect the selection of technology and energy resources– Heavy burden at the northern part of Java

• But Java has many limitations– Energy resources: no coal, relatively small oil and gas, geothermal

potentials are still undeveloped. Need to transport energy from other islands and absorb most of imported fuels

– Limited possibility for expansion: occupied land, natural port locations– Land conversion and degradation lead to severe lost of forest cover,

water deficit, shorten life of dams– Northern part of Java: land occupation for population and industry,

ground water extraction, port facilities• Need to revisit the national development strategy

Energy Security and Sustainable Development

Social Economic Environment

Availability Increase electricity demand, more pressure on limited supply capacityLower electricity generation due to lower efficiency of cooling water in thermal plants

Coal supply disruption Heavy rains in coal mining areasHydropower may not be operated

Flood: overflow of water in dams

Less electricity from hydropower

Drought: insufficient water for hydropower (Java: lower priority compare to agriculture & clean water)

Accessibility Energy shortages for various consumer groups

Disruption in transportation of coal from mines and oil products distribution

Flood & drought of rivers in Kalimantan & Sumatera

Port malfunction, long queue in port handling

High tide & sea level rise affecting all ports, significant impacts to the northern part of Java.

Affordability Higher expenditure for energy and other goods & services

All disruption in energy availability & accessibility will lead to higher costs of supply

Acceptability Lower quality of energy services

Investment on coal power plants may need additional capital for clean technology adoption; lead to higher cost of supply

CO2 emission control

Higher temperatureEnergy shortages for various consumer groups disrupt economic activities and potentially lead to lower income

Indonesia and the Region

Fossil Energy Reserves in 2006

-

5

10

15

20

BRN KHM IDN LAO MYS MMR PHL SGP THN VNM

Billion BOE

Fossil Energy Reserves to Production Ratio in 2006

-

10

20

30

40

50

60

70

80

Years

BRN KHM IDN LAO MYS MMR PHL SGP THN VNM

Fossil Energy Reserves per Capita in 2006

-

1

2

3

4

5

6

7

8

Thousand BOE

BRN KHM IDN LAO MYS MMR PHL SGP THN VNM

Oil Gas Coal

• Indonesia has many natural resources, has been exporting fossil energy: oil, gas, coal

• Current pressure between export and domestic needs

• Difficult position with respect to ASEAN plans to interconnect energy infrastructure: TAGP, TAEG.

• Interconnection in Java, Sumatera

• May not be able to maintain energy export

• Important for Indonesia to develop energy resources and the economy of the other islands