Risks, barriers and

responses to Indonesia's
biogas development

SEI brief Indonesia's energy needs and policy ambitions

June 2019 Indonesia's continued reliance on fossil fuels to meet increasing domestic energy demand has made
it the world's eighth largest greenhouse gas (GHG) emitter (Friedrich et al. 2015). In 2016, following
ratification of the Paris Agreement, Indonesia published its Nationally Determined Contribution
Richard Taylor a (NDC) targets of 26% and 29% GHG emission reductions by 2020 and 2030, respectively, in
comparison to a business-as-usual scenario. However, over the past five years, coal capacity has
Tahia Devisscher a increased by around 12.2 GW, compared to only 1.6 GW of renewable energy, and planned capacity
Mariana Silaen b additions for renewables have been slashed in favour of coal (Climate Action Tracker 2019). A
high-carbon pathway, evidenced in these energy plans and GHG emission trends, is far from being
Yudiandra Yuwono b consistent with NDC targets. Indonesia’s policies are currently rated as “highly insufficient” to
meet its NDC (Climate Action Tracker 2019). Like other countries, it faces several challenges to
Cynthia Ismail b mainstreaming and integrating climate change into national planning and development processes.

Syamsidar Thamrin c Indonesia's main strategy for development is formulated in the National Long-Term Development
Takeshi Takama a,b Plan, which is divided into four 5-year National Medium-Term Development Plans. The current
medium-term plan applies from 2015 through 2019. One of its aims is to increase the contribution of
renewable energy to 23% of total primary energy supply by 2025, as indicated in the NDC. Although
a SEI the target for the renewable energy share exists, there is no clear implementation plan from the
b su-re.co (Sustainability & Resilience.co) government for how the country will meet the goal. Moreover, other policies in the energy sector
c Bappenas (Indonesian Ministry of National often run counter to these commitments.
Development Planning)

Shifting to a more sustainable economic pathway, including clean energy production, faces many
barriers as economic growth is prioritized over other issues. Indonesia's expansion of coal mining,
a sector which attracts large export earnings, also risks the potential lock-in of carbon-intensive
infrastructure and financial assets if global markets decarbonize; yet as far as the government
is concerned there are “…no futures imagined in which coal mining does not feature centrally…”
(Atteridge et al. 2018). This articulation of support for the fossil fuel economy summarizes one of
the challenges for pursuing renewable energy transitions in Indonesia.

Rethinking renewable energy solutions in Indonesia

Renewable energy solutions, including bioenergy, need to be: low-cost, clean, and
Photo (above): geographically and culturally appropriate fuels that meet energy needs and are reasonably
A farmer in Sarasedu, in the East easy to implement and use.
Nusa Tenggara Province of Indonesia,
prepares the gas line that will connect Biogas produced through agricultural waste is one viable alternative since it can be implemented
the village's new biogas digester with in rural, and sometimes remote, areas where many Indonesians live. Biogas provides GHG
a stove. © SU-RE.CO emission mitigation benefits by reducing demand for conventional energy. Potentially, two million

Stockholm Environment Institute  1

 small biogas digesters could be installed in Indonesia, equivalent to a reduction of 6.4 million
tons CO2/year as estimated by an initiative called BIRU, a domestic biogas promotion programme
of the Yayasan Rumah Energi NGO (Devisscher et al. 2017). Meanwhile, the estimated potential
capacity for large-scale biogas-to-electricity production is 2.6 GW (Government of Indonesia
2017). Co-benefits include reducing unmanaged firewood collection, helping manage animal
waste and providing biogas slurry as organic fertilizer (Bedi et al. 2017).

Overall, biogas offers some promising practical and feasible alternative energy options for
Indonesia. This briefing investigates the potential of biogas to help meet domestic energy needs
and to comply with Indonesia's climate mitigation commitments and development planning.
A better comprehension of the risks and uncertainties associated with biogas development
pathways can support future dialogue and planning on climate, energy and development.

