INDUSTRIAL ENERGY EFFICIENCY INICIATIVES & STANDARDS

Center for Green Industry and Environment Assessment Agency for Industrial Research and Development MINISTRY OF INDUSTRY, REPUBLIC OF INDONESIA

Jakarta, 7 July 2015

OUTLINE

1. INDUSTRY CURRENT CONDITION

2. ENERGY IN ACT NO. 3 / 2014 : INDUSTRY

3. ENERGY EFFICIENCY INICIATIVES AND STANDARDS

4. CLOSING REMARKS

1. INDUSTRY CURRENT CONDITION

1.1. INDUSTRY AS AN IMPORTANT ECONOMIC

DRIVING FORCE IN INDONESIA

CONTRIBUTION TO GDP

Industrial sector is the biggest contributor of GDP i.e. 23.93%, with growth rate at 5.78% (BPS, 2014)

POPULATION

Indonesia population in 2010 was about 238,5 million and predicted in 2015 will be about 255,4 million with a growth rate of 1.38% per year (2010 to 2015).

JOB OPPORTUNITIES

Industrial sector employs 14.8 million manpower. Micro and small scale industry: 10.3 million (70%), middle scale: 700 thousand (5%) and large scale: 3.8 million (25%) (Ministry of Industry, 2014)

1.2. MARKET STATUS AND INVESTMENT POTENTIAL FOR ENERGY EFFICIENCY IN

INDONESIA

The big potential for energy efficiency investments in Indonesia: USD 1.4 - 9.7 billion.

(Source: Re-Ex Capital Study, 2010).

Based on the ADB study, the investments potential for energy efficiency in Indonesia: USD 3 - 4 billion.

(Source: ADB Study, 2010).

Estimated required investment for indonesia to achieved the energy saving target (i.e. decrease energy intensity by 1% annually and decrease energy-GDP elasticity to below 1% by 2025): USD 6,019 million.

(Source: 3rd ASEAN Energy Outlook, February 2011 and Nexant calculation).

2. ENERGY IN ACT NO. 3 / 2014 : INDUSTRY

1. Article 30 Paragraph (1) Natural resources ( including energy) should be processed and used efficiently, eco-friendly, and sustainable.

2. Article 34 Paragraph (1) Certain Companies or industries and Industrial Parks which used natural resources as energy sources shall conduct energy management based on regulations.

3. Article 62 Paragraph (1) Central Government and Local Government will guarantee industrial infrastructure availability. (2) Industrial infrastructure providing is conducted inside and/or outside of park for industries.(3) industrial infrastructure as mentioned in Paragraph (2) minimum consists of: a. Industrial land and/or park for industries; b. electricity and energy facility; c. telecommunication facility; d. water resources facility; e. sanitary facility; and f. transportation facility.

4. Article 79 Paragraph (1) in conducting Standardization, Minister should prepare and enact Green Industry Standard. (2) Green Industry minimum consists of: a. Raw Materials; artificial and energy; b. production process; c. product; d. company management; and e. waste management.

5. Article 82 To develop Green Industry, Industrial Companies should conduct regularly: a. building company awareness and preparing company's policies to develop green industry; b. implementing green industry development policies; c. Implementing environmental management system; and d. developing business networking in raw material accessing, artificial and eco-friendly technologies.

2.1. ENERGY IN INDUSTRIAL SECTOR (ACT NO.3/2014)

2.2. GREEN INDUSTRY POLICY IN ACT 3/2014 (continued)

Definition: “Green Industry shall be any Industry with a production process which places priority on efficiency and effectiveness in the sustainable use of resources, to enable harmonization between Industrial development and the preservation of environmental functions as well as to grant

benefits to the community. ”. (Article 1, Number 3)

Green Industry as one of national industry goal

“industry is organized with the goal of achieving self-sustaining, competitive and advanced industry, as well as green industry”

(Article 3 Point C)

