Snapfi Report Indonesia-2

National study September 2022
Indonesia
Enhancing the Private Sector’s Roles in Climate-Energy Policies Towards
the Indonesian NDC Target
About this report
Published in September 2022
Authors:
Djoko Santoso Abi Suroso
Niken Prilandita
Dhimas Bayu Anindito
Mulia Asri Hastari
Climate Change Center, Institut Teknologi Bandung, Indonesia
Project
Strengthen National Climate Policy Implementation: Comparative Empirical Learning & Creating
Linkage to Climate Finance – SNAPFI. Website: https://www.diw.de/snapfi
Financial support
This project is part of the International Climate Initiative (IKI). Federal Ministry for the Environment,
Nature Conservation, Nuclear Safety and Consumer Protection support this initiative based on a
decision adopted by the German Bundestag.
www.international-climate-initiative.com
Suggested citation
Suroso, D. S. A., Prilandita, N., Anindito, D. B., Hastari, M. A. 2022. Enhancing the private sector’s roles
in climate-energy policies towards the Indonesian NDC target. Strengthen national climate policy
implementation: Comparative empirical learning & creating linkage to climate finance (SNAPFI)
Country Study Report, DIW Berlin.
Disclaimer
This project is part of the International Climate Initiative (IKI - www.internationalclimateinitiative.
com/). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
supports this initiative based on a decision adopted by the German Bundestag. The opinions put
forward in this report are the authors‘ sole responsibility and do not necessarily reflect the views of the
Ministry.
Acknowledgement
We thank our project partners, Prof. Pradono, Dr. Budhi Setiawan, Mr. Dadang Hilman, Mr. M.S.
Fitriyanto, Ms. Zahara Sitta Iskandar, Ms. Novi Puspitasari, and Mr. Farijzal Arrafisena from the Climate
Change Center of ITB. We also indebted to Dr. Karsten Neuhoff, Mr. David Rusnok, and Dr. Heiner
von Lüpke, of the German Institute of Economic Research (DIW) for brainstorming, discussing, and
reviewing this report. We also thank the Governance Working Group of SNAPFI for valuable discussions
and points of view. The gratitude also extends to two anonymous reviewers of this study.
2 Report of National Study on Energy Governance

We thank the following former member and/or member of organisations for providing invaluable
information and assistance to our research through interviews and discussions: Coordinating Ministry
of Maritime Affairs and Investment; Asosiasi Energi Surya Indonesia; Dewan Energi Nasional; Badan
Riset dan Inovasi Nasional; a geothermal power plant company, and a coal company.
We also thank Dr. Andang Bachtiar for providing insights upon the commencement of this report
writing.
Contacts
Djoko Santoso Abi Suroso1 and Niken Prilandita2,
Climate Change Center (Pusat Perubahan Iklim) Institut Teknologi Bandung, PAU Building 3rd Floor,
Ganesha Street No. 10, Bandung, Indonesia 40132.
Email: [email protected] [email protected]
Project in brief
This project is a third-year study of Strengthening national climate policy implementation (SNAPFI):
Comparative Empirical Learning & Creating Linkages to Climate Finance, investigated by the Climate
Change Center, Bandung Institute of Technology collaborating with DIW Berlin. This project delves into
the energy policies of Indonesia and assesses the extent of the private sector’s roles in helping the
Government of Indonesia achieve NDC by 2030 and NZE by 2060.
Supported by:
Based on a decision of the German Bundestag

Table of Contents
1. Introduction 7
2. Situating Private Sector in The Energy Landscape 10
2.1 The Roles of private Sector in The Coal Industry 13
2.2 The Roles of Private Sector in The New Renewable Energy Development 16
2.3 Key Takeaways 19
3. Methods 20
3.1 Data Collection 21
3.2 Analysis 22
4. Indonesia Energy Outlook 2022 24
4.1 Indonesian Energy Policies 25
4.2 Energy Dominance of fossil fuels 27
4.3 Indonesian Renewable Energy Development 30
4.4 Key Takeaways 32
5. Results 33
5.1 Energy Policy Evaluation Analysis Result 34
5.1.1 Evaluation Criteria 34
5.1.2 Mandatory and Voluntary Instruments 36
1. Mandatory Instruments 36
2. Voluntary Instruments 39
5.1.3 Evaluation result 43
5.1.4 Summary of evaluation results 58
5.2 The baseline condition enabling the private sector’s involvement in the
Indonesian energy landscape 62
5.3 The private sector’s roles in the Indonesian RE sector 65
5.4 Contextualising the evaluation results into Kingdon’s multiple streams approach 68
5.5 Key takeaways 69
6. Conclusion 70
6.1 Summary of findings and practical recommendations 71
6.2 Academic contribution to literature 72
6.3 Study limitations and further research 72
7. References 74
8. Appendix 81

List of Figures
Figure 1 Renewables vs. Mitigation Investment by Public and Private Source (USD billion)
Figure 2 Ten Companies with the Largest Coal DMO Realisation-October 2021 (million tons)
Figure 3 Primary Energy Supply 2008–2021
Figure 4 Primary Energy Supply 2021
Figure 5 Indonesia Annual Coal Production 2014-2021
Figure 6 Indonesia Annual Coal Export 2015-2021
Figure 7 Renewable Installed Capacity (on-grid) in 2021 (MW)
Figure 8 Indonesian Energy Mix Projection 2021-2030
Figure 9 The feed-in-tariff policy trajectory
Figure 10 RE technologies typology matrix
Figure 11 RE Industries Value Chain
Figure 12 RE Industries Value Chain and Pertinent Stakeholders in Indonesia
Figure 13 Multiple streams in Indonesian energy sector towards NDC achievement and NZE 2060
List of Tables
Table 1 Association of NRE companies in Indonesia

Table 2 List of Respondents
Table 3 Mandatory and voluntary instruments in this study
Table 4 Evaluation Criteria
Table 5 Feed-in-tariff in Indonesia
Table 6 TKDN target in Indonesia
Table 7 Common mitigation approaches employed to integrate solar PV to on-grid electricity
Table 8 Scorecard of energy policy evaluation analysis result
Table 9 The role of government and private sector toward renewable energy development in
Indonesia
Table 10 Differences between the NDC 2016 and NDC 2021
Glossary
AESI Asosiasi Energi Surya Indonesia-Indonesian Solar Energy Association

AHP Analytical Hierarchy Processes
APBI-ICMA Asosiasi Pertambangan Batubara Indonesia-Indonesian Coal Mining Association
BAU Business as Usual
BESS Battery Energy Storage System
BPDLH Environmental Fund Management Agency (Badan Pengelola Dana Lingkungan Hidup)
BPPT Badan Pengkajian dan Penerapan Teknologi (Agency for the Assessment and Application of
Technology)
BRIN Badan Riset Nasional Indonesia- National Research and Innovation Agency
CCUS Carbon capture, utilisation, and storage
CCS Carbon Capture and Storage
CFPP Coal Fired Power Plant

CMfMIA Coordinating Ministry for Maritime and Investment Affairs (Kementerian Koordinator
Bidang Maritim dan Investasi/Kemenkomarves)
DEN Dewan Energi Nasional- National Energy Council
DMO Domestic Market Obligation
DPR House of Representatives (Dewan Perwakilan Rakyat)
FiT Feed in Tariff
FOLU Food and Land Use
GDP Gross Domestic Product
GHG Greenhouse Gases
GoI Government of Indonesia
GWh Gigawatt hours
ICF International Climate Finance
IESR Institute for Essential Services Reform
IPPs Independent Power Producers
KEN Kebijakan Energi Nasional (National Energy Policy)
LCOE Levelized Cost of Electricity
LTS-LCCR Long-Term Strategy for Low Carbon and Climate Resilience
MoEF Ministry of Environment and Forestry (Kementerian Lingkungan Hidup dan Kehutanan/
KLHK)
MoEMR Ministry of Energy and Mineral Resources (Kementerian Energi dan Sumber Daya Mineral/
KESDM)
MoF Ministry of Finance (Kementerian Keuangan/Kemenkeu)
MoI Ministry of Industry (Kementerian Perindustrian/Kemenperin)
MoNDP Ministry of National Development Planning (Kementerian Perencanaan Pembangunan
Nasional/BAPPENAS)
MoSOE Ministry of State-Owned Enterprises (Kementerian Badan Usaha Milik Negara/
Kementerian BUMN)
MtCO2e Million tonne carbon dioxide equivalent
MW Megawatt
NEK Nilai Ekonomi Karbon-Carbon Economic Value
NDC Nationally Determined Contribution
NGO Non-Governmental Organization
NRE New Renewable Energy
NZE Net Zero Emission
OECD Organisation for Economic Co-operation and Development
PEPs Politically Exposed Persons
PF Power Factor
PLN Perusahaan Listrik Negara (National Electricity Company)
PPA Power Purchase Agreement
RE Renewable Energy
RIPIN National Industry Master Plan (Rencana Induk Perindustrian Nasional)
RPJMN Rencana Pembangunan Jangka Menengah Nasional (Medium-Term Development Plan)
RUEN Rencana Umum Energi Nasional (National Energy General Plan)
RUED Rencana Umum Energi Daerah (Regional Energy General Plan)
RUPTL Rencana Usaha Penyediaan Tenaga Listrik (Electricity Supply Business Plan)
TKDN Locally Manufactured Content Level (Tingkat Komponen Dalam Negeri)

Chapter one
Introduction

1. Introduction
The Government of Indonesia (GoI) submitted an updated Nationally Determined Contribution (NDC)
in July 2021 and compiled the Long-Term Strategy on Low Carbon and Climate Resilience (LTS-LCCR)
as a commitment to achieve Net Zero Emissions by 2060 or sooner. However, the updated NDC
did not increase its climate mitigation targets, only reflecting the progression beyond the existing
NDC and a new set of activities in the adaptation strategy. Through its NDC, Indonesia voluntarily
pledged to reduce greenhouse gases (GHG) emissions by 29 % on its own efforts and up to 41 % with
international support compared to the business-as-usual (BAU) scenario by 2030. According to the
Climate Transparency Report 2021 (IESR, 2021a) Indonesia‘s emissions (excluding emissions from
land use) have increased by 157 % between 1990-2018 to 947 MtCO2e. By category, the increase was
largely due to energy-related emissions. In Indonesia, the energy sector is the second largest emitting
sector to GHG emissions after the FOLU sector by contributing to 34 % of total emissions in 2019. If no
decarbonization efforts are carried out in Indonesia, the emission from the energy sector is projected
to turn into the largest emitter by 2030 while the FOLU sector will decrease gradually (IESR, 2021b;
MoEF, 2020).
In the national level energy policy (KEN and RUEN), the GoI sets a target for NRE mix in 2025 at least
23 % and 31 % in 2050. Based on data from the Ministry of Energy and Mineral Resources-MoEMR,
the achievement of the national energy mix has reached 13.55 % as of April 2021. This number has
increased by 2.04 % in four months compared to data at the end of last year, which was only 11.51 %.
Nevertheless, renewable energy development remains sluggish in 2021, with renewables only
contributing 13.53 % of power generation (IESR, 2021b). The installed capacity of renewable energy
only increased by 386 MW in Q3 2021 with the dominance of 291 MW hydropower, 55 MW geothermal,
19 MW bioenergy, and 21 MW solar PV. This achievement is still far below what is needed to achieve
the 23 % target. In addition, coal still dominated power generation by contributing 66 % of total power
generation in 2021, while renewables only contributed around 13 %.
To reduce emissions and accelerate the achievement of the national energy mix target of 23 % in 2025
and 31 % in 2050, efforts and support from various parties are needed to formulate a clean energy
transition policy through the development of NRE sources. According to Suroso et al. (2020) there are
few issues in the NRE development in Indonesia, such as the lower-level policies and regulations not
synergising enough with higher-level policies and sometimes overlapping with each other, financing
for NRE projects in Indonesia is still limited, and the roadmap NDC for energy still do not take sides
on the NRE investors. In addition, the master plan for NRE development is regulated in Presidential
Regulation 22/2017 concerning The National Energy General Plan (RUEN), which has not been effective
enough to increase the rate of NRE development, especially in power plants, due to limited financial
instruments and the absence of a clear tariff scheme arrangement. These problems have the potential
to limit private investment in the NRE sector. Suroso et al. (2021) also found that the challenge of
NRE development in Indonesia is that the NRE sector has high risk and low returns because of the
regulation of NRE pricing, which is not too profitable for the IPP developer. The NRE policy in Indonesia
is not yet supportive of creating an attractive market for investors and is still not in favour of investors
(Erdiwansyah et al., 2022). Therefore, the NRE development in Indonesia needs the government’s
intervention through policies that facilitate actors, including the private sector, in developing NRE.

Maulidia et al. (2019) stated that Indonesia needs to strengthen its NRE commitment to address
constraints impeding private sector investment.
The involvement of the private sector in the NRE development is needed, especially in developing
countries where public finance is insufficient to meet the needs of climate finance and the lack
of local government capacity in NRE development. Suroso et al. (2020) found that the financing
for NRE in Indonesia is still limited even though NRE is intended to be the first contributor to GHG
emission reduction. Indonesia has enormous potential in the development of NRE. Still, on the other
hand, Indonesia also faces various challenges in energy governance, such as an unstable economy,
complicated regulations and policies, investors are less interested in developing NRE, and the
informality of practices in the energy sector which causes coal still dominates in the energy mix
(Boediman et al., 2021 & Suroso et al., 2021).
In the third year of the study, the public policy in the energy sector will be identified to understand the
connections of climate-related policies with the role of private sectors in - climate change mitigation
from a renewable energy sector perspective. The research question in this study is “To what extent
can the climate-energy policy be adjusted to enhance the role of the private sector in facilitating the
achievement of the Indonesian NDC targets?”. As understood from the research question, this study
aims to analyse the public policy in the energy sector that facilitates the achievement of the NDC
targets and transitioning into NZE by 2060 or sooner to identify what are the possible roles for private
sectors to help GoI in achieving the targets. This study used a qualitative approach by analysing public
policy using evaluation criteria. While there were 15 informants interviewed, consisting of government
officials, experts, and the private sector, we also reinterpreted and contextualised interviews from our
previous studies (see Suroso et al., 2020; Suroso et al., 2021).
The scope of this research is the role of the private sector in the energy sector, especially the new and
renewable energy sector. As a comparison, the role of the private sector in the oil and gas and coal
industry is also discussed in this paper.
This document is structured as follows: we introduce the background of the study. We add the
literature review on the roles of private companies in the energy sector and climate change
policymaking. Next, we explore the energy profile of Indonesia, particularly in the context of the year
2022. We then elaborate on the mandatory and voluntary instrument options assessments that are
possible to be adopted in Indonesian energy policy making and how it should be contextualised on
SNAPFI project’s theory of change. Finally, we conclude this report by summarising the findings,
suggesting practical recommendations to the government, and emphasising our contribution to
academic literature.

