Sustainable Energy Transition Development: Research Agenda

Anjar Priandoyo PhD Candidate – Environment Dept. University of York

Confidential Jakarta, 17 October 2016

Indonesia Transition 700-2000

700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100

Portuguese 1512-1575

Dutch 1602-1942

British 1811-1816

Japanese 1942-1945

Indonesia 1945

Islam Hindu Buddha

The history of Indonesia is the history of exploitation of natural resources

Development: A Paradox of Plenty

5th largest exporter of Natural Gas

1st largest exporter of Coal

40% world Geothermal Reserves

2nd largest Palm Oil, Cacao, Rubber Exporter

3rd largest Tropical Forest (60% of country’s land)

2nd largest Tin Producer

4th largest Nickel Reserves

4th largest Bauxite Producer

110th Human Development Index (0.68)

117th GDP per Capita ($3,500)

107th Corruption Index

4th largest population (250 mill)

1.2% Population Growth

16th largest economy ($800 bill)

6% Economic Growth

15th largest energy cons. (200 Mtoe)

4.1% Energy Consumption Growth

73th Energy Sustain. Index WEC, IEA 30th

Low Energy p. cap. 800 Kgoe Rank 104th

Low Electrify (80%) Rank 108th

Low Renewbl (8%) Rank 30th

112th Environment Index (EPI)

8th largest GHG emitter 800 Mt CO2e

20th worst pollution WHO 102 PM

Question 1: What is the characteristics of energy development in Indonesia?

Environment Policy

Energy Policy

Indonesia, a paradox of plenty

3

Sustainability: Energy and Environment Link

Energy Development Index (IEA)

Household Indicator

Community Indicator

Share of Population with electricity access

80% & per cap. residential electricity consumption 620Kwh

Share of modern fuels within

residential sector

Per-capita public electricity

consumption

Share of Productive uses in total final

consumption

Environment Burden Disease (WHO)

Indoor Air Outdoor Air

Solid Fuel Use% Households 72%

45,300 death/year

Mean Urban PM 10 114 ug/m3

32,300 death/year

Energy Mix Scenario ???

Coal Oil Gas Renewable

Industry Household Transportation Other

Question 3: What is the lowest impact energy scenario

Based on Source

Based on Sector

??? ???

Based on Transition Strategy

Energy Stack (Parallel)

Energy Ladder (Sequential)

Improve Energy Access

Reduce Air Pollution

Avoid Dangerous GHG

Improve Energy Security

Question 2: What is the link between energy and air pollution

4

Why this is Important?

“…Energy transformation is needed to address the growing risks associated with accelerated environmental change. Emissions from energy use contribute to multiple impacts on social and environmental systems in complex ways that are not always well understood…” Global Energy Assessment, 2012

Energy always become main political issues in Indonesia from fuel conversion (2007, 50 mill population), fuel subsidize (2014, 2.6% GDP), electrification (2015, 80%), renewable (2011, 8%)

Decision making on which energy policy that should be implemented is difficult, even conflicting (Mujiyanto and Tiess, 2013), (Gunningham, 2013), for example Greenhouse Gas Reduction vs 35,000 MW Power Plant Development

Inaccuracy of measuring the impact and potential of energy (Purwanto et al., 2015) including lack of study on energy industry implication to air pollution (Shrestha and O.P. Marpaung, 2002), (Spracklen et al., 2015)

5

1. What is the characteristic of energy development in Indonesia? What is the characteristic of energy consumption and energy supply? What is the characteristic of pollutant in Indonesia? What is the potential emission reduction that can be made between energy conservation and energy diversification policy? 2. What is the impact of energy development to air pollution in Indonesia? What is the impact of air pollution for human health? What is the impact of specific pollutant for human health and environment? 3. What is the best energy scenario that has the lowest impact to the air pollution in Indonesia?

High Level Research Interaction

6

Country Sector Pollutants Impact Policy Current State

Emission Inventory

Supply Demand Scenario

Emission Scenario Impact Policy Research Structure

Energy Mix Pollutants Impact Research Question

Supply & Demand Model (LEAP)

Emission Inventory Model (GAP)

Methodology Scenario Analysis

Non Energy Sector Energy Sector

Sustainable Energy Developing

Country Background Public Health Energy Transition

Environment & Energy

Energy Transition

• Transition is the process of changes that can be defined as major changes in the way society works. Transition do not only involve changes in technology, but also changes in user practices, regulation, industrial networks (Geels, 2002)

• Energy transition defined differently by various researcher (Sovacool, 2016). For example the energy transition can be defined as:

– Energy mix transition. A change in fuels (from wood to coal or coal to oil) and their associated technologies (from steam engines to internal combustion engines). (Hirsh and Jones)

– Energy balance transition. The switch from an economic system dependent on one or a series of energy sources and technologies to another (from import dependent country to exporting country) (Fouquet and Pearson)

– Energy pattern transition. A particularly significant set of changes to the patterns of energy use in a society, potentially affecting resources, carriers, converters, and services. (O’Connor)

Energy Transition in Indonesia

• In Indonesia, energy transition and various factor that affecting transition have been identified by various researchers in several period such as

• 2000 period, Kerosene to LPG conversion (Sovacool, 2016), an energy mix transition.

• 2000 period, Private power development (Wells, 2007). Globalization led to Indonesia’s electricity market liberalization, an energy market transition from government owned to privatization.