Envisioning a future with biogas

Research, carried out by the Stockholm Environment Institute (SEI) and su-re.co (Sustainability
& Resilience.co), a Bali-based environmental think tank, aimed to understand how biogas
alternatives could effectively contribute to a low-carbon energy transition and what changes
are required to achieve it. A transition pathway is a description of how such a transition might
unfold that includes technological innovations implemented in an existing or new market,
policy interventions that shape how this technology is used, and the social setting where the
consequences are felt and where support or opposition originates (Lieu et al. 2019). The two
pathways in this brief explore options for a low-investment/short-term scenario and a high-
investment/long-term scenario. The first is an easily implementable, low-cost household-scale
option supplying household energy needs through individual or communal installations. This
pathway also foresees the transfer of these systems and the know-how to other geographical
areas. The second pathway focuses on large-scale biogas systems that produce electricity,
require higher investment, and generate high benefits in the long run.

Household biogas for cooking pathway

Four biogas programmes are operating in the study region in Bali, Indonesia. These programmes
were implemented by Bali Provincial Agricultural Agency (SIMANTRI), the Agency of Public
Works, the West Bali National Park, and BIRU (Table 1). All programmes installed individual biogas
digesters except SIMANTRI, which carried out communal installations. Also, the government’s
programmes provided fully subsidized biogas while the BIRU programme used a market-based
approach with partial subsidies (Devisscher et al. 2017).

Renewable energy The household biogas transition pathway is concerned with meeting domestic energy needs for
solutions, including cooking and lighting that intersect with issues of health in rural areas, community social structure
and smallholder productivity. These issues are important for understanding the pathway. Nearly
bioenergy, need to be: one-third of Indonesia’s working population consists of farmers in rural areas (BPS 2017), where
low-cost, clean, and solid fuels are mostly used for cooking and are often associated with health problems (Gall
geographically and et al. 2013). Indoor pollution in the home from solid fuels utilization contributes to respiratory
culturally appropriate infections and diseases. Biogas for household cooking and lighting is clean and safe, while also
fitting the profile of the rural areas.
fuels that meet
energy needs and are In addition, biogas offers a potential means to increase farmers' resilience by, for instance, the use
reasonably easy to of biogas slurry (bioslurry) as organic fertlizer. These could generate new sources of supplementary
implement and use. or additional income for the smallholder, who may trade organic fertilizer or roasted coffee beans
produced on the premises. These benefits to the smallholder farmers should be added to the
savings gained from reducing reliance on fossil fuel-based energy.

Large-scale biogas-for-electricity pathway

Currently, large-scale biogas plants operate successfully in some areas of Indonesia as waste
management reactors and energy generators, but the technology is not as well known as
household- or smallholder-scale biogas. The large-scale biogas-for-electricity transition pathway
concerns longer-term expansion of production capacity that would contribute to Indonesia's 2025

2  Stockholm Environment Institute

Table 1. Current biogas programmes operating in Bali (and in Indonesia)

SIMANTRI* PUBLIC WORKS BIRU* WEST BALI NATIONAL PARK

Year of Introduction 2009 2015 2009 2013

Integrated farming that Individual biogas digesters Individual biogas digesters Pilot project provides livestock and
includes installation of are installed in farmer are installed in farmer biodigesters to farmers around
communal biodigesters. Farmer households that own households that own the West Bali National Park in
Description associations receive the livestock and show livestock. Guarantee period Jembrana Regency.
biodigesters as well as cattle. potential and interest. including maintenance
Guarantee period: 3 months. Guarantee period: 3 months. services: 3 years.

The project was initiated by Public Works is the lead SNV Netherlands and The West Bali National Park
the governor of Bali. The Bali implementing agency. Hivos* launched the authority is the lead implementing
Implementing Provincial Agricultural Agency Receives support from the programme. In 2012 Hivos agency, with support from the
Agencies is the lead implementing Agricultural and Livestock created Yayasan Rumah forestry agency in Jembrana
agency. agencies at the regency Energi to operationalize the Regency.
level. programme.

Provincial budget pays for Funded by national Multiple donors: Hivos, Ministry of Environment and
communal installation (incl. government. Provinces EU carbon market and Forestry provides funds that go
biogas). Programme is 100% budget allocation for biogas Indonesian government. directly to Jembrana Regency.
Funding subsidized and farmers do projects. Programme is Partly subsidized and partly
not pay for the biodigester 100% subsidized. paid for by farmers.
installation.

