DEVEDEVELOPING A SUCCESSFUL GEOTHERMAL INDUSTRY LOPING A SUCCESSFUL GEOTHERMAL INDUSTRY IN INDONESIA, IN INDONESIA,

CHARTING THE WAY TO A GREEN ENERGY CHARTING THE WAY TO A GREEN ENERGY ECONOMY ECONOMY

THROUGH FISCAL POLICY REFORMS THROUGH FISCAL POLICY REFORMS (ROLE FOR MINISTRY OF FINANCE)(ROLE FOR MINISTRY OF FINANCE)

BADAN KEBIJAKSANAAN FISKAL,BADAN KEBIJAKSANAAN FISKAL,23-24 OCT 2012, Jakarta23-24 OCT 2012, Jakarta

By: Udibowo CiptomulyonoPresident Commissioner

PT PLN Geothermal, subsidiary ofState Owned Electricity Corporation Ltd. (PLN)Jl. Wijaya I No. 61 - Jakarta 12170 - INDONESIA

Telephone: + 62.21.7210170Mobile : + 628158365886

Email: udibowo@gmail.com / udibowo@plngeo.com

http://www.plngeo.com

The utilization of renewable energy reduces GHG emission and climate change mitigation, UNFCCC, a legal framework of UN that mandates Parties to start process of stabilizing green house gases in the atmosphere.

With 450 Scenario (UN-Climate goal) demanded that in 2035 stabilizing green house gases at 450 ppm (CO2 equivalents under 20C), therefore all fuel subsidy should be abolished, and USD 312 billions should be spent on carbon extensive development.

While New Policy Scenario (NPS) 2010 (G20 agreements), between 2008-2035 world energy demand will rise by 36%, however based on 2011 scenario, post – Fukushima, nuclear is facing uncertainty, and MENA turmoil raised questions about regions investment plans. Natural Gas & Renewable become increasingly important.

Without further action, by 2017 all CO2 permitted in the 450 scenario with be “locked in” by existing power plants, factory, building.

Energy demand of Indonesia pose greater challenge in future, environmental sustainability is already at risk, development of abundant renewable energy of geothermal is the key solution.

Energy Policy Direction by Vision of 25/25 by 2025, the portion of energy-mix of geothermal will be 25% (about 12,000 MW). Geothermal provides good option for improving base load power-mix.

By 55 MW cost model, this vision requires more than USD 30 bills.

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The World Energy Outlook 2010: the 450 Scenario and other estimates

450 Scenario (UN-CLIMATE GOAL <20 – Stabilizing atmospheric greenhouse gases – at 450 ppm CO2 equivalents).These are the requirements for the 450 Scenario:•Oil demand peaks just before 2020 at 88,000,000 barrels per day – and declines to 81,000,000 in 2035 •Coal demand should also peak before 2020 •Gas demand should peak before 2030 •Renewable and nuclear double combined share to 38% in 2035 Therefore:•All fossil fuel subsidies should be abolished, fast •The freed 312,000,000,000 dollars per year should be spent on carbon extensive development, because: •Due to the lack of ambition in Copenhagen – and the consequential policy delays – the cost of reaching the 2 degree target has risen to 1 trillion dollars (these are of course all to be seen as economic investments as well, not as damage)

New Policy Scenario – (G20 agreements)•Between 2008 and 2035 world energy consumption will rise by 36 percent •Of that world energy rise also 36 percent can be attributed to increased consumption in China •Oil remains the leading fuel in the energy mix of 2035 •Oil demand grows from 84,000,000 barrels per day in 2009 to 99,000,000 barrels per day in 2035 •Oil price will accordingly rise from 60 to 113 dollars per barrel

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Energy security by utilizing an abundant national resources

Environment benefit and green energy goals by utilizing a clean energy source

Geothermal Energy Hedge against volatile prices for fossil – fuels

Base on 55 MW model requires more USD 30 bills for geothermal investment

PLN apply fixed system planning for geothermal development

Must-run for geothermal operation

CONCLUSIONCONCLUSION