PLN And ADB Agree To Reduce Carbon Emissions In Indonesia's Electricity Sector

Illustration. (Photo: Unsplash)

JAKARTA - PT PLN (Persero) is committed to reducing carbon emissions produced by coal-fired power plants to support the government's target of achieving Carbon Neutral 2060. This effort has received financial support from an international financial institution, namely the Asian Development Bank (ADB).

This support was realized by the signing of a memorandum of understanding (MoU) between PLN President Director Zulkifli Zaini and ADB Director General Southeast Asia Department Ramesh Subramaniam on the sidelines of the COP 26 series, in Glasgow, Monday, November 1.

The scope of cooperation between PLN and ADB includes a full feasibility study covering the technical and financial aspects of reducing coal-fired power plants. The next step is to evaluate the structure of the ETM, look for other suitable programs or mechanisms and design an equitable transitional technical assistance program.

PLN President Director Zulkifli Zaini said Indonesia has an important role in managing climate change. The reason is, in the business as usual (BAU) scenario or doing nothing, Indonesia's emissions will increase to more than 4 billion tons of CO2 per year by 2060. The two sectors that contribute to these emissions are the transportation and electricity sectors.

By 2060, said Zulkifli, emissions from the electricity sector could reach 0.92 billion tons of CO2 per year, and emissions from the transportation sector could reach 0.86 billion tons of CO2 per year. Indonesia has committed to reducing carbon emissions, by setting a carbon neutrality target by 2060 and realizing the Nationally Determined Contribution (NDC) commitment by 2030.

This target will be achieved if the electricity and transportation sectors carry out decarbonization, PLN also has an important role in driving the growth of environmentally friendly energy.

"Our mission is to provide affordable, safe and clean electricity. We are committed to decarbonization," said Zulkifli.

Zulkifli continued, at the same time PLN must ensure an affordable and safe electricity supply. The reason is, Indonesia is a country with economic growth and electricity consumption per person is currently only 15 percent of the average G20 country.

As the largest energy utility company in Indonesia, PLN aspires to lead the energy transition and contribute to the government's commitment to low-carbon development and curbing climate change. Therefore, PLN has made a plan to develop environmentally friendly energy, by increasing its electricity supply capacity of nearly 21 Gigawatts (GW) from new and renewable energy (EBT) by 2030.

In line with the plan, PLN will discontinue fossil fuel-based power plants with careful and comprehensive planning. In the long term, Zulkifli said PLN is targeting net zero emissions by 2060 or sooner.

According to Zulkifli, to achieve this target, PLN cannot do it alone, it requires support from all stakeholders. Because PLN will have to invest more than 500 billion dollars over the next 40 years, so it needs access to green finance, development grants, and G2G support.

"We need subsidies or compensation to avoid imposing additional costs on customers. We also need support in technology sharing and partnerships with leaders in hydrogen utilization and carbon capture. As well as policy support to accelerate the transition to electric vehicles," he said.

Deputy Minister I of SOEs Pahala Mansury assessed that PLN is one of the SOEs that is very active in the decarbonization program. PLN has taken many aggressive steps in achieving net zero emission. Cooperation with ADB, said Pahala, is an additional ammunition for PLN to accelerate the target.

"We are very optimistic that the decarbonization target can be achieved with good cooperation between PLN and ADB. This is an aggressive step in PLN achieving net zero emissions," said Pahala.

On the same occasion, ADB Vice President Ahmed Saeed said, ADB has been working with Indonesia for more than 50 years. The collaboration with PLN this time, he said, was a good opportunity to jointly achieve the energy transition to clean energy.

"This opportunity is very good for us and PLN in supporting Indonesia towards the energy transition from high-carbon energy to clean energy," he said.

Saeed also said that Indonesia is one of three countries that are ADB partners in the Energy Transition Mechanism (ETM) pilot project. This program is ADB's carbon reduction support program that aims to use public-private financing to accelerate the retirement of coal-fired power plants and replace them with clean and renewable energy sources.

"ADB recently completed an ETM pre-feasibility study and is now working on a full feasibility study," said Saeed.

Director General Southeast Asia Department of ADB Ramesh Subramaniam also revealed that this cooperation will be valid for three years and can be followed up later. In the future, both parties will discuss more specifically regarding PLN's plan to reduce the portion of PLTU and switch to clean energy.

"Of course we hope that at the next COP we and PLN will be able to present the progress of this collaboration. We hope that Indonesia will be even better in the clean energy portion and we are very happy to work with PLN in this clean energy project," said Ramesh Subramaniam.

After the signing of this MoU, PLN and ADB will develop an annual cooperation program. In 2022 and beyond, PLN and ADB will design a roadmap to stop coal use to achieve carbon neutrality by 2060 or sooner.