Chapter two
Situating Private
Sector in The Energy
Landscape

2. Situating Private Sector in The
Energy Landscape
The involvement of the private sector in policymaking has various roles such as advocate, financier,
and policy entrepreneur. Related to advocating in the energy sector, the presence of new actors
and organisations in the development of New Renewable Energy provides knowledge and material
resources which further increase learning potential and economic competitiveness as well as increase
the capacity to advocate for institutional change and market development (Jacobsson and Bergek,
2004). The private sector plays an important role in shaping public policy. The private sector influences
public policy using three main avenues such as knowledge sharing, campaign contributions; and
lobbying efforts (Strickland, 2018). In addition, private consultants and energy NGOs also provide
technical/operational support sources, for example, through the development of policy impact
estimators to estimate electricity and GHG savings in building and land use policies.
To reduce greenhouse gases by setting GHG reduction targets on an administrative scale, limited
local scale capabilities can make the changes needed to meet targets a significant challenge. The
active participation of private actors in climate and energy negotiation is essential to increase climate
and energy governance efficiency (Andrade and Oliveira, 2015). One of the failures in the process of
getting the emissions down is a state-centric system that does not allow the effective inclusion of
multiple actors including the private sector (Andrade and Taravella, 2009). Therefore, Berkhout and
Westerhoff’s (2013) stated that adopting a system perspective through a network in climate policy
development can support local governments in achieving GHG emission reduction targets.
Governments have a wide range of national plans and policies that require funding to implement,
therefore the governments cannot address the impacts of climate change on their own. In this case,
the private sector has a role as a financier. Berkhout and Westerhoff‘s (2013) also mention the role
of private organisations in networking with the government, namely as providers of funds for local
governments because government funding sources are often only available for a limited time and less
than needed. Related to climate finance, for example the private sector can be a conduit for innovative
financing and act as a service provider (Pacific Islands Forum, 2021). A recent analysis of the global
landscape of climate finance by the Climate Policy Initiative (2021) found that the private finance
source continues to provide the majority of NRE finance. Private sector finance accounts for the
majority of renewable energy finance which reached USD 223 billion annually in 2019/2020, or around
69 % of total renewable energy finance. In mitigation finance flows, private investors accounted for
over half (54 %) of all mitigation finance (see Figure 1).

Figure 1 Renewables vs. Mitigation Investment by Public and Private Source (USD billion)
ALL MITIGATION SECTOR
600 $ 571
500
RENEWABLES
400 54 %
$ 324 $ 324
USD billion
300
68 % 69 %
200
46 %
100 Private
32 % 31 %
Public
0
2017/2018 2019/2020 2019/2020
Source: Climate Policy Initiative, 2021
In the Indonesian context, according to Hendriwardani et al. (2022) fossil fuels still attracted the largest
share of investment in 2020 at USD 16.5 billion (around 65% of the total investment in the energy
sector). While investment in renewable energy made by Independent Power Producers (IPPs), PT PLN,
and other developers was only USD 1.4 billion, representing 7.8% of the total investment in the energy
sector. Renewable energy investment in Indonesia is significantly lower than fossil fuel investment and
insufficient to meet the 23% renewable energy target (ibid.).
Public funding is also important to support the achievement of NZE and NDC targets. Sitorus et al.
(2018) stated that public finance instruments play a role in supporting clean energy development,
and some are more effective in catalysing private investment. Sitorus et al. (2018) found that funding
between 2012 and 2016 indicates that capital injections to state-owned enterprises and guarantees
significantly impact leveraging private investment. Between 2012 and 2016, the GoI provided financial
support for the clean energy development of IDR 12.4 trillion (average of IDR 2.5 trillion) per year. This
financial support contributed to developing renewable energy power plants across Indonesia at least
2.140 MW or equivalent to an average of 430 MW per year.
Hendriwardani et al. (2022) also stated that public finance is the key to encouraging private investment
in renewable energy. Public finance can play a de-risking role, signaling that the GoI prioritises
support for the renewable energy sector. Public funding in the form of direct budget transfers, fiscal
incentives, capital injections, equity investments, and public debt issuance can potentially attract
private investment in new renewable energy by reducing private financial risk and mobilising private
finance. One mechanism to accelerate private investment in renewable energy projects is the Green
Sukuk or Green Islamic Bond to fund climate change mitigation and adaptation (Hendriwardani et al.,

2022). SNAPFI (2020) found that Green Sukuk is impactful in renewable energy development because it
involves energy facilities construction, including solar power plants, micro-hydro and mini hydropower
plants, solar-diesel hybrid power plants, biogas facilities and photovoltaic street lighting. Green
projects that the Green Sukuk can finance are based on the Indonesian Climate Budget Tagging (CBT)
to identify expenditures of projects delivering environmental benefits in accordance with Indonesia’s
climate change targets. Green Sukuk have supported the government to map green financing needs
better and assist the project planning and evaluation process.
The private sector can also play a role as policy entrepreneurs. Cohen (2016) stated that policy
entrepreneurs are individuals from the private, public or third sectors who take advantage of
opportunities to influence policy outcomes to increase their interests. Cohen and Naor (2013) found
that policy entrepreneurs have proven significant in various policy areas such as energy policy.
Privates, especially those from large companies are more prone to develop a corporate political
strategy (CPA) which is intended to influence government policies or processes to create a favorable
environment for their business activities (Huang et al., 2017).
In addition, Andrade and Oliveira (2015) found that increasing and more direct participation of the
private sector in the global climate and energy governance especially in decision-making can be
problematic because of their lack of legitimacy and/or their participation have any political legitimacy.
Private sectors are mainly driven by profit, therefore an expanded influence of private sectors in global
climate and energy governance might trigger a shift from international environmental regulations
to economic goals (Clapp and Dauvergne, 2005). Private sectors can be powerful actors in the
international and national energy policy landscape, generally they lobby heavily against any form of
regulation to shape international agreements and national legislation for their own interest (Andrarde
and Oliveira, 2015). The challenge regarding the involvement of the private sector in climate and energy
governance is finding ways to avoid their interests negatively influencing regime outcomes while also
including the valuable information and resources at their disposal to support the effectiveness of the
climate regime (ibidem).
2.1 The Roles of Private Sector in The Coal Sector
In the context of climate change, private actors have the capacity to directly shape outcomes at the
national or international level (Falkner, 2008). Downie (2017) stated that business actors are critical to
addressing some global environmental problems. In the energy sector, Yudha et al. (2018) also stated
that the presence of private investors and business actors in the fossil energy development network
plays a role in supporting business processes better. With rising coal prices and supply shortages due
to disruptions, the private sector is the viable alternative to emerge from an impending crisis (APBI-
ICMA, 2022a). The existence of a large number from the private sector would not only enhance supply
but also trigger competition.
However, profit-oriented business actors, including in the coal sector, tend to oppose policies or
regulation if the policy has a negative impact on the company business process. The private sector,
especially those operating within “polluting” industries, is under pressure when it comes to improving
environmental performance (Snell, 2018). On the one hand, they make strategic decisions about their

environmental footprint, but on the other hand they also consider various issues in their supply chain
and business assets (Kolk, 2016; Boutilier, 2017). According to Downie (2017) the coal industry has a
long history of opposing climate regulations. In the context of the coal industry in the US, leading coal
industries often oppose policies related to limiting emissions from coal because it adversely affects
their competitive position in the energy market (ibidem). This is driven by the fact that some of the
leading coal companies rely on coal production for almost 100 percent of their revenues.
In the Indonesian context, control of natural resources in the mining sector, especially coal, is still
dominated by the private sector. Due to the dynamic nature of demand and supply of fossil fuel,
Indonesian policies have a significant effect on the fossil fuel industry development (Yudha et al. 2018).
Leading coal companies in Indonesia are also often in conflict with carbon emission reduction plans.
This is shown by the issue related to the extension of coal mining contracts by one of the leading coal
companies in Indonesia (Wakik, 2022). This has resulted in the company having overused its carbon
budget to reach the Paris Agreement. In addition, policies related to coal export restrictions and high
taxes on coal also received rejection from coal companies because these had an impact on company
revenues.
In order to ensure the security of sustainable domestic coal supply, the GoI stipulates a Domestic
Market Obligation (DMO) in which coal companies are required to sell 25 % of the planned total annual
coal production to meet domestic demand. According to the Minister of Energy and Mineral Resources
in Tempo (2022) in the development of the energy transition which is still dominated by coal, the GoI
has set a DMO to support the provision of affordable electricity. In the New Renewable Energy Bill, the
DMO Policy which was originally 25 % will become 30 % of the total production. However, it is feared
that this policy is not in line with the renewable energy transition effort because the increase in the
portion of DMO is considered a step to support the addition of domestic coal use in the midst of efforts
to achieve net zero emission targets (APBI-ICMA, 2022b; Riyandanu, 2022). The increase in DMO is
also an inconsistency of the government in its commitment to make an energy transition. Based on
PLN (2021), there are 10 (ten) companies with the largest coal DMO realisations as of October 2021 (see
Figure 2). The PLN (2021) reported that the realisation of coal sales to DMO reached 93.16 million tons
until October 2021. During that period, Bukit Asam became the largest domestic supplier of coal by
selling 11.44 million tons of coal. This number even exceeds the target set for the BUMN, which is 6.05
million.

Figure 2 . Ten Companies with the Largest Coal DMO Realisation-October 2021 (million tons)
Musi Prima Coal 2,01

Multi Harapan Utama 2,46
Berau Coal 2,87
Sumber Suryadaya Prima 3,899
Arutmin Indonesia 4,31
Borneo Indobara 4,77
Adaro Indonesia 7,55
Kaltim Prima Coal 8,81
Kideco Jaya Agung 8,98
Bukit Asam 11,44
0 2 4 6 8 10 12
Source: PLN (2021)
While much of the world is shifting from coal to clean energy, the Government of Indonesia (GoI)
is taking steps to further strengthen the country‘s coal production and consumption (Coca, 2021).
Politicians who own shares in coal companies are proponents of coal in Indonesia‘s government
by demonstrating the role of coal in Indonesia‘s economy and energy independence (ibidem). The
politician aims to encourage local and national bureaucracies to support mining so that financial
interest in coal mining activities can be maintained (Atteridge et al. 2018). The involvement of
individuals who hold powerful political positions and concurrent positions in the company has
facilitated the phenomenon of coal and political corruption (Greenpeace-Jatam-ICW-Auriga, 2018).
Suroso et al., (2021) found the phenomenon of informality in Indonesian climate and energy governance
which causes issues in the energy sector such as conflict of interest among actors and inconsistent
regulation and policies in the energy sector and sometimes overlap with each other. Informality
in Indonesian climate and energy governance are indicated through the practice of lobbying and
negotiating in the policy-making and the policy-making process is often coloured by political and
economic interests (ibid.). Current energy policies in Indonesia tend to slow the energy transition by
increasing the utilisation of fossil fuels rather than NRE until 2030. With the current situation, where
the global trend is toward decarbonization, the private sector in Indonesia needs to transform towards
renewable energy and should be involved in renewables development (Jong, 2021).

2.2 The Roles of the Private Sector in the Renewable
Energy Development
Increasing global investment in climate change mitigation interventions beyond national ambitions
is urgently needed. Irena (2019) states that in order totolimate challenge would require cumulative
investments of USD110 trillion in the energy sector through 2050. Due to limited capacity in developing
countries, climate finance is urgently needed to close the financing gap ng international climate
finance and funding from the private sector. Developing countries will disproportionately carry the
burden of climate change, on the other hand GHG emissions will also increase along with industrial
activities in developing countries, therefore investment in low carbon and nature-based solutions
will be vital in coming years in these countries (IFC, 2016). Suroso et al., (2022) also mention that to
optimise existing funding for climate change, Indonesia as a developing country should develop various
financing instruments such as optimising the role of private or non-public actors.
The private sector will play a crucial role in pushing and driving the energy transition, private capital
investments in sustainable infrastructure are vital to addressing the climate change impact (Meltzer,
2018; Martin, 2020). Renewable energy projects always require a huge amount of funding, national
budgets or public sector investments are often insufficient to fund these projects. Therefore, private
investment plays an important role in the development of renewable energy in Indonesia with all
its financial and technological capabilities (Boediman et al. 2021). In order to support the transition
toward renewable energy to go smoothly, the private sector needs to be involved in the development
of renewable energy (Jong, 2021). Related to power generation, the private sector contributed to
expanding power generation capacity in developing countries (Cugh and Singla, 2020).
Nevertheless, the involvement of the private sector in the development of renewable energy still faces
numerous challenges. According to Pacific Island Forum (2021), there are some common barriers
to engage the private sector in climate finance: Lack of appropriate incentives and an enabling
environment to increase private sector investments; Limited understanding of the role of the private
sector in accessing climate change resources; Limited understanding by the private sector on
available funding sources for climate change projects; Lack of information on national initiatives and
interaction by government with the private sector such as planning and implementation; Burdensome
requirements and standards applied by funding agencies; and Limited capacity and ability to prepare
bankable projects to mitigate the impacts of climate change.
In the context of the Indonesian energy sector, Yudha et al. (2021) stated that the most significant
barriers to the transicenterede centred on planning and implementation aspects. In general, NRE
development policies in Indonesia are technically and economically unattractive to investors (The
Director General of New, Renewable Energy, and Energy Conservation-Tempo, 2022). Moreover, the
development of renewable energy in Indonesia faces numerous challenges that make it difficult to
involve the private sector in renewable energy and energy in general, the major challenges in particular
have been identified as the following:
• The inability of the government to comprehensively understand the factors needed to encourage
private sector investment in the renewable energy sector and energy in general. The government’s
neglect of private sectors within policy-making, where policies are often difficult and

