Indonesia's Draft Bill On New and Renewable Energy

Indonesia’s bill on New and Renewable Energy
Introduction
As a party that ratified the 2015 Paris Agreement on Climate Change through the enactment of Law
Number 16/2016 on the Ratification of the Paris Agreement, Indonesia is one of the countries that is
committed to mitigate the effects of climate change. 1 One of its main efforts to overcome the emergence
and effects of climate change is through the country’s plan to develop and utilize new and renewable
energy resources as alternatives to fossil fuel in order to reduce greenhouse gas emission into the
atmosphere, a significant contributor to the global warming phenomenon. Additionally, due to Indonesia
limited fossil fuel deposits, utilizing alternative energy sources are imperative to maintain and safeguard
the country’s energy independence and security in the long term.
Thus, the Indonesian government released the draft bill on new and renewable energy on May 30, 2022
to create a strong legal basis for the country’s development and utilization of new and renewable energy
and to aid the country’s objective of attaining net zero emission by 2060. 2
Transition to New and Renewable Energy

The draft bill governs the transition of replacing non-renewable energy with new and renewable energy
utilization. The transition phase will be implemented by the construction of new and renewable energy
plants, conversion of power plants that rely on fossil fuels and/or utilization of advanced technology to
reduce carbon emissions in non-renewable energy plants and all diesel power plants must be replaced
with new and renewable energy power plants no later than 2024 according to the provision. 3
Roadmap
The draft bill also sets the legal basis for the government’s formulation of the roadmap for the
development of new and renewable energy on the short, medium, and long-term to ensure a balance
between the supply and demand for electricity in the national electricity system based on the national
energy policy. The roadmap will be intended to promote the transition from fossil fuel utilization to
electricity-based equipment in the transportation sector, industrial sector and household appliances. 4
New and Renewable Energy

It is important to note that the draft bill distinguished between new energy and renewable energy. Renewable
energy is defined as energy that originates from or is produced from renewable e 5 and the draft bill
classifies the following energy sources are as renewable energy:
 geothermal;
 wind;
 biomass;
 sunlight;
 water from streams and waterfalls;
 garbage;
 waste from agricultural and plantation products;
 livestock waste or manure;
 energy derived from the ocean’s movement and temperature; and
other renewable energy sources that can be categorized as new energy according to technological
developments.6
1
http://ditjenppi.menlhk.go.id/kcpi/index.php/tentang/amanat-perubahan-iklim/komitmen-indonesia
2
https://www.esdm.go.id/en/media-center/news-archives/speaking-at-cop26-energy-minister-gives-indonesias-commitment-to-net-
zero-emission
3
Article 6, Draft Bill on New and Renewable Energy
4
5
6
On the other hand, new energy is defined as all types of energy originating from or produced from new
technologies for processing non-renewable energy sources and renewable energy sources 7 and draft bill
classifies the following energy sources are as new energy:
 nuclear;
 hydrogen;
 coal bed methane;
 coal liquefaction;
 coal gasification; and
 other energy sources that can be categorized as new energy according to technological
developments.8
 Provisions on the aforementioned new energy sources will be governed by a government regulation. 9
The government shall issue business licenses to permit individuals and business entities to utilize
renewable energy10 to conduct to the following activities:
 electricity generation;
 to support industrial activity;
 transportation; and/or
 other activities in the health sector, research and development of science and technology along with
household needs.11
The business licenses for the aforementioned business sectors will be issued by the relevant ministries.
The draft bill also governs other matters pertaining to environmental management, new and renewable
energy price, incentives, research and development, and government funds to support new and
renewable energy related activities.
However, several stakeholders have criticized the Indonesian government’s inclusion of coal derived
products under the new energy category in the draft bill as potentially hampering Indonesia’s net zero
emission target in 2060. “The NRE Bill draft shows the DPR RI’s lack of understanding of the need for
energy development in the context of the energy transition. The entry of new energy technologies such as
coal downstream will make Indonesia trapped with fossil energy infrastructure”, according to the executive
director of Institute for Essential Services Reform. 12
It is important for Indonesia to apply the carbon capture, use and storage method to offset greenhouse
gas emission when using new energy that include coal derived products. Carbon capture, use, and
storage is the process of capturing carbon dioxide emissions from fossil power generation and industrial
processes for storage deep underground or re-use.13
Conclusion
It is expected that the enactment of this draft bill will support Indonesia’s capability to fulfill its targets of
slashing greenhouse gas emission to either 29% with its own effort or 41% with international support
under business-as-usual condition in accordance with its Nationally Determined Contribution in 2030. 14
Furthermore, it is anticipated that the bill will play a major role in spearheading the country’s direction to
attain its net zero emission target by 2060.
7
8
9
Ibid
10
11
Article 36 and its elucidation, Draft Bill on New and Renewable Energy
12
https://iesr.or.id/en/nre-bill-is-ineffective-in-supporting-energy-transition-in-indonesia
13
Law Number 16/2016, page 9
14
https://unece.org/sustainable-energy/cleaner-electricity-systems/carbon-capture-use-and-storage-ccus

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