Time for Indonesia to accelerate use of renewable energy

Antara News, By Eliswan Azly, Monday, July 26, 2010 21:52 WIB

Jakarta (ANTARA News) - Indonesia is at a crossroad. With the impressive rate of its economic growth which leads to a dramatic increase in energy consumption and in an effort to reduce its greenhouse gas emissions, this archipelagic country has to find renewable energy that would may help reduce reliance on carbon-fueled energy.

It is for that purpose that the Energy Care Society (MPE) on Sunday urged the government and the House of Representatives (DPR) to encourage the use of renewable energy as an alternative to fossil fuel.

"The government and the DPR need to issue a regulation to lay a firm basis to change the market domination of fossil fuel by encouraging the public to use more renewable energy," MPE Chairman Abdul Kadir said.

According to him, the regulation must contain clauses requiring companies operating under contracts of work in the oil and gas mining sector to help meet power demand using renewable energy such as solar energy under the corporate social responsibility (CSR) programs.

The companies` participation in the fulfillment of power demand using alternative energy was badly needed to solve power shortages as well as to preserve the environment, he said adding that hopefully this will help accelerate the use of renewable energy in this country.

"It is regrettable that people in oil- and mineral-rich regions have difficult access to electricity. This must draw all of our attention," he said.

He said a number of companies such as state electricity company PLN, state oil company Pertamina, Antam and Freeport had started building solar and micro hydro power plants to meet power demands, however, the power plants are still of low capacity.

"This must become a common movement including the involvement of the extractive industry to think of a solution by providing CSR programs," he said.

He said the MPE had discussed the matter with extractive industries at a seminar in Bandung, West Java, on July 22-23.

In addition, Indonesia could also develop solar power plants which would help it overcome future energy crises, Jacobus Purwono, the director general of electricity, said.

Indonesia recently announced its plan to build 250 solar power plants with a total capacity of 2.2 MW by 2014 to supply the country`s rural areas with electricity. The proposed project is expected to cost around US$84 million.

"The electricity produced by the plants will benefit 150,000 to 200,000 households in different parts of the country," he said.

Indonesia`s announcement comes on the heels of Japan`s $400 million loan to help the country deal with global warming. The proposed solar plants are part of Indonesia`s alternative energy plan, which outlines the installation of solar panels at 192,000 homes, building 570 small-scale hydro-electric plants and the construction of 270 wind plants.

According to Jacobus, the Indonesian government looked forward to the solar project as part of their alternative energy plan since it will power villages while at the same time reducing their CO2 emissions.

Businessgreen.com also reported that the Indonesian government`s statistics showed that only 65% of Indonesia`s 240 million people had access to electricity. Because the large population was distributed in over 17,000 islands, some of the villages, especially in the easternmost regions, were not connected to the National Grid. With the new solar projects, the government hoped to connect more people to electrical supply sources.

As a matter of fact, Indonesia has the world`s largest geothermal power potential, and the plan allocates extensive co-financing to expand large-scale geothermal electricity generation, Katherine Sierra, vice president for sustainable development at the Work Bank, said earlier.

Indonesia could accelerate initiatives to promote energy efficiency and use of renewable energy sources by creating risk-sharing facilities and addressing financing barriers to small- and medium-scale investments.

The low-carbon growth investments in Indonesia are an example of similar programs now approved to receive Climate Investment Funds (CTF) financing in Kazakhstan, the Philippines, Thailand and Vietnam.

Taken together, these programs will demonstrate how future energy demands can be satisfied in ways that will not generate excessive levels of greenhouse gases.

"From our vantage point as multilateral development bank partners in helping countries implement these CTF-funded plans, this bold action on the part of Indonesia and other Asian nations is a harbinger of a fundamental shift in climate action around the globe," she said.

And the same sorts of actions are moving forward in developing countries in every region of the world. While developing countries have not been the primary source of climate-altering greenhouse gas emissions from the past burning of fossil fuels, "they are taking positive actions to help achieve a global solution to the common challenge posed by climate change," she said.

This climate-smart approach offers lessons which all, including those in developed countries, can look to emulate in coming years.

The CTF is founded on partnerships between policymakers, indigenous peoples, private sector entities, civil society and others, she said.

More important to help the country arrive at the targeted use of alternative energy is the granting of such incentive to boost investment in renewable energy such as geothermal, solar and biofuel, in an effort to cut reliance on fossil fuels.

Harry Z Soeratin, a spokesman of the finance ministry said in a statement, his office had issued a decree which granted a 5 percent tax cut over six years for renewable energy producers as well as exemptions from value-added tax and import duties on equipment. Another provision allowed investors to use accelerated depreciation and amortization on assets to reduce taxable income.

The incentive is offered to investors as the government aimed to reduce dependency on non-renewable energy and to ensure availability of sustainable energy sources by attracting investment.

In response to offered incentives, Paulus Tjakrawan, secretary general of the Indonesian Bio-fuel Producers Association (Aprobi), gave his applause and said Indonesia had joined the rest of the world by applying regulations to develop renewable energy. The government was heading in the right direction.

Paulus said the incentives would cut bio-fuel production costs, making it more affordable.

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