unprofitable for renewable energy investment is also the reason why Indonesia‘s energy sector is
underinvested by the private sector (Maulidia, 2019; Asian Development Bank, 2019).
• The policies and regulations concerning renewable energy are fragmented and changing, which
has had a discouraging impact on investment (Hendriwardani et al., 2022).
• The prevailing pricing and tariff structure is not cost-reflective and varies considerably from
region to region. Current policy for IPPs and renewable energy developers does not reflect the real
costs of renewable energy and is not profitable (Simanjuntak, 2021; Hendriwardani et al., 2022).
• High risk in developing renewable energy in Indonesia due to the complexity and difficulty of
obtaining domestic debt for renewable energy projects. The investment risk, inconsistent policies
and unprofitable pricing structure has deterred investors because renewable energy projects in
Indonesia are not financially viable and are not bankable (Dutt et al., 2019; Lestari, 2021; MoEMR,
2021b; Bechauf, 2021).
• The lack of transparency and accuracy of data on financial flows, sources and allocation of public
funding for renewable energy projects in Indonesia has harmed renewable energy development
and hurts investment and investor confidence (Lestari, 2021; MoEMR, 2021b; OECD, 2021).
• Complicated collateral requirements make it difficult to increase the production of NRE projects
(Simanjuntak, 2021).
• The cooperation mechanism of Build, Own, Operate, Transfer (BOOT) is less attractive to investors
(Simanjuntak, 2021)
• Results of licensing procedures pose a high risk of loss for Independent Power Producers (IPP)
(Simanjuntak, 2021).
The government has established a Feed-in Tariffs (FIT) scheme for the development of power plants
through the Minister of Energy and Mineral Resources Regulation Number 4 of 2012 concerning the
Purchase Price of Electricity by PT PLN (the Company) from Power Plants Using Small and Medium-
scale Renewable Energy. But then the policy was changed in 2019 when the government implemented
a maximum price regulation to reduce the Basic Cost of Production (BPP) of electricity and to meet
electricity needs in locations where there are no other primary sources. Moreover, there is also
an additional provision for price approval in which the government provides space for PT PLN and
Independent Power Producer (IPP) to negotiate in determining the Power Purchase Agreement (PPA).
These uncertain changes are an obstacle to increasing NRE power plant investment. Therefore, it
is hoped that the government can improve existing policies in the renewable energy sector, among
others by providing convenience to investors in the renewable energy sector, including effective and
efficient management of renewable energy supply chains (Yudha and Tjahjono, 2019).
Given the limited capacity of the government, the involvement of the private sector engaged in the
NRE is important as a stimulant in order to increase renewable energy to reduce the use of fossil fuel
and achieve NZE and NDC targets. Moreover, the existence of renewable energy associations also plays
an important role in accelerating energy mix targets by providing support for the implementation of
established policies and regulations and providing input for the formulation of policies and regulation
in the energy sector. In Indonesia, there are several associations of NRE companies (see Table 1).

Table 1 Association of NRE companies in Indonesia
No Association
1. Asosiasi Produsen Biofuels Indonesia (Indonesian Biofuel Producers Association)
2. Asosiasi Produsen Bioethanol Indonesia (Indonesian Bioethanol Producers Association)
3. Asosiasi Panas Bumi Indonesia (Indonesian Geothermal Association)
4. Asosiasi Pengusaha Minihidro Indonesia (Indonesian Mini Hydro Entrepreneur Association)
5. Asosiasi Pengusaha Pembangkit Listrik Tenaga Air (Hydro Power Plant Entrepreneur Association)
6. Asosiasi Hidro Indonesia (Indonesian Hydro Association)
7. Asosiasi Energi Surya Indonesia (Indonesian Solar Energy Association)
8. Asosiasi Pabrikan Modul Surya Indonesia (Indonesian Solar Module Manufacturers Association)
9. Asosiasi Energi Laut Indonesia (Indonesian Ocean Energy Association)
10. Indonesian Renewable Energy Society (METI-IRES)
For emerging and developing economies, renewable energy investment from the private sector will
be indispensable. However, there are many obstacles to the deployment of private investment in
renewable energy projects. World Economic Forum (2021) identified five broad areas that can be
addresses these obstacles, including:
1. T
ransparent and regulated policies to give investors confidence in the ability to recover
investment in power generation. For example, a bankable and standardized power purchase
agreement (PPA).
2. Incentives for clean energy include the development of an integrated multi-year energy
strategy to phase out fossil power generation, decommissioning schedule for coal-fired
power plants, and implement a carbon tax.
3. Development of business-friendly policies such as no VAT (Value-added tax) on clear power
sales, improved permitting processes, and allowing foreign direct investment (FDI).
4. Development of innovative financing mechanisms to mitigate risk, creating more investment
opportunities, and offering additional return potential.
5. Development of early risk assumption.
In the Indonesian context, the GoI has also developed several strategies to increase the attractiveness
of investment in renewable energy. Several strategies include: Tariff policies to attract NRE
investment in a Presidential Regulation, creating a market for renewable energy through Renewable
Energy Based Industry Development (REBID) and Renewable Energy Based on Economic Development
(REBED), encourage an increase in NRE power generation capacity in accordance with the RUPTL,
and developing large-scale solar power plant and wind power plant to create an attractive market for
investors and develop local industries (MoEMR, 2020). Related to financing, the GoI has also developed
innovative financing through the issuance of Green Bonds and Green Sukuk as financial instruments to
attract investors in financing renewable energy projects (Suroso et al., 2022).

2.3 Key takeaways
—The presence of private sectors in the development of renewable energy plays an important role
in providing knowledge and material resources, technical/operational support, and financing
which further increase capacity to advocate for institutional change and increase climate and
energy governance efficiency.
—The direct participation of the private sector in climate and energy governance can be
problematic due to a lack of legitimacy or a profit orientation. The private sector generally lobbied
heavily against any regulation to shape international agreements and national legislation for their
own benefit.
—The private investors and business actors in the fossil energy development network play a role
in supporting business processes better. The existence of the private sector would not only
enhance energy supply but also infuse competition. However business actors in the coal sector
tend to oppose policies or regulation if the policy has a negative impact on the company business
process.
—The role of private sectors in the energy transition are vital to addressing the climate change
impact with all its financial and technological capabilities. However, Indonesia‘s energy sector
is underinvested by the private sector due to uncertain and unprofitable policies in renewable
energy investment.
—To increase the attractiveness of renewable energy investment, the GoI has developed several
strategies such as: Tariff policies, creating a renewable energy market, increasing NRE power
generation capacity, developing large-scale solar and wind power plants, and issuing Green Bonds
and Green Sukuk.

Chapter three
Methods

3. Methods
This section elaborates the methods utilised in this study, both in collecting and collating data and the
following analytical framework.
3.1 Data collection
This study employs a qualitative approach to answer the research question. The data were collected
through in-depth interviews and literature review. Several respondents coming from various
institutions in Indonesia related to the energy sector were interviewed in the period of 2021 until March
2022 (see Table 2). Also, the interview notes from several respondents of our previous studies (Suroso
et al., 2020; 2021) will also be re-analysed and contextualised within this study.
Table 2 List of respondents
Respon- Position/Profession Institutions

dents
A Former Advisor Coordinating Ministry of Maritime Affairs and Investment
B Vice President Geothermal power plant company
C CEO Coal company
D Staff Coal company
E General Secretary AESI
F Member DEN
G Political scientist BRIN
H C-level person Medco Energy
Y1 - A Director of Energy, Mineral, and Mining Resources Ministry of National Development Planning
Y1 - B Director of Energy Conservation, Directorate General of Renewable Ministry of Energy and Mineral Resources
Energy and Energy Conservation
Y1 - C Associate - Debt Capital Markets at HSBC Global Banking and Markets HSBC
Y2 - A Public policy expert
Y2 - B Former Deputy Presidential Chief of Staff Office
Y2 - C Directorate General of Renewable Energy and Energy Conservation Ministry of Energy and Mineral Resources
Y2 - D Senior New Venture Development Star Energy Development

The interview transcripts were then analysed using content analysis. The excerpts were systematically
coded and interpreted. The official statistics, reports, regulations, and national and local news were
also collected to be analysed qualitatively, and added into the content analysis result.
3.2 Analysis
In this study we employed public policy evaluation analysis with the main focus on the efforts towards
achieving NDC by 2030 and transitioning into NZE by 2060. The main framework initially was done by
employing the concept of Regulatory Impact Assessment which tried to propose several scenarios
first, before the implementation feasibility was assessed (Radaelli, 2004; OECD, 1997). As this approach
is an ex-ante evaluation, the main assumption in this study is that the government will maintain a cost-
efficient policy making process to balance competing interests, while at the same time maintaining
the process’ quality by contextualising an array of emerging policies, disciplines, and frameworks
(Shah, 2018). Using the previous study’s analytical framework (ibid.), we devised several Mandatory
Instruments and Voluntary Instruments that are possible for the GoI to select and act upon to succeed
the targets aforementioned. The evaluation criteria was developed not only by adapting ex-ante
evaluation method 1, but also by adapting energy policy’s evaluation criteria in the previous study (Shah,
2018).
The Mandatory instruments and Voluntary Instruments to be implemented were then assessed by
considering its possible effects and externalities (see Table 3). The findings from our previous studies
(Suroso et al., 2020; Suroso et al., 2021) were also interpreted and contextualised. We provided
statistical facts, regulations, and discourses related to assessing all the criteria. Besides those, using
content analysis, we knitted the findings from interviews to complement the overall energy policy
evaluation analysis. The evaluation criteria will be elaborated in Section 5.
1 A
s the criteria for ex-ante evaluation analysis by JICA (2015) consists of relevance, effectiveness/impact, efficiency, and sustainability, a trenchant
set of criteria will be developed to elaborate the public policy evaluation in the Indonesian energy sector.

Table 3 Mandatory and voluntary instruments in this study
Mandatory/Voluntary Instruments Explanations
NRE Act Still in draft version
Incentivising IPPs in renewables sector (through feed-in-tariff policy)
Enabling the carbon market in Indonesia
Galvanising the role of DEN in the energy policy making
Localisation on RE technologies (battery and TKDN) Incentive for RE suppliers
Developing carbon capture and storage technologies Incentive for RE suppliers
Minimising Politically-Exposed Persons in coal sector Disincentive for coal energy suppliers
Higher tax on coal supplier Disincentive for coal energy suppliers
Limitations on coal export Disincentive for coal energy suppliers
Subsidised electricity price from PLN
Simplified procedure for installing home solar PV

Chapter four
Indonesia energy
outlook 2022

4. Indonesia energy outlook 2022
4.1 Indonesian Energy Policies
In 2021, Indonesia updated its Nationally Determined Contribution (NDC) submitted to the UNFCCC.
Indonesia voluntarily pledged to reduce greenhouse gases (GHG) emissions by 29 % on its own efforts,
and up to 41 % with international support, compared to the business-as-usual (BAU) scenarios of 834
MtCO2e and 1,185 MtCO2e, respectively, by 2030. However, the updated NDC did not increase its climate
mitigation targets, only reflecting the progression beyond the existing NDC and a new set of activities
in the adaptation strategy. The updated NDC reflects progress beyond the existing NDC, particularly
through:
• Enhancing ambition on adaptation;

• Enhancing clarity on mitigation by adopting the Paris Agreement rule book (Katowice Package);
• Aligning the national context relating to the existing condition;
• Enacting milestones along with national development for 2020-2024;
• Providing indicative pathways towards Vision Indonesia 2045 and the Long-Term Strategy on Low
Carbon and Climate Resilient Development 2050 (LTS-LCCR 2050);
• Translating the Paris Agreement Rule Book (Katowice Package) into Indonesia‘s context.
In addition, Indonesia also submitted a Long-Term Strategy for Low Carbon and Climate Resilience
(LTS-LCCR) 2050, which aims to contribute to achieving global goals and national development
objectives by considering the balance between emission reduction, economic growth, justice, and
climate resilience development. Several things listed in the LTS-LCCR 2050 are the achievement of
Indonesia’s first NDC targeted in 2030, and then Indonesia will achieve net-zero emission (NZE) by 2060
or sooner. However, according to IESR (2021b) the LTS-LCCR’s low carbon scenario still incorporates
a high portion of fossil fuels (share of CFPP is still 38% in the primary energy mix) and the use of
CCUS despite estimates showing that such technological options will become more costly (78 % of is
equipped with CCS that may cause higher LCOE).
On the way to the G20 presidential forum, the GoI introduced a scenario to achieve the NZE target
by 2060 or sooner, as outlined in the National Energy Grand Strategy (GSEN), which includes a plan
to transition from fossil energy to renewable energy (MoEMR, 2022b). In the GSEN, the target for
renewable energy mix is 100 % by 2060, with a capacity of 587 Gigawatt (GW), including solar power
plants 361 GW, hydropower plants 83 GW, wind farms 39 GW, nuclear power plants 35 GW, bioenergy
power plants 37 GW, geothermal power plants 18 GW, and ocean currents power generation systems
13.4 GW. After 2030, additional power plants will only come from renewable energy; then starting in
2035 it will be dominated by Variable Renewable Energy (VRE) in the form of solar power plants, and
in the following year, it will become wind farms and ocean current power plants. Geothermal power
plants will also be maximised up to 75 per cent of its potential. However, according to the Minister
of Energy and Mineral Resources in Tempo (2022) Indonesia has great geothermal potential but is
still constrained by its expensive development, therefore the GoI is preparing regulations to support
geothermal development. On the other hand, there will be no additional coal-fired power plants except
those that have reached financial close and are under construction.

