JAKARTA, INDONESIA — Several ASEAN nations have expressed scepticism toward a recent report by the International Energy Agency (IEA), which urged fossil fuel investments to be halted as a way to achieve zero-emission targets by 2050.
“Our Roadmap outlines actions that urgently need to be taken to ensure that the possibility of net-zero emissions by 2050 – narrow but still achievable – is not lost.
“The scale and speed of the efforts demanded by this critical and formidable goal – our best chance of tackling climate change and limiting global warming to 1.5 °C – make this perhaps the greatest challenge humankind has ever faced,” IEA Director, Dr Fatih Birol said in the statement.
Multiple ASEAN nations, however, argued that such a target is unrealistic, as they still rely on fossil fuels as a primary energy source.
Based on the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025, coal itself is expected to account for 40 per cent of energy demand in Southeast Asia alone until 2040.
Indonesia is increasing its coal production, boosting oil and gas investment despite the IEA’s demand
Energy expert Bisman Bakhtiar appreciated the IEA’s call to reduce carbon emissions. However, such a proposal is not in line with Indonesia’s efforts to boost investment in the fossil fuel sector, he opined.
“It is impossible to stop fossil fuel projects in the next 10 years. There are two causes: Firstly, our energy needs. Today, most of our energy demand still relies on oil and gas and coal. Secondly, the oil and gas plus coal sectors are among the main revenue contributors, especially when the price is attractive,” Bisman told TOC in an interview on 25 May.
In Apr, Indonesia’s Ministry of Energy and Mineral Resources (ESDM) officially raised coal production from 75 million tonnes to 625 million tonnes this year, as stated in the Ministerial Decree.
Mark Cann, CEO of CryomatiKs — a clean energy company that harnesses air to produce energy — told TOC that the cost of technology and the significant role of coal in Indonesia’s economy poses setbacks in the country’s path of shifting to green energy sources.
“The technology used to produce greener coal rakes up a high cost, which makes the coal itself less competitive,” he explained.
Bisman noted that Indonesia is also trying to lure oil and gas investors by simplifying procedures for investment permits and providing fiscal stimulus.
“Our oil output still stands at 700,000 barrels per day – the lowest in the last five years. Indonesia still has a huge potential for oil and gas, but the exploration is not optimised,” he said.
What is the progress of several ASEAN nations’ energy transition?
Bisman lauded Indonesia’s energy conversion breakdown in comparison with other countries in Southeast Asia.
The energy mix target of 23 per cent in 2025 is the most realistic one, given that the use of technology for renewable energy development is not at its peak yet, he said.
“Indonesia’s energy transition is pretty satisfactory compared to that of other countries in the region. If the development of smelters and electric cars can be accelerated, we can meet the target faster than the expected deadline,” Bisman stated.
Malaysia has just published its blueprint for oil and gas service and equipment (OSGE) blueprint for 2021-2030 with four main objectives: Sector employment, national GDP growth, export development, and fiscal contribution.
Thailand has its floating hydro-solar hybrid projects installed on the surface of a dam as part of its primary efforts to reduce its reliance on coal.
Singapore derives 95 per cent of its energy sources from natural gas. But it has also pushed for more use of solar power, specifically on reservoirs and rooftops, the Republic’s Energy Market Authority reported.
Cann is of the view that the ASEAN region has a great opportunity to reinvest revenue from the fossil fuel industries over to cleaner technologies.
“As the economies of this part of the globe continue to grow, energy demand will continue to increase as well, so the practical solution is to invest in the solutions that are not only economically competitive but also provide societal benefits as well,” he said.
Cann added that energy transition is not an apple-to-apple comparison as each country has its own unique market composition.
“Of course the market will adjust to what sources as available and what’s great about the region is the diversity of the sources like wind and solar. The transition may not be as fast, but there is still an opportunity,” he said, adding that the energy transition can take several decades.