• 2010 period, Low carbon growth to reduce GHG (Schwarz, 2010), an energy pattern transition, including the change in environmental expenditure (Vincent et al., 2002)

Energy Mix in Indonesia 1900-2010

Energy mix is the composition of fuel source. The energy transition in Indonesia is rapidly happen, compare with other developing countries (Bee, 1984)

Historical Energy Growth 1980-2014

• Fourth most populated country in the world with more than 250 million citizens, average 1.2% population growth.

• Energy growth from period of 1980 to 2014 Indonesia is estimated to be 5-7% per year.

• Energy consumption around 200 MTOE in 2014 and estimated to be 400 MTOE in 2030

• Energy transition can be seen from energy mix composition. Energy mix reflecting the decreasing roles of oil and increasing roles of coal and gas.

• Renewable energy is still small compare with other fossil fuel energy, less than 5%

Projected Energy Growth 1980-2030

• Energy planning usually made with the assumption of constant fuel source mix.

• Projection made with LEAP starter pack, indicating the constant fuel source mix.

• The composition of fossil fuel estimated to be more than 95% and renewable remain around 5%

• Problem: Energy planning did not consider future energy transition

• Energy mix is official indicator in National Energy Planning of Indonesia. It is important to consider the fuel mix in any energy and environment planning

Historical & Projected Energy Growth 1900-2010

• In the last 100 years, there are four phase of energy transition in Indonesia from coal, oil, gas and renewable energy

• Energy consumption trend is increasing

• The transition trend is important to be used as factor in designing the future energy scenario

Impact of Energy Transition 1990-2010 GHG Growth & Energy Consumption

• The gas and coal rebirth age begin in the period 1980-2000

• There is significant growth of domestic coal consumption

Impact of Energy Transition 1990-2010 GHG by Sector

• There is significant growth of domestic coal consumption, especially in electricity/energy generation

Historical PM 10 and PM 2.5

• Indonesia is one of the most polluted country in the world

0

5

10

15

20

25

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

PM 2.5 μg / m3

PM2.5

0

10

20

30

40

50

60

70

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

PM 10 μg / m3

PM10

APPENDIX

16

Future Scenario

Coal, 30%

Gas, 21%

Oil, 41%

Renewable, 8%

Coal, 30%

Gas, 22%

Oil, 26%

Renewable, 23%

Indicator 2010 2025 National Energy Policy

Primary Energy Supply 180 Mtoe 400 Mtoe

Energy Consumption per Capita 0.8 Mtoe 1.4 Mtoe

Electrification Ratio 81.6% 96.6%

Electricity Capacity 50 GW 115 GW

Electricity per Capita 620 Kwh 2500 Kwh

Renewable Energy Share 8% 23%

GHG Emission 1,800 Mt CO2e (2005) 29% Reduction (835 Mt)

17

Air Pollution is 4th leading cause of death in 2013

23%

22%

15%

10%

18

Primary Energy Supply 2003-2013 by Type

Average Growth 3.8%, Primary Energy Supply 228 Mtoe

Coal Oil Gas Hydro Geothermal Biofuel Biomass

Mill

ion

To

n O

il Eq

uiv

ale

nt

(Mto

e)

30%

41%

21%

8%

8% Renewable Energy 92% Fossil Fuel Energy

19

Final Energy Consumption 2003-2013 by Type

Energy Ladder, In 2007 convert 50 mill household from kerosene to LPG

Coal Gas Oil LPG Electricity

19%

14%

5% 13%

12%

17%

2% 10%

96% Fossil Fuel Energy 4% Renewable Energy

Renewable

20

Industry Household Commercial Transportation Others Non Energy

Final Energy Consumption 2003-2013 by Sector

Average Growth 4.1%, Final Energy Consumption 174 Mtoe

Mill

ion

To

n O

il Eq

uiv

ale

nt

(Mto

e)

33%

27%

27%

3%

3%

9%

21

Final Energy Consumption – Industry Sector

Average Growth 4.5%

Mill

ion

To

n O

il Eq

uiv

ale

nt

(Mto

e)

Coal Gas Oil Other &RE Electricity Biomass

22

Final Energy Consumption – Transportation Sector

Oil is the biggest source of energy in transportation sector M

illio

n T

on

Oil

Equ

ival

ent

(Mto

e)

97,2% Oil

2.6% Biofuel

0.19% Gas

0.01% Electricity

23

Final Energy Consumption – Household Sector

Average LPG Growth 21%, Electricity 8%, Kerosene -19%

71%

13%

14%

Mill

ion

To

n O

il Eq

uiv

ale

nt

(Mto

e)

Gas Kerosene LPG Electricity Biomass

24

Final Consumption – Commercial Sector

Finance, Trading, Tourism, Services. Average Growth 5.9%

Mill

ion

To

n O

il Eq

uiv

ale

nt

(Mto

e)

Gas Oil LPG Electricity Biomass

25

Electricity

PP Type Shr. Grw.

Coal 46.7% 9.3%

Gas + Coal 19.3% 10%

Oil (Diesel) 11.6% 2.3%

Gas 8.6% 8.3%

Hydro 9.9% 4.4%

Geothermal 2.6% 3.9%

Renewable 0.5% <2%

26

Energy Keyword 1996 – 2015 (Energy Planning n = 50 papers)

Current Condition Gap Analysis

27

Indonesia Exports & Destinations

28