Indonesia also signed four strategic cooperations towards NZE 2060 or sooner between PT PLN and
related stakeholders (MoEMR, 2022c). The four cooperations are:
1. Memorandum of Understanding (MoU) on the Construction of a Public Electric Vehicle Charging

Station with the Association of State-Owned Banks or Himbara, consisting of PT. Bank Mandiri,
PT. Bank Rakyat Indonesia (BRI), PT. Bank Negara Indonesia (BNI), and PT. Bank Tabungan Negara
(BTN).
2. Power Purchase Agreement (PPA) for two projects, namely the development of solar power
plants in Bali with Medco Power and the development of the Kukusan-2 5.4 MW Mini Hydro Power
Plant in Lampung with Arkora New Energy.
3. Renewable Energy Certificate from PT PLN to 6 companies for more than 500 MWh per year from
PLN‘s NRE generators.
4. Memorandum of Understanding (MoU) with the World Wide Fund (WWF) Foundation on technical
assistance in improving the quality of socio-environmental standards and Renewable Energy
infrastructure projects in Indonesia.
The Indonesian government‘s commitment to climate change was also demonstrated by the launch of
the Country Platform for the Energy Transition Mechanism (ETM) together with the Asian Development
Bank (ADB) and PT Sarana Multi Infrastruktur (PT SMI) (Ministry of Finance 2022). The country platform
for ETM is a framework that provides the financing needed to accelerate the national energy transition
by mobilising funds from public and private sources in a sustainable manner. ETM consists of two
schemes. First, Indonesia‘s Carbon Reduction Facility (CRF) scheme is used for the early retirement of
coal-fired power plants (PLTU). Second, the Clean Energy Facility (CEF) scheme to develop or invest in
the construction of green energy facilities.
Besides the international commitment through NDC and NZE in the climate sector, the Indonesian
energy sector also has a different policy trajectory, namely The national energy policy (Kebijakan
Energi Nasional-KEN 2014, RUEN 2017, RUKN 2019-2038, RUPTL 2021-2030, and Presidential
Regulation 98/2021 on the Implementation of Carbon Economic Value. KEN 2014 aims to optimise the
energy mix and stipulates that renewable energy should be at least 23 % of the energy mix by 2025.
However, projections in 2025, coal will remain Indonesia‘s most significant energy source with a
proportion of 30 % in the energy mix. KEN is then detailed in the National Energy General Plan (RUEN)
2017. The main Indonesian energy policies (KEN and RUEN) state the renewable energy share target
is 23 % in 2025 and 31 % in 2030. According to IESR’s study (2021b), with the current slow renewables
growth, the share of renewable energy will only reach 15 % in 2025 and 23% in 2030. Electricity Supply
Business Plan (RUKN) 2019-2038 contains the national electricity policy, the direction of developing
electricity supply, the current condition of electricity supply, and the projected electricity demand for
the next 20 years. Furthermore, in the newly released RUPTL 2021-2030, there is an increase in the
addition of new renewable energy capacity. However, coal will still dominate the overall generation mix
for the next ten years. In the renewable energy context, the GoI, through the Ministry of Energy and
Mineral Resources, also updated and improved the MoEMR Regulation number 26/2021 on rooftop solar
PV.

4.2 Energy Dominance of Fossil Fuels
The energy resources in Indonesia can be divided into energy development and consumption. Based
on Figure 3, the trend of primary energy supply decreased in 2020 and then increased in 2021 to
1,545,557,232 Boe. However, the energy supply in 2021 is still dominated by coal at 36.15 % and crude
oil & product 32.09 %. Meanwhile, biomass and biofuel contributed 8.15 % for renewable energy,
followed by hydropower 2.97 %, geothermal 1.91 %, wind 0.069 %, and solar PV 0.051 %. This shows that
renewable energy is still underutilised. The following is a description of the primary energy supply from
2008-2021 in Figure 3 and an overview of the primary energy supply in 2021 in Figure 4.
Figure 3 Primary Energy Supply 2008–2021 (BOE)
1,8E+09
1,6E+09
1,4E+09
1,2E+09
Biogas
1E+09 Biofuel
Biomass
Solar-Powered Street Lighting
800000000
& Energy-saving lamp
Other Renewables
600000000 Wind
Solar & Solar PV
400000000 Geothermal
Hydro Power
200000000 Natural Gas & Product

Crude Oil & Product
0 Coal
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: MoEMR, 2022a

Figure 4 Primary Energy Supply 2021 (BOE)
3,907 4,242 0,012

0,001
2,421
0,069
Coal
0,051
Crude Oil & Product
1,911
2,973 Natural Gas & product
Hydro Power
Geothermal
36,154
Solar & Solar PV
16,161 Wind
Other Renewable
Solar-Powerd Street Lighting &
Energy-Saving Lamp
Biomass
32,098
Biofuel
Biogas
Based on data from the Ministry of Energy and Mineral Resources, the achievement of NRE in the
national energy mix has reached 13.53 % as of April 2021 (IESR, 2021b). This number has increased
by 2.04 % in four months compared to data at the end of last year, which was only 11.51 per cent. The
installed capacity of renewable energy only increased by 386 MW in Q3 2021 with the dominance of 130
MW hydropower, 71.26 MW micro hydropower, 55 MW geothermal, 19.5 MW bioenergy, and 17.88 MW
solar PV (MoEMR, 2021). This achievement is still far below what is needed to achieve the 23% target
(IESR, 2021b). In addition, coal still dominated the power generation by contributing 66% of total power
generation in 2021.
In 2022 Indonesia announced its commitment to reaching net-zero by 2060 or sooner and phasing out
CFPP (Coal Fired Power Plant) by 2040 (with international support). However, the implementation of
COP26 also raises new issues in the energy sector. For example, in the closing stages of the UN COP26
summit, India and China succeeded in weakening the effort to end coal power and fossil fuel subsidies
by bringing countries to agree to „phase down“ rather than „phase out“ coal. This issue certainly has
a significant impact on the future of the energy sector, especially in a country with abundant coal
resources such as Indonesia.
Indonesia is still reluctant to move away from coal. According to MoEMR (2022a), Indonesia‘s coal
production reached 606.22 million tons in 2021. This realisation increased by 7.2% compared to 2020,
which was 565.69 million. The realisation of production in 2021 is 96.99% of the target of 625 million
tons. Related to coal exports, the trend of coal exports has decreased in the last two years, especially
during the pandemic. Coal exports declined by 26.97% to 331.94 million tons in 2020. Furthermore, coal
exports fell by 8.15% to 304.9 million tons in 2021 (MoEMR, 2022a).

Figure 5 Indonesia Annual Coal Production 2014-2021
700
616,16 606,22
600 557,77 565,69
500 461,29 456,17 461,36

Million Tons
400
300
200 163,97
100
2014 2015 2016 2017 2018 2019 2020 2021
Figure 6 Indonesia Annual Coal Export 2015-2021
500
454,5
400 365,75 356,39

331,37 331,94
304,9
300 286,94
Million Tons
200
100
0
2015 2016 2017 2018 2019 2020 2021

4.3 Indonesian Renewable Energy Development
According to IESR (2021b), the long-awaited Indonesian renewable energy law such as Presidential
Regulation on Feed in Tariff, regulation on energy conservation, and Presidential Regulation on Carbon
Economic Value suffer more delays this year. The delays extend uncertainty to investors in renewable
energy development. This year, renewable energy development in Indonesia remains sluggish and
far below what is needed to achieve the 23% energy mix target in 2025. Installed renewable energy
capacity only increased by 386 MW by Q3 2021 with the dominance of 291 MW hydropower, 55 MW
geothermal, 19 MW bioenergy, and 21 MW solar PV (IESR, 2021b; MoEMR, 2021).
Figure 7 Renewable Installed Capacity (on-grid) in 2021 (MW)
Solar PV: 21
Bioenergy: 19
Geothermal: 55
Hydropower: 291
Source: IESR, 2021b
In addition, coal still dominated power generation by contributing 66% of total power generation in
2021, while renewables only contributed around 13%. According to PLN (2021), Indonesia‘s energy mix
will continue to be dominated by coal until 2030 (59.4%) if it follows the low-carbon scenario. National
coal power generation is projected to continue to grow from 194,558 GWh (2021) to 264,260 GWh
(2030). Fuel power generation will be the only energy source to be reduced from 10,222 GWh (2021) to
1,798 GWh (2030).

Figure 8 8 Indonesian Energy Mix Projection 2021-2030 (GWh)
120%
100%
80%
60%
40%
20%
0%
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Hydro Geothermal Another NRE Gas Oil Coal NRE potential Import
Source: RUPTL, 2021-2030
In order to achieve carbon neutrality in 2060, PLN proposes two scenarios: the first scenario focuses
on the use of renewable energy plus storage and nuclear power to replace the Coal-fired Power Plant
(CFPP) (IESR, 2021b). And the second scenario is to combine the use of renewable energy, nuclear
power, and coal plus CCUS. In Tempo (2022) through an interview with the Director General of New,
Renewable Energy, and Energy Conservation, it was also stated that nuclear power is planned to be
built in 2040-2050 to achieve the NZE projection in 2060. Nuclear development in 2040 in the Nuclear
Energy Law is intended as a base load to compensate for the intermittent solar and wind power
plants. However, the inclusion of nuclear power is still seen as a distraction to the development of
renewable energy in Indonesia, even though it has low emissions, one of which is because technology
is considered as “immature” technology (IESR, 2021b).

4.4 Key takeaways
• In order to achieve the NDC target and towards net zero emissions, key policies and regulations in
the energy sector such as NDC, LTS-LCCR, KEN and RUEN, RUPTL 2021-2030 and regulation
No. 26/2021 on rooftop solar PV were updated and improved. However, these policies still incorpo-
rate a high portion of fossil fuels, especially coal. With the current slow renewables growth, it is
predicted that the share of renewable energy will only reach 15 % in 2025 and 23 % in 2030.
• Renewable energy in Indonesia is still underutilised. Coal still dominated the power generation
by contributing 66 % of total power generation in 2021, while renewables only contributed around
13 %.
• Renewable energy development in Indonesia remains sluggish and far below what is needed
to achieve the 23 % energy mix target in 2025. However, if it follows the low-carbon scenario,
Indonesia‘s energy mix will continue to be dominated by coal in 2030 (59.4 %). In addition, policy
uncertainty over renewable energy laws hinders investor engagement in NRE development.

Chapter five
Results

5. Results
In this section, the energy policy evaluation analysis will be elaborated, followed by the baseline
condition enabling the private sector’s involvement in the Indonesian energy landscape. The role of
the private sector in the Indonesian energy landscape will be elaborated next, followed by the extent to
which the private sector can contribute to climate change mitigation.
5.1 Energy Policy Evaluation Analysis Result
This section will explore the evaluation criteria first, followed by a brief explanation of the mandatory
and voluntary Instruments that are being evaluated. Finally, the evaluation result will be presented.
5.1.1 Evaluation criteria
In this study, several main criteria have been developed from a previous study (Shah, 2018) and chosen
to represent the dimensions of which a certain public regulation can contribute to. These main
criteria are then broken down into sub criteria. The overall evaluation criteria can be seen in Table 4.
We also devise simple parameters to assess the performance of every policy instrument that will be
summarised in the scorecard (see Table 8).

Table 4 Evaluation Criteria
Ex-ante evaluation Main evaluation Sub criteria Explanation Parameters

criteria criteria
Effectiveness/ Increase of Direct effect on the increase ‘+’ sign: Direct effects
Impact renewables share of renewables share in the ‘-’ sign: Indirect or no effect(s)
in the energy mix energy mix
and environmental
effects
Effectiveness/ Additional effects on the Positive environmental effects ‘+’ sign: Direct additional effects
Impact increase of renewables such as greenhouse gas emission ‘-’ sign: Indirect or no additional
share in the energy mix reduction effect(s)
Effectiveness/ Political and social Competitiveness Measures the policy instrument’s ‘+’ sign: The policy instrument
Impact; Relevance acceptability capacity to positively or negative- motivates the nation’s economy to
ly influence the how the country's react to national or international
economy reacts to national or changes positively
international changes ‘-’ sign: The policy instrument
motivates the nation’s economy
to negatively react to national or
international changes
Effectiveness/ Social equity Measures the fairness in ‘+’ sign: The policy instrument
Impact; Relevance renewables development of the promotes fairness in renewables
policy instrument between the development between stakehol-
stakeholders regarding costs and ders regarding costs and benefits.
benefits. ‘-’ sign: The policy instrument
does not/slightly promote fair-
ness in renewables development
between stakeholders regarding
costs and benefits.
Efficiency Flexibility The ability of the instrument ‘+’ sign: The policy instrument is
options to be manipulated to con- easily manipulated.
sider cost and timeframe changes ‘-’ sign: The policy instrument is
given potential changes such as difficult to manipulate.
overachievement of the targets,
technology innovative activities and
others.
Effectiveness Transparency and Shows whether the implementa- ‘+’ sign: The policy instrument
accountability tion and application of the policy promotes transparency and
instrument is transparent for all accountability.
stakeholders. In addition, it indica- ‘-’ sign: The policy instrument does
tes whether the accountability is not promote transparency and
clear or not. accountability.
Efficiency; Feasibility of Implementation Indicates the extent to which ‘+’ sign: The policy instrument
Relevance implementation network capacity responsible actors (ministries, requires a narrow extent of actors’
authorities, etc.) are able to design, capacity.
support and manage the imple- ‘-’ sign: The policy instrument
mentation of the policy instrument. requires a wide extent of actors’
Factors such as trained personnel, capacity.
technological, infrastructure, credi-
bility and transparency determine
capacity.

