Energy Efficiency: What People Most Forget About Energy Transition
Energy Transition becomes a buzzword for every green policy mandated by the government. This compelling issue sparked at least by two things: Our ambitious target for attaining Net Zero Emission and the USD 20 billion Just Energy Transition Partnership (JETP) Joint Statement signed at the G20 Summit last year.
Back in Conference of Parties (COP) under the United Nations Framework Convention on Climate Change in Glasgow (COP 26) and Egypt (COP 27), Indonesia officially launched its Net Zero Emission (NZE) target by 2060 or earlier. Reality speaking, such target is ten years longer than ideal target to pursue Paris Agreement commitment. It is understandable, because our major economic remains coal-dependent.
Indonesia through State Owned Electricity Company (PLN) already announced the roadmap strategy to achieve NZE 2060 objective. The plan will be fueled by various finance mechanism, such as Energy Transition Mechanism (ETM) and of course the newly JETP, which focus on facilitating the early retirement of coal-fired power plants. The initiative possibly boosts the national energy mix from clean energy by 23% in 2025. It just two years ahead, and currently still under 12%.
Like a usual policy analysis, the supply and demand aspect need to be taken into account. Indonesia’s energy transition has primarily focused on ambitious, complex, and capital-intensive projects on the supply side, such as early retirement of coal plants. However, the emphasis on demand-side of energy management, particularly on energy efficiency and conservation, still being overlooked.
Energy efficiency defined as an effort to reduce wasteful energy consumption, thereby reducing costs. It should be done by promoting behavioral changes and raising awareness to adopting energy-efficiency appliances, such as LED lighting, chillers and cooling systems, and energy-monitoring system. These efforts possibly implemented by various stakeholders, including households, commercial buildings, industries and the government. At the different meaning, by using energy in efficient way, energy conservation successfully be bolstered.
It seems that such initiatives pretty small in scale compared with building new clean power plants or coal retirement plan. Lest we forget, a widespread and massive movement toward energy conservation is really matter. Besides, energy becomes the biggest emission polluters, while more than 60% of energy absorbed by giant buildings across municipal and capital.
Reflecting above fact, it is unfortunate that energy efficiency policies and measures are still overshadowed by renewable energy and electric vehicles that have more compelling industry. So, how to make energy efficiency initiative effectively in Indonesia?
First, robust government policies and financial tools arestrongly needed. By the other name Market Based Instruments (MBIs), it will effectively enable the market. The MBIs will serve as incentives or disincentives to drive the primary market and related ecosystem. One of the potential regulations that I am familiar with is green buildings and mandatory energy audits. This can stimulate the growth of green and low-carbon buildings in Indonesia.
While it is run effectively, the govt can also promote the development of energy efficiency ecosystems, including technology suppliers, energy service companies, green building consultants, energy management auditors, certification agencies and financial institutions. Singapore becomes a perfect case study for prioritizing energy efficiency through the Singapore Green Building Master Plan (SGBMP) which successfully drives green property market.
In detail, Indonesia’s Govt has issued green building regulations under the Public Works and Housing Ministerial Regulation №2/2015. Unfortunately, the enforcement of these regulations is primarily delegated to sub-national governments, leading to a lack of consistent implementation due to their limited capacity.
On the other side, internationally recognized green building certification systems such as Green Mark, EDGE, and LEED are also adopted by office buildings in Jakarta. Again, rather than being mandated by the government, these certifications are frequently pursued voluntarily by building owners. Because it will impact on boosting property value and marketability, thus making them attractive for prospective tenants and clients who are concerned on sustainability. Hence, there are not enough government incentives to encourage compliance and implementation.
Another key factor comes from government. It is leading by example thing. As a national budget holder, the Govt has a prominent opportunity to incorporate energy efficiency principles in major infrastructure projects. All public buildings, airports and government facilities, should be constructed with a low carbon footprint. By adopting green building certification in each project, the Govt takes a role as a benchmark for pushing energy transition initiatives.
Furthermore, it is also important to drive energy efficiency into more inclusive in the national energy transition strategy. Although we are on the hype of the JETP, energy efficiency remains abandoned compared with other investment priorities, such as coal retirement and renewable energy construction. It is worth to try, through JETP, for marking energy efficiency as an integral part of transition. This initiative also will affect the pricing of energy in the market. When making energy efficiency work, we need to reflect on the real economic costs, thus investment on this field will be more attractive.
In the end, there are various factor to succeed the energy transition. It does not matter whether initiatives are complex like coal retirement or renewable energy and electric vehicle adoption or simple energy efficiency through behavioral changes. Both are significant for chasing the NZE 2060 target or earlier.