632 biodigesters installed 57 biodigesters installed in 16,000+ biodigesters Only a few pilot projects have been
as of Oct 2016. Farmers also Jembrana Regency. installed as of November implemented around the national
Biogas Installations produce bioslurry as part of the 2016 in 9 provinces of park.
integrated farming. Indonesia.

Source: Devisscher et al. 2017 - Interviews, focus group discussions, programme websites.
* SIMANTRI is the Bali Provincial Agricultural Agency. BIRU is a domestic biogas promotion programme of the Yayasan Rumah Energi NGO . Both SNV Netherlands and
Hivos are international aid/development organizations based in The Netherlands. The SNV Netherlands Development Organisation, a non-profit group, focuses on
international development.

renewable energy and 2030 carbon emission targets. It is also a means of addressing the near-
term development goals of providing electricity access in remote areas and jobs in renewable
energy-generating enterprises.

Since 2014, the government has focused on increasing electricity access to rural areas,
including remote islands. As it stands, Indonesia has achieved above 94% of its electrification
ratio target of 92.75% in 2017 through the Solar Powered Efficient Lamp (LTSHE) programme in
rural areas (Kementerian ESDM 2017; Kementerian ESDM 2018). To further develop the sector
new approaches may be needed. In this regard, promising new regulation has been introduced
that offers private companies the opportunity to generate and sell electricity in currently
unelectrified regions - although the delivery and pricing models need to be carefully thought out
(Susanto 2016).

Currently, many private-sector actors are working on renewable energy initiatives, but they are
less active in biogas-to-electricity enterprises. Stakeholders observed that the current policy is
not totally supportive of the biogas-for-electricity pathway. Biogas power plants have high initial
set up and operating costs, and therefore companies selling electricity generated by biogas
face strong economic challenges in view of the low feed-in tariff – the price at which companies
may sell electricity to Indonesia's state-owned electricity corporation. There was, however,
some political support for making the policy more favourable to renewable power companies via
strengthening the feed-in tariff legislation and implementation.

Risks, barriers and responses to Indonesia's biogas development  3

 Risks and uncertainties
To successfully navigate a transition pathway, it is important to understand the kinds of risks and
uncertainties that might come into play. Risks and uncertainties are closely related concepts;
however, risks are often understood in a more context-specific way, and they also more often carry
negative connotations (Hanger-Kopp et al. 2019). It is also important to note the subjectivity of risk
perception. What may pose a risk for one group of stakeholders may be totally satisfactory and
unproblematic for another. Similarly, uncertainty stemming from the different viewpoints among
stakeholders on the value and meanings of biogas, together with an overall lack of consensus, can
make it difficult to find solutions.

To get a clearer picture of the situation in Indonesia, researchers held policy dialogues and
workshops with a wide range of stakeholders: district, provincial and national government officials
[from the Ministry of National Development Planning (Bappenas); the Ministry of Energy and
Mineral Resources, and the National Electricity Company (Perusahaan Listrik Negara)]; private-
sector actors; university- and government-based researchers, representatives of NGOs and banks,
and coffee and cacao farmers. Two main uncertainties raised by the stakeholders in the workshops
included: the unclear role of public and private sectors and the unspecified national biogas target. It
is worth unpacking these uncertainties further in order to contextualize the main risks and barriers
discussed later in this brief.

First, the roles and responsibilities of the public and private sectors in accelerating development
of the sector, and bearing the financial risks, are unclear. This is an issue of regulatory uncertainty:
the private sector is expected to invest in and manage bioenergy assets, but it is not clear to what
extent the government will be prepared to support this through favourable regulation, to de-risk the
sector on the basis of the wider public benefits from low-carbon pathways. This situation hinders
businesses investment and may undermine the willingness of public and private sector actors to
collaborate effectively.