Efficiency; Administrative feasibility Measures the total work exerted by ‘+’ sign: The policy instrument requi-
Relevance the government's implementation res a small portion of work.
network and the enforcement of ‘-’ sign: The policy instrument
the policy instrument during the requires a big portion of work.
implementation process
Relevance Market readiness This shows the readiness of the ‘+’ sign: Shows the high readiness of
market to adapt the required chan- the market.
ges caused by the policy instrument ‘-’ sign: Shows the low readiness of
the market.
Sustainability Sustainability Indicates whether the expected ‘+’ sign: Shows the lasting policy
changes last or not. instrument and its effects.
‘-’ sign: Shows the lasting policy
instrument and its effects.
Source: Adopted from Shah, 2018
In this study, there are three main criteria used to assess the mandatory and voluntary instruments
in regards to the energy policies and their connection to climate change mitigation: increase of
renewables share in energy mix and environmental effects; political and social acceptability; and
feasibility of implementation.
5.1.2 Mandatory and voluntary instruments
As this study assesses the impact of energy policy options in Indonesia, we propose several
mandatory and voluntary instruments that can contribute to achieve NDC by 2030 and also NZE by
2060. Mandatory instruments are mostly concerned with the regulation dimension of the energy
sector, while voluntary instruments are developed regarding supply-demand dynamics within both
coal and RE sectors. Mandatory instruments tend to be obligatory due to the regulation being either
an operationalisation of an international pledge or the convergence of a policy trajectory. Voluntary
instruments include policies that might not be strategically situated in the main energy policies but
needed to support the implementation of mandatory instruments.
The mandatory and voluntary instruments are as follows:
1. Mandatory instruments
a.NRE Act
NRE Act will be a bill proposed to specify the 2007 Energy Act with the targets set in NDC regarding
GHGs emission. Besides improving the efforts to minimise GHGs emissions, the NRE Act will also
emphasise the targets set in KEN 2015, which are the 23% share of renewable energy in the energy mix
by 2025 and improving the electrification rate, particularly in the frontier areas.
The NRE Act is currently still in a draft version. Several public hearings have been held since 2020, but
it has not been effectively enacted yet. During a public hearing in 2020, our team was invited by the
House of Representatives of Indonesia (DPR) to provide opinions on the bill draft. Our team found that
there are no parts mentioning the climate change situation or policies in the draft version, although its

brief explanation is found in the academic paper of the pertaining act. This situation suggests that the
NRE Act looked like a stand-alone regulation only focusing on the energy sector without considering its
potential impact on the climate change sector.
b. Incentivising IPPs in the renewables sector (through feed-in-tariff policy)
As the renewables market in Indonesia is still nascent, several regulations have been enacted to
incentivise the IPPs in the renewable energy sector particularly through the feed-in-tariff policy.
The feed-in tariff policy has also been specified by renewable energy sources, such as geothermal,
mini and micro hydro, biomass, municipal solid waste, and solar PV (see Figure 9). From this policy
trajectory, the latest Ministerial Regulation of EMR 7/2018 and Ministerial Regulation of EMR 9/2018
repeal the previous regulation, meaning that there has been no effective feed-in tariff policy until now.
However, Table 5 displays several baselines set as a precedent for future feed-in tariffs specified by
renewable energy sources.
Figure 9 The feed-in-tariff policy trajectory
Ministerial Ministerial Ministerial Ministerial

Geothermal Regulation of Regulation of Regulation of Regulation of
EMR 32/2009 EMR 2/2011 EMR 22/2012 EMR 17/2014
Mini and Micro hydro; biomass Ministerial Ministerial Ministerial

municipal solid waste (Non- Regulation of Regulation of Regulation of NRE Act
biogas and landfill gas) EMR 31/2009 EMR 4/2012 EMR 7/2018
Ministerial Ministerial Ministerial

Solar PV Regulation of Regulation of Regulation of
EMR 17/2013 EMR 19/2016 EMR 9/2018
Source: Authors’ analysis (2022)

Table 5 Feed-in-tariff in Indonesia
Energy sources Feed-in-tariff2 Condition Relevant regulation
Geothermal US$ 11.8 - 25.4/kWh (around Rp Depends on location, whether the power Ministerial Regulation of
173,734.83 - Rp 373,971.58/kWh) plant is connected to a high- or medium EMR 17/2014
voltage network, and based on year (
where for different areas, price increase
rate is also different).
Mini and micro hydro Rp 656 - 1,506/kWh (USD 0.045 –

0.1/kWh)
Biomass Rp 975 - 1,722.5/kWh (USD 0.066 –

0.12/kWh) <10 MW, dependent on location and
Ministerial Regulation of
whether connected to low or medium
Municipal solid waste Rp 1,050 - 1,398/kWh (USD 0.071 – EMR 4/2012
voltage network
(non-biogas) 0.095/kWh)
Municipal solid waste Rp 850 - 1,198/kWh (USD 0.058 –

(landfill gas) 0.081/kWh)
Solar PV Price ceiling US$ 0.25 - 0.30/kWh Purchase agreements through tenders. MoEMR Regulation No. 17
(Rp 3,680.82 – 4,416.99/kWh) Price ceiling dependent on use of 40% of 2013
local materials
Source: Halstead et al. (n.d.), Authors’ analysis (2022)
Feed-in-tariff will also be regulated by the NRE Act, which is still in draft. However, experts said that the
feed-in-tariff stated in the draft is going to be too expensive in the future, as the global trend of renewa-
bles price is decreasing and thus will not be contextual once the Act is finally effective (Faizal, 2021).
c. Enabling the carbon market in Indonesia
The carbon market in Indonesia has been seen as an alternative in achieving the NDC. The enactment
of Presidential Regulation 98/2021 about the Carbon Economic Value invites not only governments
of Indonesia on any hierarchy level to contribute to the measurement of carbon emission, but also
the private sector to take the opportunity and synchronise their business activities and minimise the
carbon emission. Other goals also include to support a more efficient investment in greener industry
and R&D for greener technology (Ministry of Finance, 2021). This presidential regulation comprises four
mechanisms: carbon emission trade, also including carbon emission offset; result based payment;
carbon tax; and the combination of the other three. However, the carbon tax will be effective around
July 2022, where it was supposed to be in April 2022 mostly due to the synchronisation with other
tax regulations (Hamdani, 2022). According to the Minister of Energy and Mineral Resources in Tempo
(2022) stated that the implementation of the carbon tax is still waiting for the right time. The carbon
tax has previously been implemented but with the current crisis conditions, the implementation of
the carbon tax will begin in 2023. The focus of the carbon tax is on the Coal-fired Power Plant (CFPP),
although it will burden PLN, it is hoped that PLN must be proactive in reducing emissions, one of which
is by using gas as a transition bridge from heavy carbon, medium, low and zero carbon.
2 The reference price is used is USD 1 ~ Rp 14,723.29

2. Voluntary instruments
a. Galvanising the role of DEN in the energy policy making
Despite the centrality of the Ministry of Environment and Forestry (MoEF), the Ministry of National
Development Planning (MoNDP), and the Ministry of Energy and Mineral Resources (MoEMR), National
Energy Council (DEN) is also central in overseeing the coordination between pertinent ministries in
implementing the NDC (Suroso et al. 2020; Suroso et al. 2021). However, it is indicated that the process
of promulgating certain regulations and policies are still coloured by informality in governance (Suroso
et al., 2021). After the Reform era, the boundary between politicians and businessmen is getting blurry,
which is reflected, for example, by the number of Politically Exposed Persons (PEPs) coming from the
fossil fuel sector and holding positions in executive or legislative institutions.
The structure of DEN is also intricate. While the independent institution advises the President on
the energy sector, the internal composition of it is dominated by the pertinent Ministers, such as the
Minister of EMR. Oftentimes the MoEMR is perceived to bypass the DEN’s authority and enact the
regulations that have not been discussed with the members of DEN in the meetings. This condition
refers to the fact that the Acting Head of the DEN is the Minister of EMR, who also has the capacity to
enact Ministerial Decree or Ministerial Regulation. Moreover, internal conflicts within the DEN are also
triggered by political business competition, where political parties have business interests behind
the formulation of energy policies inside DEN. Another example of conflicts of interest is within PLN,
in which the Directorate General of Electricity in MoEMR is also the commissioner of PLN. It is also
found that there are small informal groups consisting of politicians who are also businessmen in the
coal sector, advocating their interest in Indonesian energy policy-making. Such absence of a clear
hierarchy of authority among the various institutions involved in the climate change policy-making
process, including in energy, has made various institutions develop and lead particular programmes on
climate change fitted to the interest of each institution.
Such urgency is also driven by the process of updating the National Energy Policy (KEN) to accelerate
the achievement of the national energy mix, which is arguably still coloured by political bargaining
processes, where many political parties having business interests are also involved in the policy-
making process. The role of DEN remains paramount in leading the KEN updating process while at
the same time minimising the influence of PEPs from the fossil fuel sector. The independence of DEN
needs to be amplified and thus distinguished from the interest of political parties and businesses.
b. RE and bridging fuel supplier incentives
To motivate the private sector to contribute to achieving NDC by 2030, renewable energy and
bridging fuel suppliers need to be incentivised. We propose localisation on RE technologies and the
development of CCUS technologies as options for the incentive.
— Localisation on RE technologies
The renewable energy industry does not only cover the power generation sector, but also the
manufacturing sector. In Indonesia, the Ministry of Industry has made the National Industry Master
Plan (Rencana Induk Perindustrian Nasional/RIPIN) that lasts from 2015 to 2035. This master plan

aims to enhance the economic performance of Indonesia, while at the same time extending the
access to job opportunities for local workforces. In this document, indeed renewable energy
industries are among national priorities, particularly in the stage of 2020-2035. The industries
aforementioned will be focused on electricity generators, battery, solar cell, and nuclear power
plants.
One of the instruments seemingly used to ensure the localisation of the RE industry is
Manufactured Local Content Level (Tingkat Komponen Dalam Negeri/TKDN). As mandated by
the Industry Act 2014 and Governmental Regulation 29/2018, it was highly suggested that every
national industry should: do the production domestically–where it should lead to the efficient
industrialisation; improve the access to job opportunities for local workforces; maximise foreign
exchange saving; and decrease the government’s expenditure dependency on foreign products.
For the renewable energy sector for electricity generation, TKDN in this sector is expected to be
around 40% (see Table 6).
Table 6 TKDN target in Indonesia
TKDN for RE power plant Baseline in 2019 Target in 2024
Solar PV 40 % 40 %
Bioenergy 40 % 40 %
Geothermal 30 % 35 %
Source: Medium Term National Development Plan (RPJMN) 2020-2024
The next one is the localisation of RE technologies. RE technologies can be distinguished based on the
innovation needed, which furthermore can be categorised by its design capabilities and manufacturing
capacities needed for innovation (see Figure 10). This classification considers the knowledge
acquisition, technology transfer, and learning processes involved, as well as the role of home markets
in the formation of a domestic industry that differ strongly between the technologies (Schmidt and
Huenteler, 2016). Several supporting industries include fabrication and manufacturing, but other RE
industries are also heavy on design innovation.

Figure 10 RE Technologies Typology Matrix
Source: Schmidt and Huenteler, 2016
High
Wind turbines
Electric vehicles
Geothermal power
Grid-scale battery storage
Concentrated solar power
Trains
Large hydro power
Design capabili-
ties involved in
innovation
Small & micro hydro
Small wind Solar PV
Small biogas Solar heating (vacuum collectors)
Low Solar cook stoves Energy-efficient lighting
Solar heating (flat plate collector) Heat pumps
Bicycles
Low Manufacturing capacities High

involved in innovation
The localisation of RE technologies is important as starting in 2025, the GoI will develop a super grid
to improve energy access and thus minimise the gap in electricity demand between frontier areas and
on-grid areas3. To support this, other technologies will also be developed, such as smart grid, smart
metre, and energy storage technologies including pumped storage and Battery Energy Storage System
(BESS).
— Developing CCUS technologies
Carbon capture, utilisation, and storage (CCUS) technologies are developed as a complementary to
RE development, as a logical reason for the GoI–pressured by both global communities and national
PEPs from the coal sector) to solve energy trilemma. CCUS technologies also cover clean coal
through ultra supercritical coal power plants and biomass co-firing. Currently, CCUS technology
has become a national discourse in minimising the GHGs emission from the electricity generation,
as old coal power plants operation will be either stopped or enhanced by this technology4. Con-
cerning the nation’s abundance of coal, several argue that CCUS technology can act as a supporter
of bridging fuel5, particularly in managing energy trilemma, while the other demand that using this
technology perpetuates the hurdles hindering climate change mitigation efforts6. According to the
Minister of Energy and Mineral Resources in Tempo (2022) the development of CCUS technology is
one strategy to respond to PT PLN‘s excess electricity capacity by increasing demand.
3 h ttps://migas.esdm.go.id/post/read/cop-ke-26-menteri-esdm-sampaikan-komitmen-indonesia-capai-net-zero-emission (in Bahasa Indonesia).

4 https://www.esdm.go.id/id/berita-unit/direktorat-jenderal-ketenagalistrikan/carbon-capture-utilizaton-and-storage-ccus-sebagai-solusi-pengu-
rangan-emisi (in Bahasa Indonesia).
5 Interview with Respondent Y2 - A, 2021.
6 https://iesr.or.id/dekarbonisasi-sistem-energi-perlu-mempertimbangkan-secara-matang-pilihan-teknologi-rendah-karbonnya (in Bahasa Indonesia).

c. Coal supplier disincentives
— Minimising Politically-Exposed Persons in coal sector
This policy instrument is chosen due to the fact that the Indonesian energy landscape cannot be
fully cleared from the political and business interests7. It is found that 40 out of 90 PLTU companies
have directors and commissioners as Politically-Exposed Persons (PEPs), a person with public
authority and/or person has registered political party affiliations (Yazid et al., 2021). There are
also directors of state-owned enterprises who also become commissioners in private companies
at the same time. This situation triggers “backstage” practices, which include lobbying and
political transactions leading to seemingly “formal” corruption8 due to a lack of transparency and
accountability mechanism, and thus these power holders can easily sway policies leaning to their
interests (Makki, 2021). From the government’s perspective, such an absence of a clear hierarchy of
authority has enabled the governmental institutions to develop and lead particular programmes on
climate change fitted to interest of each their own (Resosudarmo et al., 2013).
— Higher tax on coal supplier
The higher tax on coal suppliers has been regulated on Governmental Regulation 15/2022 to change
the coal mining contract to be a coal mining licence. In this instrument, the non-tax national
income tariff from the coal sector is progressively calculated based on coal reference price. This
regulation should ensure higher non-tax national income, particularly when the coal sector has a
6.6% growth rate in 2021, exceeding overall GDP growth rate9.
— Limitations on coal export
During January 2022, there was a coal export ban in Indonesia. This ban is effective since the
domestic market obligation that accounts for 5.1 million tonne has not been fulfilled by coal
companies until December 2021, as they only provide 35 thousand tonne10. This national electricity
emergency seems to be not seriously responded to by the coal companies, as they were still
exporting coal to other countries. However, the coal export ban has been lifted in February 2022 for
several conditions: if the companies have fulfilled 100% of their DMO in 2021; if they want to pay the
compensation fee for the shortfall in fulfilling the DMO in 2021; or if they did not have DMO in 2021 11.