2.3. CHARACTERISTICS OF GREEN INDUSTRY

3. ENERGY EFFICIENCY INICIATIVES AND STANDARDS

RPJPN RIPIN

RENCANA PEMBANGUNAN

INDUSTRI KAB/KOTA

PP

20 Thn

UU 3 TAHUN 2014 TTG PERINDUSTRIAN

RENCANA PEMBANGUNAN

INDUSTRI PROPINSI

UU 17 TAHUN 2007

RPJMN

PERPRES

KIN PERPRES

5 Thn

RKP

PERPRES RENJA PEMBANGUNAN

INDUSTRI

Pasal 9 Ayat 2 : RIPIN paling sedikit meliputi: a. visi, misi, dan strategi pembangunan Industri; b. sasaran dan tahapan capaian pembangunan Industri; c. bangun Industri nasional; d. pembangunan sumber daya Industri; e. pembangunan sarana dan prasarana Industri; f. pemberdayaan Industri; dan g. perwilayahan Industri.

PERMEN

Pasal 9 Ayat 1 : RIPIN paling sedikit memper­hatikan: a. potensi sumber daya Industri; b. budaya Industri dan kearifan lokal yang tumbuh di masyarakat; c. potensi dan perkembangan sosial ekonomi wilayah; d. perkembangan Industri dan bisnis baik nasional maupun

internasional; e. perkembangan lingkungan strategis, baik nasional maupun

internasional; f. Rencana Tata Ruang Wilayah Nasional, Rencana Tata Ruang Wilayah

Provinsi, dan/atau Rencana Tata Ruang Wilayah Kabupaten/Kota

1 Thn

Arah Pembangunan Industri: • Industri yang berdaya saing • Keterkaitan dengan

pengembangan IKM • Struktur Industri yang

sehat dan berkeadilan • Mendorong perkembangan

ekonomi di luar Pulau Jawa

PERDA

3.1. PLANNING REFERENCE ON NATIONAL INDUSTRIAL DEVELOPMENT

(Dokumen Perencanaan Pembangunan Industri Nasional)

3.2. DEVELOPMENT OF 14 INDUSTRIAL PARKS (Pembangunan 14 Kawasan Industri di luar Pulau Jawa

Kerjasama Pemerintah dan Swasta)

In 2012, as much as 42,91 percent of national energy consumption is used in Industrial sector (MEMR, 2014)

About 60-70 percent of that energy is consume by 7 energy intensive industry sub sectors, they are: (1) Fertilizer industry, (2) Pulp and paper industry, (3) Textile industry, (4) Cement industry, (5) Iron and steel industry, (6) Ceramics industry, and (7) Palm oil processing industry

3.3. Industrial Energy Demands

Data in this table shows that the energy consumption in 2025 is 428,667 GWH equivalent which is 60,945 GWH equivalent (14.2%) less than using acceleration without efficiency scenario.

(GWH equivalent)

Sumber: Study INDEF/ Kemenperin (2012)

3.4. Projection of Energy Demands for 7 Energy Intensive Industries Acceleration with Efficiency Scenario

No. Unit 2012 2015 2020 2025

1. Steel 3,120 6,309 11,119 19,595

2. Textile 22,408 38,027 91,932 222,600

3. Fertilizer 4,520 5,680 8,365 12,414

4. Pulp and Paper 58,150 61,110 94,440 129,450

5. Palm Oil Processing 505 559 663 786

6. Cement 6,418 10,409 21,393 38,590

7. Ceramic 1,202 1,688 2,974 5,232

Total 96,323 123,782 230,886 428,667

Ministry of Industry Decree No.: 05/M-IND/PER/2011 The award is given to the industry that has contribution to country's economy, benefit the community and participate in preserving the function of the environment through efficient resource utilization and application of environmentally friendly production processes

Legal

3.5. GREEN INDUSTRY AWARD

Encouraging the industry to implement green industry Objective

1. Production Process (70%) 2. Waste / Emissions Management Performance (20%) 3. Company Management (10%)

Aspects

From 2010 to 2014, 344 companies actively participated and 256 companies have been awarded