Farmers working in the fields in Bali, Indonesia. Farm plant and animal wastes are used to power the biodigesters, and the waste (bioslurry)
from the biodigesters provides fertilizer for crops. © TAHIA DEVISSCHER

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Second, the current lack of biogas development targets is problematic.
Targets – together with policies to meet those targets - are an important
way to reduce risks and uncertainty. In their absence stakeholders face
uncertainty and this may negatively affect their commitment to biogas. A
national biogas target might help to motivate ministries and other actors
to better coordinate biogas programmes to pursue a common objective.
Critically, the government also needs to have the capacity to implement
the measures to achieve such targets. Moreover, there are ways to move
along the pathway without targets. Other changes supporting a transition
may include: implementing experimental pilot projects to deliver lessons
for feasibility of options; institutional and social reconfiguration through
activities such as the creation of multi-stakeholder learning networks and
spaces; or conducting Technology Needs Assessment exercises to move
forward with transition planning for a specific priority technology.
Residents of an Indonesian village install a cylindrical plastic
biogas digester. © MASNARANG / FLICKR
Main risks of biogas development in Indonesia
We now discuss seven of the most significant risks across both pathways
identified by policy stakeholders. Note that while many stakeholders had
background experience in household programmes and held strong views about this pathway, fewer
had a background in biogas-to-electricity. Therefore, risks associated with the latter were discussed
in less detail and may have been underestimated.

1. Investment risks (Household and electricity pathways)

Chief among the risks is the high initial investment requirement for both pathways. For the investor, upfront
cost is a barrier regardless of government support. Household biogas is not affordable for most farmers, and
for others may be difficult to justify given the small savings involved. However, strong interest has emerged
in cheaper PVC alternatives to concrete dome digesters. Stakeholders also mentioned investment risks
hindering entrepreneurship in the electricity pathway; private investment may grow if incentivized through
appropriate regulation and redistribution of risks. In terms of government support, it is expected that public
investment would need to be considerable in either pathway, however this was perceived by some as an
additional risk due to the low reliability of public finance.

2. Inadequate monitoring and maintenance (Household pathway)

A risk specific to the household pathway was the lack of standards for biogas monitoring
procedures. Weak monitoring can be attributed to the different motivations underlying biogas
programmes and lack of consensus on monitoring (Devisscher et al. 2017). Many digesters had been
abandoned when farmers faced difficulties operating biogas or technological faults, as they had no
warranty and were not technically trained. A low sense of ownership was another factor in disuse
of subsidized biodigesters: farmers who contributed financially to the purchase were more likely
to continue to use the equipment than those who had received full subsidies. Generally speaking,
when the capacity of the farmer (finance, skills, knowledge) is lower, there is a greater risk of not
fully benefiting from the installation.

3. Complicated and bureaucratic distribution and management (Household pathway)

Government-run programmes often present barriers in the distribution of biogas systems to
individual farmers. These farmers encountered difficulties with the process; they felt it was
particularly bureaucratic and time-consuming. There are various stages farmers need to pass
through to obtain the digesters and each stage could prevent their participation. On the other
hand, with communal biogas installations in the SIMANTRI programme, barriers arose around
management issues (Devisscher et al. 2017). Low attachment to biogas technology and difficulty
coordinating as a team were factors in many cases. There was more interest in the biogas slurry and
waste and less interest in biogas use.

4. Price and reliability of electricity from biogas (Electricity pathway)

Discussions about technology development for the electricity pathway revealed concerns about
the reliability of supply. The output of biogas-fuelled power plants might not be .as stable as

Risks, barriers and responses to Indonesia's biogas development  5

 the existing commercial elecricity
generators (including hydroelectricity,
thermal, diesel, natural gas, and
geothermal sources). Nor might the
biogas generators be as efficient.
Unreliability of biogas technology
could ultimately harm its commercial
feasibility. Further, the high costs
associated with the technology might
also necessitate a high production
cost that is passed on to consumers,
which could be damaging for demand.
Under this scenario, electrification
in remote areas would become very
difficult to achieve.

5. Fossil fuel subsidies (Household

and electricity pathways)
Fossil fuel subsidies present another
challenge because they work
against biogas development. For
households, fossil fuel alternatives
Farmers and residents at the installation of a biogas digester in Sarasedu, a village in the Ngada remain attractive because of their
District in the East Nusa Tenggara Province in Indonesia. © SU-RE.CO affordability compared to renewable
energy alternatives. For example, a
3-kilogram liquefied petroleum gas tank
is widely subsidized. Such subsidies mean low-investment costs for farmers and lower technological
barriers. Nevertheless, in many rural or isolated areas subsidized fuels are not accessible or are
rarely available. Subsidies also affect the electricity pathway; electricity from coal plants is more
heavily subsidized than renewables, making it affordable (IISD 2018). At the same time, the low tariff
currently makes it very difficult for biogas-fuelled power to compete successfully with fossil fuels.