8 Interviewed with Respondent G, 2022.
9 https://ekonomi.bisnis.com/read/20220415/44/1523341/rezim-kontrak-berakhir-pemerintah-terbitkan-aturan-baru-perpajakan-dan-pnbp-sektor-ba-
tu-bara (in Bahasa Indonesia).
10 https://katadata.co.id/happyfajrian/berita/61fa3817e9b15/esdm-ungkap-alasan-di-balik-kebijakan-larangan-ekspor-batu-bara (in Bahasa Indonesia)
11 https://ekonomi.bisnis.com/read/20220201/44/1495531/ekspor-batu-bara-kembali-dibuka-tapi-tidak-untuk-perusahaan-ini (in Bahasa Indonesia).

d. Direct consumer incentives for renewables utilisation
— Subsidised electricity price from PLN
Energy Act 2007 and Electricity Act 2009 has mandated the government to subsidise the citizens
who have low affordability. However, there have been several changes in subsidy mechanisms,
particularly in electricity. In 2010 and 2013, there was an increase in electricity cost, where all 38
customer classifications received subsidies from the government12. While currently the electricity
cost is around Rp 1,400-1,500/kWh (USD 0.096 - 0.10/kWh), the government will try to specify the
right subsidy recipients, particularly the households connected to 450 and 900 VA apparent power
grid, so they can only pay for Rp 400 - 600/kWh (USD 0.027 - 0.041/kWh).
— Simplified procedure for installing home solar PV
As stipulated in Ministerial Regulation of EMR 49/2018, not all PLN customers can install the solar
PV panels, as it is limited only to households, governmental offices, and civil society organisations.
The power capacity for solar rooftop panels is limited to 90% from connected apparent power
from PLN. The power capacity is set through a hybrid total power inverter. The customer can then
apply to a local office of PLN for the EX-IM electricity metre designed specifically for on-grid solar
panels. They also have to apply for the change of prepaid electricity to postpaid one.
5.1.3 Evaluation result
In this section, the mandatory and voluntary instruments are elaborated based on the evaluation sub-
criteria to compare between instruments.
a. Direct effect on the renewable energy share increase in the energy mix
In this sub criterion, all mandatory instruments were assessed to be able to directly increase the
renewable energy share in the Indonesian energy mix by 2030. Firstly, the NRE Act has the fundamental
potential in doing so, since the Act will provide legal certainty for NRE development and utilisation,
strengthening NRE governance and institutions, creating a nurturing investment climate for NRE
investors and optimising NRE resources in supporting industrial and economic development13. Next,
the feed-in tariff will provide a competitive advantage of RE over fossil fuel in the energy sector,
arguably due to the fact that the policy is the effective incentive for IPPs (Simanjuntak, 2021; Lu et al
2020). Another study also signifies that feed-in tariff policy positively influences and correlates with
the renewable energy utilisation growth (Kersey et al., 2021). Next, the enabling of carbon market
in Indonesia will arguably increase the cost of fossil energy i.e. coal which is currently the cheapest
source of energy for power generation, thus the price of NRE will be competitive and thus increase
the development of NRE14. The carbon market is therefore important in leading the energy sector by
12 h ttps://money.kompas.com/read/2022/01/24/094806026/subsidi-listrik-dari-pemerintah-dulu-semua-dapat-kini-makin-terbatas?page=all (in
Bahasa Indonesia).
13 https://www.den.go.id/index.php/dinamispage/index/1118-den-sosialisasikan-rancangan-undangundang-energi-baru-terbarukan.html (in Bahasa
Indonesia).
14 https://ebtke.esdm.go.id/post/2021/04/09/2838/forum.kehumasan.dewan.energi.nasional.menuju.bauran.energi.nasional.tahun.2025 (in Bahasa
Indonesia).

incentivising those who develop clean energy and disincentivising those who develop energy from
fossil fuels, particularly in the condition where Indonesia is facing energy trilemma15.
For the voluntary instruments, however, our assessment is mixed. Several voluntary instruments
could possibly improve the RE share in the energy mix, such as developing CCUS technologies while
at the same time implementing higher coal tax. While NRE is motivated by mandatory instruments
aforementioned, both incentive and disincentive in the coal market could slow down the utilisation of
fossil fuels, particularly coal, and reduce the GHGs emission. CCUS technologies can be developed as a
complementary to RE development, as a logical reason for the GoI to solve energy trilemma. Following
this incentive, higher coal tax is an effective way to reflect coal‘s negative impacts, allowing the
government to compensate for some of the costs of pollution and increasing coal prices, which would
encourage consumers and investors to shift to cleaner alternatives. From consumers‘ perspective,
incentivising the solar PV installation by reducing the time during applying for special electricity-metre
to PLN could also capture a large share of the potential new customers.
However, such a practical approach might be hindered by the political economy dimension of strategic
energy policy making in Indonesia. Our assessment of other voluntary instruments shows that
untangling the complexity inherent in national energy policy making is still revolving on the presence
of PEPs from the coal sector. Furthermore, another voluntary instrument i.e. limitation of coal export
is not effective in slowing down the coal export towards other countries, referring to the fact that the
coal export prohibition was made in place by MoEMR during January 2022 only to avoid national coal
power plant crisis (Guitarra, 2022). It is highly indicated that PEPs pressure the government since the
discussion is limited, including CMfMIA, MoEMR, PLN, representatives from coal companies, and other
related parties (Muhammad, 2022).
These findings lead to our next assessments where our proposed voluntary instruments would possibly
give the indirect effects to improve the RE share in the energy mix. While invigorating the DEN’s
capacity in energy policy making seems crucial, it will not necessarily result in the direct effect of the
NRE share increase of the energy mix. This option is considered not contributing to solving the nation’s
energy trilemma. The policy window nearby, that is the discourse of KEN updating, is perceived to not
set a more ambitious target for RE share16. On the other hand, the NDC target itself is considered too
ambitious to achieve, particularly by the private sector17 18.
The localisation of RE technologies and improving its TKDN as proposed voluntary instruments also
will not directly give a substantial role in enhancing the RE share in the energy mix. In Indonesia, the
localisation of RE technologies are considered limited, particularly due to the low level of design
innovation needed for the development of solar PV and micro hydro, for example (see Schmidt
and Huenteler, 2016). Although the solar PV industries are growing in Indonesia, the upstream and
downstream industries are considerably still not well connected, particularly compared to China (Sari
and Dewi, 2021). However, Minister of Maritime and Investment Affairs explained a recent investment
commitment from China and the United Arab Emirates summing up to Rp 1.848 trillion (USD 132 million)
has been made to support the new development of an industrial park in Kalimantan island, which
15 I n this study, rather than using only Gunningham’s (2013) definition, we assert that energy security should be improved to be energy sovereignty,
referring to Indonesia’s unique position of having abundance of energy source potentials, both RE and fossil fuels.
16 Interview with Respondent F, 2022.
17 Interview with Respondent Y1 - B, 2020.
18 Interview with Respondent H, 2022.

will be focused on the nickel battery and the solar PV industries (Mudassir, 2021). Considering the RE
industries value chain (see Figure 11), the investment starts on the manufacturing stage and follows the
next stages.
Figure 11 RE Industries Value Chain
Research, design, and development
Manufacturing
Transport, installation, and commissioning
Operation and maintenance
Renovation, modernization, up-rating, and decommissioning
Source: Adapted from Llera et al., 2013
b. Additional effects on the increase of renewables share in the energy mix
Besides increasing the RE share in the energy mix, we assessed that several mandatory and voluntary
instruments will have additional impacts. First, both the NRE Act and feed-in tariff policy arguably
will result in more positive impacts towards the environment, despite the possibility that nuclear
power plant development in Indonesia, as mentioned in NRE Act, is arguably endangering biodiversity,
particularly amid the current trend of weakening environmental protection instruments (Anindarini et
al, 2021). The agenda of deep decarbonisation, particularly in accordance with the NZE 2060 pathway,
is supported by not only these mandatory instruments, but also by enabling the carbon market in
Indonesia and utilising the CCUS technologies. The Presidential Regulation 98/2021 on the Carbon
Economic Value is expected to mobilise more green financing and investment that have an impact
on reducing GHG emissions19. On the consumers’ side, raising the price of coal for end users would
reduce both carbon emissions and toxic air pollution by encouraging energy efficiency and switching
investment to renewable energy sources20.
19 h
ttp://ppid.menlhk.go.id/berita/siaran-pers/6269/perpres-nilai-ekonomi-karbon-dukung-pencapaian-ndc-indonesia (in Bahasa Indonesia).
20 https://koran.bisnis.com/read/20211013/245/1453626/editorial-pajak-karbon-dan-geliat-ekonomi-hijau (in Bahasa Indonesia).

Other impacts that could be generated by feed-in tariff policy as our proposed mandatory instrument
include the creation of new job opportunities, improving public health, and thus building a modern
economy that allows Indonesia to compete in the global market, especially carbon neutral products.
(IESR et al., 2021). However, we argued that the use of CCUS technologies indeed will decrease carbon
emission, but it still gives a negative impact on the environment .
Other impacts that could be generated by feed-in tariff policy as our proposed mandatory instrument
include the creation of new job opportunities, improving public health, and thus building a modern
economy that allows Indonesia to compete in the global market, especially carbon neutral products.
(IESR et al., 2021). However, we argued that the use of CCUS technologies indeed will decrease carbon
emission, but it still gives a negative impact on the environment21.
c. Competitiveness
As the clean energy transition is being favoured globally, several mandatory and voluntary instruments
were assessed to be able to positively improve the competitiveness of Indonesia’s economy,
particularly improving the economy’s agility towards national or international changes. The regulatory
foundation set by the NRE Act, feed-in tariff policy, and carbon market regulations will be adequate
to start the clean energy transition. The NRE Act can positively accelerate the investment process
by entering a good level of competitiveness against fossil energy, which consequently encourages
a green economy22. Also, the existence of carbon market regulations opens up opportunities for
Indonesia to receive various funding alternatives in climate change management. In particular, the
implementation of carbon pricing, especially at coal power plants, will provide investors with a strong
market for Indonesia‘s commitment to the energy transition23. It will also have a positive impact on NRE
investment, thereby attracting more investors in renewable energy (IESR, 2022).
From the political economy dimension, the policy instrument to equip DEN with more authority, or
rather, securing the institution independence from the PEPs from the coal sector can positively
influence Indonesia’s economic agility, since it provides DEN opportunities to transition to cleaner
energy which is in line with the global agendas, particularly NDC target by 2030. As DEN also regulates
renewables, particularly through updating the targets in KEN and RUEN, it is possible for them to keep
referring to international commitments such as the Paris Agreement and NDC. This has to do with
the discourse of KEN and RUEN update. Other targets such as NZE and coal phase down can also be
incorporated into KEN and RUEN.
The DEN’s authority is also needed to overlook the emerging issue both in enhancing RE share in the
energy mix and phasing down coal. On the one hand, feed-in tariff policy has the potential to increase
electricity tariffs and burden the state budget. In practice, the provision of incentives on the selling
price of electricity generated from NRE plants can increase the basic cost for electricity generation in
the local system which has an impact on increasing electricity subsidies and or increasing electricity
tariffs. PLN is obliged to buy electricity production from private power companies which has the
potential to burden PLN and the state budget because the stated budget is used to cover losses if
PLN buys electricity more expensively from the private sector so that it can trigger electricity tariffs
21 https://iesr.or.id/dekarbonisasi-sistem-energi-perlu-mempertimbangkan-secara-matang-pilihan-teknologi-rendah-karbonnya (in Bahasa Indonesia).

22 https://ebtke.esdm.go.id/post/2021/04/28/2849/topang.green.economy.ruu.ebt.berikan.solusi.percepatan.pengembangan.ebt (in Bahasa Indonesia).
23 http://ppid.menlhk.go.id/berita/siaran-pers/6269/perpres-nilai-ekonomi-karbon-dukung-pencapaian-ndc-indonesia (in Bahasa Indonesia).

to rise (Wahid, 2015). On the other hand, coal phasing down through several voluntary instruments may
be intricate. Higher taxes on coal will have an impact on increasing state budget allocation for PLN
(increase in electricity rates, because the majority of primary energy for PLN power plants still uses
coal, up to 62% (Kementerian Energi dan Sumber Daya Mineral, 2022). This situation is also exemplified
by the limitation on coal exports in the beginning of January 2022 aimed to avoid inflation risk and
energy crisis, and its sudden repeal not long after–highly likely due to pressure from PEPs from the coal
sector. Both of which show the perspective of GoI in using coal due to complicated energy trilemma or
using it as the tool for economic growth from coal export. Next, developing CCUS technologies for coal
as bridging fuel is also still considered a pessimistic scenario, even in developed countries, due to its
high cost for being a nascent technology24 25 26. This low economic viability is still an emerging challenge
since the perceived huge benefits from the CCUS technology to Indonesia’s economy: job creation,
minimising the operational cost for electricity generation, maintaining the existing infrastructure, and
the unfolding innovation system for the bridging fuel industries27.
From the standpoint of the innovation cycle of RE industries, Indonesia is geopolitically situated in two
major areas. On the one hand, Indonesia is also influenced by the regional coal market, particularly the
recent coal war between China and Australia28. This geographical proximity possibly plays an important
role in the echo chamber29, that led to the lifting of the coal export prohibition that was in place in
January 2022. The ensuing discussion in national policy making might consequently be centred on the
possibility of developing CCUS technology to set coal as bridging fuel.
On the other hand, the emerging RE industries in Indonesia are also going hand in hand with other
ASEAN countries, although Singapore is currently leading the electricity futures market in the region
(Philippines Department of Energy, 2020). Solar PV is entering the adoption phase in Indonesia, since
the market is currently growing in SEA regions (see Suroso et al., 2021). In particular, discourse around
the development of nuclear power plants in ASEAN is done with the context of Singapore (Nian et al,
2014), although Indonesia, Malaysia, Thailand, Philippines, and Vietnam have embarked on nuclear
research programmes (Nian, 2017). In Indonesia, the nuclear power plant is indeed planned in RIPIN
2015-2035, but faces rejections from experts, academics, and civil society, mostly due to high risks of
natural disasters and limited technological capacity. Therefore, the effect of geographical proximity in
nuclear energy development is confirmed (see Schmidt and Huenteler, 2016).
From this situation, the localisation of RE technologies and adjusting TKDN for RE industries is
also demanded. Politically, the value chain of renewable industries can be distinguished by RE
manufacturing sector and R&D sector (Schmidt and Huenteler, 2016). The development of RE
industries will be still limited to solar PV (high manufacturing activities – low design innovation) and
electric vehicles (high manufacturing activities – high design innovation), as it is directed by RIPIN
2015-2035 and also the abundance of nickel reserves in Indonesia. However, the investment in the
24 https://medium.com/@stanfordsolutionsproject/why-not-carbon-capture-b8bdd03f977c
25 https://katadata.co.id/happyfajrian/ekonomi-hijau/62679e98883a0/sudah-gagal-di-as-bisakah-teknologi-ccus-diterapkan-di-indonesia?utm_
source=pocket_mylist (in Bahasa Indonesia).
26 https://www.kompas.id/baca/ekonomi/2022/04/26/komersialisasi-penangkapan-dan-penyimpanan-karbon-temui-tantangan?utm_source=po-
cket_mylist (in Bahasa Indonesia).
27 https://www.esdm.go.id/id/berita-unit/direktorat-jenderal-ketenagalistrikan/carbon-capture-utilizaton-and-storage-ccus-sebagai-solusi-pengu-
rangan-emisi (in Bahasa Indonesia)
28 https://www.mining-technology.com/analysis/the-coal-war-why-has-china-turned-its-back-on-australian-coal/
29 “Echo chamber” is used by Respondent Y2 - B in our previous study (Suroso et al., 2021) to represent a situation where the President is exposed to
the specifically framed context of information, particularly to benefit one’s interest.