Results

3.6. PARTICIPATION IN GREEN INDUSTRY AWARD

back

REGULATION AND GUIDELINES

1. Continue to Develop and Distribute Technical Guidelines on Energy Conservation

and CO2 Emission Reduction in Industrial Sector (large, medium, and small scale

industries);

2. Enforcement of Ministrial Regulation No.12/2012: CO2 Emission Reduction in

Cement Industry in Indonesia (mandatory by 2016);

3. Implementation of Green Industry Policy and Plan;

4. Establishment of A Green Industry Council and Certification Bodies (1 Council and

40 Bodies);

5. Formulation and Implementation of Green Industry Standard (60 commodities);

3.7. Energy Efficiency/Conservation Program in Industrial Sector 2015-2025

REGULATION AND GUIDELINES (continued)

6. Machinery Restructurization and Facilitation (fiscal and non-fiscal incentive) for

industries implementing energy efficiency/conservation (example: textile

industries, footwear, and fertilizer);

7. Finalization and Implementation of Ministrial Regulation on Energy Management

and Water Management in industrial sector including industrial parks and estates;

8. Establishment of Carbon Footprint Guidelines for Export Oriented Energy

Intensive Industries;

9. Development of Appropriate Model and Implementation of Energy Management

System ISO 50001 in Energy Intensive Industries (120 pilot companies);

Energy Efficiency/Conservation Program in Industrial Sector 2015-2025 (continued)

CAPACITY BUILDING/TRAINING

1. Training on Energy Efficiency and Conservation in Energy Intensive Industries (for

about 1000 persons);

2. Training and certification for energy manager and energy auditor/ green industry

assessor (200 persons);

3. Capacity Building for Industry Human Resources on Energy Management System

(ISO 50001), System Optimization (compressed-air, steam, and pump system in

energy intensive industries);

4. Development of technical consultation/training method and implementation of

energy efficiency in small and medium scale industries;

Energy Efficiency/Conservation Program in Industrial Sector 2015-2025 (continued)

IMPLEMENTATION

1. Implementation of Energy Efficiency/Conservation and GHG Emission Reduction in

Energy Intensive Industries (for about 200 companies);

2. Promotion and Implementation of Green Industry Promosi Principles (for about

200 companies);

3. Potency Identification and utilization of new renewable energy in industrial sector

(solar panel, biomass, micro hydro, etc);

4. Utilization of Industrial and Municipal Waste for Energy in Industrial Sector (for

about 100 companies);

5. Continue to establish collaboration with related ministries/institutions in

implementation of energy efficiency/conservation;

Energy Efficiency/Conservation Program in Industrial Sector 2015-2025 (continued)

MONITORING AND SOCIALIZATION

1. Monitoring of industrial performance (energy efficiency/conservation, production,

waste management) in Energy Intensive Industries using an online integrated

information system (of about 600 companies);

2. Socialization and development of consultation forum on regulation/policy related

to implementation of energy efficiency/conservation inter-sectoral and region

(500 regions/cities).

Energy Efficiency/Conservation Program in Industrial Sector 2015-2025 (continued)

4. CLOSING REMARKS

1. Energy Efficiency/Conservation in industrial sector in Indonesia becoming a potential business, as mainly machineries used has already inefficient and almost obsolete, requiring modification/replacement .

2. The modification/replacement of the technologies is mainly at medium to high investment, so the industries find it difficult as the financial access is still under-developed.

3. Many iniciatives by Ministry of Industry have been conducted in order to increase energy efficiency. However, government support is needed especially to improve the technology used and industrial human resources competency in implementation of energy efficiency/conservation as well as implementation of green industry principles. Hence,Indonesia needs collaboration with either regional or international organization.

CLOSING REMARKS

Thank You CENTER FOR GREEN INDUSTRY AND ENVIRONMENT ASSESSMENT

Ministry of Industry Jln. Gatot Subroto Kav. 52 – 53

Floor 19 -20, Jakarta http://bpkimi.kemenperin.go.id