6. Environmentally harmful leakages (Household and electricity pathways)

Environmental aspects were a central concern for both pathways. For example, some rural biogas
digesters were not installed with hydrogen sulphide (H2S) filtering, which may harm the environment
or even human and livestock health according to interviews with local researchers. It also runs
the risk of corrosion to the digesters (Chaiprapat et al. 2011). In many cases, the observed biogas
digesters were found to be not equipped with filtering. Similarly, some methane leakages in the
biogas digesters might occur when users do not burn the biogas produced. Risks of possible leakage
of methane emissions and unfiltered H2S would occur on both pathways, as they are based on similar
technological principles.

7. Redistribution of labour for the smallholder (Household pathway)

The women in rural Bali tend to have significant roles in collecting firewood and providing meals,
while men’s roles are mainly taking care of livestock. Men are also normally responsible for managing
organic waste as feedstock for biogas technology. Substitution of biogas for firewood therefore has
the effect of reducing the women’s working time while increasing the men’s time. Such a role reversal
has a positive aspect because women and their families can benefit from women spending more time
doing other things. However, it was also recognized that this role change relating to unpaid work
on the farm also carries a risk of labour imbalance in the household. Similarly, task division among
smallholders was fraught according to some experiences with SIMANTRI’s communal installations.

Considering risks and responses to risks

Considering the set of seven risks as a whole, it is evident that stakeholders tended to focus on
the barriers to uptake, rather than potential negative outcomes of biogas development. This has
been observed in other transition pathways work (Lieu et al. 2019). Considering the two transition

6  Stockholm Environment Institute

pathways, clearly the technologies, policies and social issues are very different, and therefore the Biogas development
risks are specific. On the other hand, there are common risks that appear on both pathways: the has not yet become a
cost of initial investment, the risks of environmentally harmful leakages, and the prevalence of fossil
fuel subsidies. In such cases it could be valuable to consider whether measures can address risks on
government priority. As a
both pathways simultaneously more effectively than can combinations of more targeted measures. result, biogas is not being
developed evenly across
Overall, we found that biogas development has not yet become a government priority and, as a Indonesia.
result, biogas is not being developed evenly across the country. This has also led to a tendency to
criticize current biogas efforts rather than evaluate them thoroughly. However, both government
and businesses are working to address current shortcomings, to build their knowledge and to
look for new opportunities. For example, implementation challenges have led su-re.co's clean
energy business to design and pilot less expensive and more easily transportable household
digester equipment: the removable biogas digester bag. The PVC digesters are well-suited to
the even year-round temperature, unlike the concrete digesters which are prone to crack with
alternating wet/dry conditions.

Knowledge from activities on the ground, as well as from in-depth research in Bali, and its wider
significance were discussed at a national level, and a number of conclusions and recommendations
also surfaced at this level.

First, it is important to address uncertainties in government policymaking by formulating renewable

energy targets complemented by clear pathways to attain them. It could also be effective to further
disaggregate the targets by technology or application and implement the different mechanisms
as appropriate. Second, it is necessary to implement supporting actions to mitigate risks, such
as strengthening the institutions that manage the national biogas development and implement
monitoring standards and other regulations. Third, it is important to further incentivize private
investment by introducing favourable lending schemes and feed-in tariffs, as well as enabling
supplementary income generation. These steps could make biogas transition pathways very
attractive to a majority of stakeholders and would encourage effective collaborations.

ACKNOWLEDGEMENTS

This discussion brief is a derivation and evolution of previous work – Devisscher et al.
2017 and Silaen et al. 2019 – and is based on research under the TRANSrisk and
Green-Win international projects. The authors thank the many policy stakeholders -
farmers, and representatives of NGOs and the business sector - who participated in
group discussions, and in workshops held in Bali and in Jakarta, Indonesia, with
Bappenas (the Indonesian Ministry of National Development Planning). The authors also
thank Francis X. Johnson for review of the discussion brief. Green-Win and TRANSrisk
are funded by the European Union’s HORIZON 2020 Framework Programme for
Research and Innovation, under grant agreements 642018 and 642260 respectively
(green-win-project.eu and transrisk-project.eu).

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perspectives on governance, the economy,
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8  Stockholm Environment Institute