electric vehicle industry was just made for the total of Rp142 trillion (around USD 9.745 billion) and
claimed to create 20 thousand jobs, spanning from Halmahera in Maluku province to Batang in Central
Java and Cikarang in West Java30 31.
The competitiveness of RE industries in Indonesia, therefore, lies on the opportunity to improve the
value chain of renewable energy industries. From the electricity consumers’ perspective, the social
acceptability of solar PV is quite high. PLN has provided a mechanism for customers to change their
electricity metre into EX-IM one–specifically designed for solar PV users. The application procedure
takes approximately one month to register solar PV before they change their electricity metre32. From
the RE industries, however, the competitiveness can be seen through the number of workforce utilised
in building and expanding the RE industries (see Llera et al. 2013; Schmidt and Huenteler, 2016). As the
solar PV industries require more capacity on fabrication and manufacturing, the workforce needed
can be in a higher amount than that of electric vehicles industries or rather, nuclear power plants. The
workforce of the latter, however, need to have more sophisticated hard skills to make the industries
competitive at national and even international scale. In Indonesia, there is no link between RIPIN 2015-
2035 under MoI to the Technology Development Plan under BPPT33 (see Figure 12), hence it is arguably
difficult to operationalise the high technology RE industry in Indonesia. From Figure 12, the national
ministry that has pertinent function and authorities to handle the development of RE industries are
either MoI and/or MoSOE.
Figure 12 RE Industries Value Chain and Pertinent Stakeholders in Indonesia
Research, design, and development

MoEMR Mol BPPT Private sector
Manufacturing
Mol CfMIA, MoF (for investment) Private sector
Transport, installation, and commissioning

Mol, MoSOE Private sector
Operation and maintenance

renovation, modernization, up-rating, and decommissioning

Source: Llera et al., 2013; Authors’ Analysis, 2022
30 h ttps://ekonomi.bisnis.com/read/20220608/9/1541387/investasi-industri-baterai-kendaraan-listrik-di-batang-tembus-rp142-triliun (in Bahasa

Indonesia).
31 h
ttps://www.inews.id/finance/bisnis/proyek-investasi-industri-baterai-kendaraan-listrik-tersebar-hingga-luar-jawa (in Bahasa Indonesia).
32 https://esdm.jatengprov.go.id/download/materi/Penggunaan-Sistem-PLTSA-oleh-Konsumen-PLN.pdf (in Bahasa Indonesia).
33 I nterview with Respondent A, 2022.

d. Social equity
Regarding the social equity sub-criterion which measures the fairness in renewables development of
the policy instrument between the stakeholders regarding costs and benefit (Shah, 2018), we found
that our proposed policy instruments–both mandatory and voluntary–tend to be not socially equitable.
Only the implementation of the carbon market that distributes the social cost of carbon equitably,
since it sets the carbon price and charges it to the carbon emitters (Fullerton et al., 2005; Lucas,
2017). For the NRE Act, there exist imbalanced roles between central and regional governments in the
NRE utilisation and management. In the NRE Act draft that we analysed, there is no clear reflection
regarding the main job and functions between the central government and local governments in the
management, utilisation, and provision of NRE. Synergy is needed between the central government
and local governments in NRE management. In addition, the inputs and needs of the marginalised
community have not been reflected and raised in the draft of the NRE Act34 35.
For feed-in tariff policy, the scheme would require additional costs that would either be borne by
PLN or by the government through a subsidy from the state budget36. For solar PV, there are several
mitigation measures reflected in the additional cost to prevent infrastructure violation in integrating
solar PV with on-grid electricity (see Table 7). Some argue that these mitigation measures can be borne
by PLN or rather, the electricity consumers (Horowitz et al., 2013), particularly due to the lessening
electricity quality once the on-grid solar PV is widely utilised. Rather than achieving economies of
scale, the additional cost of mitigation measures are not equitably distributed if the state budget
allocates subsidy for this cost. Several examples have provided the scheme where it should be the sole
responsibility to the ones who install the on-grid solar PV37 38.
34 h
ttps://iesr.or.id/kelompok-perempuan-dan-kelompok-petani-mengenai-ruu-ebt-bukan-energi-baru-terbarukan-tapi-energi-bersih-terbarukan
(in Bahasa Indonesia).
35 Anindarini et al, 2021.
36 https://www.cnnindonesia.com/ekonomi/20210809194354-90-678437/pengamat-ungkap-pr-panjang-di-ruu-ebt/2 (in Bahasa Indonesia).
37 https://news.energysage.com/net-metering-3-0/
38 https://www.canarymedia.com/the-fight-over-the-future-of-rooftop-solar-in-california

Table 7 Common mitigation approaches employed to integrate solar PV to on-grid electricity
Violation Mitigation measures Notes
Overvoltage ∙ Advanced inverters Advanced inverters are most commonly

∙ Modification of voltage regulator equipment used for power factor (PF) control.
or increased use of voltage regulators Energy storage is employed much less
(LTC, SVC, capacitor banks) frequently
∙ Modifications to voltage regulator controls
equipment
∙ Energy storage
Undervoltage ∙ Addition of capacitors

∙ Modification of capacitor controls
Voltage stabilisation ∙ PF control via inverter Reconductoring is not a preferred solution
∙ Modification of capacitor bank control due to expense, employed only if necessary
settings
∙ Reconductoring
Overload ∙ Transformer replacement Energy storage may provide a cost-effective

∙ Reconductoring alternative to major transformer or line
∙ Energy Storage replacements, even at current prices
Protection ∙ Installation of additional reclosers, relays,

or fuses or change the location of these
devices on the circuit
∙ Update substation protection schemes
∙ Use of advanced relay controls/functions
Harmonics Harmonic filters
Device movement Change low-frequency trip settings of the PV

inverter to reduce frequent tripping during
frequency drops
Anti-islanding ∙ B uilt-in inverter functionality

∙ D irect Transfer trip
∙ C oordinating tripping of PV systems
Source: Horowitz et al., 2018

From the internal structure of the DEN standpoint, BAU tends to make the DEN member selection
process unfair and thus not socially equitable. As DEN is also designated as the public representatives
in the decision making, the elected members coming from public/academicians tend to suffice the
representativeness in the energy policy making. However, since the DEN members are dominated by
The Ministers and two members of House of Representatives, the representations of civil society and
academicians are thus arguably reduced and negligible. Comprehensive amendment to regulations
related to DEN will open the avenue towards fairness in strategic renewables energy policymaking.
In navigating Indonesia’s energy trilemma, there is still a gap between national and local focuses
on RE utilisation. National stakeholders are still focused on improving energy access (Wibisono et
al, 2022), while coal is considerably cheaper. RE development is not socially equitable, considering
the contestation between the coal dilemma and RE technologies for improving energy access.
While getting popular in urban society, solar PV is still not economically feasible for frontier areas
where people’s purchase power is inadequate. Nevertheless, the enactment of Village Law provides
opportunities for village authorities to generate electricity independently (Wibisono et al, 2022), where
low RE technology i.e. micro hydro power plants tend to be adopted by frontier areas in Indonesia to
generate local electricity.
From the coal perspective, the utilisation of CCUS technologies nowadays is still not socially equitable,
as the CCUS technology is still being developed and the adoption process takes a long time. CCUS
technology can also justify the need for more land to be utilised as new coal exploration and perhaps coal
power plants, whereas now the land conflict has put interest and needs of indigenous communities at
expense. Offshore CCUS projects in Indonesia tend to be developed on former oil rigs39 40, which is still
considered not economically viable by oil and gas companies41 42.
e. Flexibility
This sub-criterion measures the ability of the instrument options to be manipulated to consider cost
and timeframe changes given potential changes such as overachievement of the targets, technology
innovative activities and others (Shah, 2018). Due to the informality practices in Indonesian governance,
we think that our proposed instrument options might be highly likely to be manipulated, particularly in
the next two years the new President will be elected.
While to date the NRE Act has not been enacted, the NRE Act is considered unable to comprehensively
address the issue of renewable energy management because it still considers fossil fuel energy,
includes nuclear as a reserve fuel which is high risk for Indonesia, and still overlaps with many other
regulations. The feed-in tariff is supposed to be regulated in this Act, particularly due to the current
situation where many of previous regulations stipulating this have been repealed (see Figure 9). Many
studies have been conducted with the aim of providing input on the NRE Act. On the other hand,
considering the urgency of this law, DPR held a series of public hearings to listen to the inputs from
various stakeholders. Regarding the carbon market, although there have been several rejections
39 https://www.ruangenergi.com/teknologi-ccus-bagian-penting-pengembangan-lapangan-migas/ (in Bahasa Indonesia).

40 https://www.antaranews.com/berita/2381121/teknologi-ccus-ciptakan-pengembangan-lapangan-migas-rendah-karbon (in Bahasa Indonesia)
41 h
ttps://tender.pengadaan.com/index.php/news/view/16692/Keekonomian-jadi-tantangan-proyek-ccus-hulu-migas-retno-ayuningtyas-retnoayu-
ningtyas-investorcoid- (in Bahasa Indonesia).

from industries, even NGOs such as Greenpeace Indonesia and Wahana Lingkungan Hidup Indonesia
(although the latter concerns about the low carbon tax), the carbon tax still remains synchronised with
other tax mechanisms.
Reinstating the independence of DEN through regulations will also be difficult due to the high political
cost of the current government in doing so and most importantly, a rather short timeframe for
achieving NDC by 2030. As galvanising the role of DEN requires a regulation in the tier of a national
bill/ and the presidential regulation, it requires a wide extent of time frame nor real cost. The internal
structure and member composition of DEN is stipulated in the Energy Law 30/2007, followed by
Presidential Regulation 26/2008 on the Formation of DEN and the Selection Procedure of DEN’s
Member Candidate. Also, as the candidates are selected by the House of Representatives, it means
that they open the possibilities for the informal political transactions that favour the coal sector. The
high political post will also be hard to bear to minimise the PEPs from the coal sector, as nowadays the
member of DPR can be from any background, including coal sector. The influence of private sector
remains substantial in pressuring the government to transition into renewable energy43. Furthermore,
for bureaucrats, particularly ministers, it takes a deeper measure to untangle the complex process set
in place by the Civil Servants Act and prohibit PEPs from the coal sector to be ministers.
Regarding the policy instruments to regulate energy suppliers and consumers, the regulations being
effective nowadays will also be easy to manipulate. The development of battery and electric vehicles
have high flexibility to look for investments, particularly due to those two being the two main focus
of RE industry development as stipulated in RIPIN 2015-2035. Although the national RE technologies
localisation plan, or rather overall technology development plan has not been enacted yet44, the
discussions between the President and several Ministries and SpaceX have been started to induce the
development of electric vehicle industries45. This situation will be a window for both investment and RE
technology localisation plans in the near future.
Other voluntary instruments are also highly flexible to be manipulated, particularly as there are
no technical regulations yet, if not informal practices in policy making. These instruments include
developing CCUS technology, higher coal tax, and prohibition of coal export. The presence of PEPs
in the coal sector then again provides high influence to policy making. However, there is seemingly a
good side in this flexibility, as the application process to register solar PV to PLN can be potentially
shortened in less than one month.
f. Transparency and accountability
This sub-criterion shows whether the implementation and application of the policy instrument is
transparent for all stakeholders, which also indicates whether the accountability is clear or not (Shah,
2018). From our assessment, we found that the issues in transparency and accountability of our
proposed policy instruments can be classified into two categories: overlapping regulations and the
strategic position of a regulation to improve, all of which in relation to the influence of PEPs from the
coal sector. For example, The NRE Act will contain a number of provisions that have been regulated

44 Interview with Respondent A, 2022.
45 h
ttps://nasional.kompas.com/read/2022/05/15/06114561/jokowi-kunjungi-spacex-diskusikan-rencana-kerja-sama-dengan-elon-musk (in Bahasa
Indonesia)

in other laws and regulations such as Energy Act 2007, Electricity Act 2009, and Nuclear Power Act
199746 47. Another immediate example is the disharmony between the feed-in tariff mechanism and
other tax policies. Although feed-in tariff policy has been mentioned in KEN 2014 to catalyse the
investment of RE technologies, the Ministerial Regulation of EMR 4/2020 specifies the mechanism of
electricity selling from IPPs is based on the local electricity generation basic cost. However, the feed-
in tariff mechanism will be effective once the governmental regulation to follow the Tax Regulation
Synchronisation Act 2021 has been enacted.
The carbon market regulations are also criticised as considerably low carbon tax will be an opportunity
for high carbon emitters to do greenwashing. This argument has to do with the opportunity for them
to continue emitting carbon and just somehow pay the government to deal with the following impact.
For comparison, carbon tax in Indonesia is USD 2 per tonne, while the World Bank sets USD 30 to USD
40 per tonne48. To ensure transparency and accountability of carbon tax, there should be several
measures to implement: the management of tax payment scheme, the process of operational policy
making for carbon tax implementation, and integrating the carbon tax to the Monitoring, Reporting,
and Verification (MRV) system (Suryani, 2021). Next, in the lifting of the prohibition of coal export, the
government claimed that the national coal supply crisis, being the sole reason for the coal export ban
in the first place, had been managed. However, some claimed that it had to do with the pressure with
the coal importing countries. Therefore, we assessed that this overall policy making process is far from
transparency and accountability.
In a different policy area, DEN is supposed to advise the executive government in the energy sector.
However, we assess that the current internal structure of DEN will be transparent and accountable
if and only if the mechanism of DEN member selection is changed first. The following process i.e.
the energy policy making including updated KEN and RUEN, will rely on that first step. Higher public
representation will open more opportunities to make the policy making process more accountable.
However, this is also in line with current conditions as the ministry related to climate change tends to
hide/delay the communication on climate change mitigation and adaptation progress.
g. Implementation network capacity
This sub-criterion measures the extent to which responsible actors are able to design, support and
manage the implementation of the policy instrument (Shah, 2018). This capacity is influenced by
trained personnel, technological, infrastructure, credibility and transparency. From our assessment,
our assessment suggests that the overall implementation network capacity to implement our
proposed mandatory and voluntary instruments are still low in the short term, particularly in
achieving NDC by 2030. However, we think that in the long term, or using the NZE target by 2060, the
improvement of implementation network capacity can be accelerated.
While currently DEN consists of experts coming from public, private sector, and the government itself,
it is possible to put RE champions as DEN’s members. Current arrangement of DEN is highly influenced
46 Anindarini, 2021.
47 https://ipc.or.id/masyarakat-sipil-sebut-ruu-ebt-tak-menjawab-persoalan-utama-energi-terbarukan/ (in Bahasa Indonesia).
48 https://katadata.co.id/sortatobing/indepth/618cded6c0b7b/aturan-nilai-ekonomi-karbon-mampukah-turunkan-emisi-gas-rumah-kaca (in Bahasa
Indonesia).

by the position of ex-officio position of Minister of EMR as the head of DEN, where it is arguably
possible for the Minister to bypass a proposed regulation regarding energy. There are also DEN
members having political party affiliations and favouring coal over RE49. However, as there are many
informal practices in the current energy regime, there might be resistance from the coal sector’s PEPs
that will induce many lobbying and political transactions that are not transparent and accountable. The
President also is considered to have an echo chamber where the most influential PEPs can drive the
policy discourse to lean also to the coal sector50.
From the legislative government side, to be a member of The Energy Commission in DPR does not
necessarily need to be a trained personnel and/or having an expertise in the energy sector. The
distribution of DPR members to Commissions is rather based on the composition of the party faction51,
although there might be inner party discussion about who should be on which Commission. This
situation is prone to political lobbying that can be dominated by DPR members leaning to the coal
sector.
Although legislative and executive government is different, we assess that the issue here is political
bargaining vis-a-vis political commitment to reform bureaucracy towards leaning to RE, particularly
in achieving NDC by 2030. Currently, political bargaining on a strategic level tends to take a long time,
before another process starts to make the decision operational. However, a major reform i.e. revising
the Civil Servants Act 2014 to clearly separate bureaucracy and partisanship52 needs not only political
will, but also a strong political commitment53. A similar overhaul needs to be done to prohibit the
double positions that are often present in state-owned enterprises. It is indicated that 62 members of
the board of directors in state-owned enterprises are also commissioners in private companies54. The
prohibition of this double position will motivate a more competitive business environment in Indonesia.
From the perspective of energy policy making, prioritising what to do is done more in a pragmatic
way. On the one hand, The NRE Act is a regulation initiated by DPR, where DPR continues to conduct
discussions on the NRE Act. MoEMR as the leading institution is also actively studying and supporting
the preparation of the NRE Act through internal discussions. However, it is not adequate since the NRE
has not been enacted until now.
The MoF is currently also synchronising the tax regulations, including carbon tax, through a
governmental regulation. The carbon tax itself is planned to be effective in July 2022. To support the
carbon market, MoEMR is also preparing a procedure to cap the emission from coal power plants and
another for carbon economic value dedicated to other power plants55. Other climate change measures
are also prepared by the MoEF i.e. linking carbon market with NDC and by the CMfMIA i.e. assigning
Carbon Economic Value Committee to supervise the carbon market implementation. Regarding the
management of environment fund, apart from BPDLH whose functions include channelling finance

50 Interview with Respondent Y2 - B, 2021.
51 www.dpr.go.id/akd/komisi (in Bahasa Indonesia).
52 https://www.jawapos.com/nasional/politik/29/06/2021/agar-birokrasi-tak-partisan-pakar-lipi-desak-revisi-uu-asn/ (in Bahasa Indonesia).
53 I nterview with Respondent G, 2022.
54 https://money.kompas.com/read/2021/03/22/210400326/kppu-minta-erick-thohir-cabut-aturan-komisaris-bumn-bisa-rangkap-jabatan?page=all
(in Bahasa Indonesia).
55 h
ttps://www.kemenkeu.go.id/publikasi/berita/terapkan-pajak-karbon-1-juli-2022-pemerintah-siapkan-aturan-teknis-pelaksanaan/ (in Bahasa
Indonesia).

towards green projects, the financial flow i.e. green sukuk as green bond has also been managed by the
commercial bank56.
Nevertheless, as feed-in tariff policy is highly influencing RE financing and investment, the subsidy
in fossil fuel sector seems to be counterproductive57. This situation is also exacerbated by the lifting
of the coal export ban, where there are indications that such action is motivated by economic gain.
In short, we see the inconsistency in practical policies and regulation related to RE in the context of
climate change, while strategic decision making tends to take a long time. Hence, it is safe to assume
that the GoI is not giving adequate political commitment and mobilise implementation network
capacity to RE development.
h. Administrative feasibility
Administrative feasibility measures the total work exerted by the government‘s implementation
network and the enforcement of the policy instrument during the implementation process (Shah,
2018). From our analysis, we found that there are three main issues in administrative feasibility of our
proposed policy instruments.
The first one is the inevitable need for an integrated regulatory framework to support RE development.
The implementation of the NRE Act still requires support from both the executive and legislative
government to strengthen regulations and policies related to NRE development including the
importance of coordination between related ministries58. Furthermore, for feed-in tariff policy, fiscal
policy and other related policies need to be reformed, as the changing policy trajectory of feed-in
tariff policy has put hurdles to RE investment (Ministry of Finance, 2015). Similar approach is also
needed in enabling the carbon market, as fiscal policy and budgeting policy needs to be reoriented to
the carbon market, hence they will support the low carbon development. For both the RE technology
localisation and the CCUS technology development, a synergy between BPPT and MoI in terms of
National Industry Master Plan is needed, as both technologies are advanced. Current RIPIN 2015-2035
is not backed up by the National Technology Development Roadmap59 as the latter is not made yet.
Meanwhile, the localisation needs to specify the RE sectors–which technologies for which sector,
thus the prioritisation can be made. However, as many CCUS technology utilisations are still pilot
projects60 61, other policy measures need to be prepared as BAU is way cheaper than adopting a nascent
technology62 63. From consumers’ perspective, the solar PV installation has been made easy as they can
convert their electricity metre by applying to PLN; all which are regulated by technical regulation by
MoEMR.
56 Interview with Respondent Y1 - C, 2020.

57 http://green.ui.ac.id/permasalahan-investasi-energi-baru-terbarukan-di-indonesia-yang-masih-terabaikan/ (in Bahasa Indonesia).
58 https://www.dpr.go.id/berita/detail/id/36404/t/Perlu+Penguatan+Aspek+Regulasi+untuk+EBT (in Bahasa Indonesia).
59 Interview with Respondent A, 2022.
60 https://migas.esdm.go.id/post/read/teknologi-ccs-ccus-tingkatkan-produksi-migas-dan-kurangi-emisi-grk (in Bahasa Indonesia).
61 https://www.cnbcindonesia.com/news/20220221092326-4-316881/tekan-emisi-karbon-kerjamasa-ccus-di-lapangan-migas-dibuka (in Bahasa
Indonesia).
62 https://katadata.co.id/happyfajrian/berita/61b857f94cbe0/teknologi-penangkapan-karbon-sangat-mahal-pln-seharga-pltu-baru (in Bahasa
Indonesia).
63 https://www.idxchannel.com/economics/kurangi-emisi-ini-tiga-skema-kerja-sama-carbon-capture-yang-diterapkan-pemerintah (in Bahasa
Indonesia).

The second issue is the policy trajectory of certain aspects needs to be more coherent and convergent.
This issue mainly revolves around the galvanisation of DEN and minimisation of PEPs from the coal
sector. Although by the regulations DEN has more strategic authority, there are times when DEN
has to assist MoEMR in guiding local governments of making RUED. This precedent conflates the
strategic position mandated by the Energy Law 2007, where the Minister of EMR acts as the Head of
DEN. Galvanising DEN requires a strong political commitment from the President and thus the DEN’s
members from the government side. We propose that the Minister of EMR should not be the head of
DEN to avoid the abuse of power i.e. asking DEN to assist provincial/local governments in RUED making
or bypassing the advice from other DEN members64. However, improving the independence of DEN has
a low administrative feasibility due to the large burden to revise regulations about DEN and its policy
trajectory.
Nevertheless, the most imminent issue from administrative feasibility is that political commitment
should dominate political bargaining65. For minimising the role of PEPs from the coal sector in the
government, it needs a literal bureaucratic reform, since Civil Servants Act needs to be updated
to decrease the PEPs and thus hinder their role in policymaking. However, the current situation of
informality practices in governance will also enable the PEPs to advocate against this cause66. The
same commitment is also needed to be present in the implementation of carbon tax and limitation
mechanism of coal export. In short, political commitment should be directed to shorten the policy
making process from strategic to practical level, both in favour of RE if the NDC pledge wants to be
achieved by 2030.
i. Market readiness
This sub-criterion measures the readiness of the market to adapt the required changes caused by
the policy instrument (Shah, 2018). From our assessment, we found that the market is not adequately
ready to implement our proposed policy instruments. While there are opportunities for kickstarting
the transition to NRE as many fossil fuels companies are pivoting into NRE as a new direction, several
threats also emerge. A number of big issuers in the energy and non-energy sectors have started to
enter the new renewable energy business segment, such as Medco, PT Pool Advista Indonesia Tbk,
PT Indika Energy Tbk, PT Bukit Asam Tbk, Adaro Energy Indonesia, TBS Energi Utama, and United
Tractors. However, from their perspective, the community‘s lack of knowledge about NRE projects is
a challenge for NRE development. This situation intensifies as the absence of feed-in tariff policy also
contributes to the less bankability of RE projects.
On top of that, there is seemingly another form of resistance from the coal sector. This situation
manifests also in the strategic energy policy making. Through Energy Law 2007, the authority of DEN
is indeed strategic yet limited. The development of the RE sector also needs ICF, where currently DEN
has still limited authority to monitor and improve the current situation. However, the energy market
(both coal and RE producer and consumers) is strategically influenced by the rearrangement of DEN
and its authority.

65 Interview with Respondent G, 2022.

The political lobbying done by PEPs seemingly makes the market lean on coal. On the one hand, strong
resistance from the coal sector, arguably amplified by PEPs, also occurs in the discourse of carbon
tax and coal export limitation. This situation seemingly worsens by weak law enforcement67 over coal
mining operations that will be facilitated by the presence of PEPs in the ownership and leadership of coal
companies. On the other hand, developing CCUS technology is still too costly since in Indonesia it is still
a pilot project and has not reached economical viability. Using CCUS technology will make the electricity
generation cost increase to 91% (Firlina, 2016). Thus, BAU is considerably cheaper in the coal sector.
From a RE technology standpoint, advanced technology, both in RE or fossil fuels utilisation needs
to be accelerated to support NDC achievement by 2030. The market readiness in localising RE
technologies depends on the technical regulations, particularly in the case of solar PV installation. For
RE manufacturing industries, the TKDN standards set by Kemenperin are perceived by the industries as
challenging, as it makes the solar PV modules to be more costly and so will electricity generation cost68.
For solar PV, however, the standard used for the product is only national standard or SNI, thus it is easier
to make a RE project economically feasible to do.
From a consumer perspective, the solar PV installation for homes has been supported by both the
Ministerial Regulation of EMR 49/2018 and the Ministerial Regulation of EMR 13/2019, where it directs
PLN about the installation, particularly the conversion of EX-IM electricity metre. APAMSI has also
encouraged the solar PV companies to reach the market actively69.
j. Sustainability
The sustainability sub-criterion Indicates whether the expected changes from policy instruments last
or not (Shah, 2018). From our assessment, we found that political commitment is an important factor in
ensuring the sustainability of our proposed mandatory and voluntary instruments. While phasing down
coal until 2060 to reach NZE and the use of nuclear power plants will be mentioned in The NRE Act,
actually the options will affect the environment negatively and increase emissions in the energy sector
and hinder the portion of NRE in the energy mix70. The political commitment for NRE is also needed to
accelerate the enactment of feed-in tariff policy that hopefully will attract the investors. On top of that,
the lasting effect of the carbon market will be sustained if the carbon tax is adjusted equitably i.e. high
carbon tax for big carbon emitters71.
We also found that the nearing-end presidential term will also influence the sustainability of our
proposed policy instruments. In the strategic energy policy making, galvanising DEN through the
overhaul of regulations will be sustainable if and only if the bureaucracy follows the designated
their main duties and functions. Currently, there are also supporting regulations, apart from similar
understanding about the current climate crisis and the RE potentials. While the changing landscape
of Indonesian energy sector towards favouring renewables will be an opportunity yet to be reaped
by DEN by improvement of the institution’s independence, the political cost is considerably high to

68 Interview with Respondent E, 2022.
69 https://www.esdm.go.id/id/berita-unit/direktorat-jenderal-ebtke/apamsi-tawarkan-solusi-pemasangan-plts-atap-konsumen-ritel (in Bahasa
Indonesia).
70 https://iesr.or.id/group-women-and-farmer-group-on-ruu-ebt-not-new-renewable-energy-but-clean-renewable-energy
71 https://katadata.co.id/sortatobing/indepth/618cded6c0b7b/aturan-nilai-ekonomi-karbon-mampukah-turunkan-emisi-gas-rumah-kaca (in Bahasa
Indonesia).

ensure this process happens before presidential election in 2024. The similar precaution also applies
to the localisation of RE technologies, as the synchronisation between RIPIN 2015-2035 and National
Technology Development Master Plan needs to be done in conjunction with the global efforts for clean
energy transition. The opportunity of ICF and private sector pivoting to RE should be leveraged to
support a clean energy transition.
The presidential transition in 2024 will also make our proposed voluntary instruments seemingly have no
lasting effects. This situation is influenced by both the echo chamber around the President that affects
the problem framing in the energy transition72 and the authority of the Minister of CMfMIA and PEPs from
the coal sector. The Minister of CMfMIA’s power is also a challenge as the recent repeal of coal export ban
is declared by them.
The development of CCUS is rather too costly in reference to NDC 2030, and perhaps to NZE 2060
compared to NRE development73. In addition, a higher carbon tax still requires a high political cost,
although once a higher tax on coal suppliers is consistently implemented, it will phase down coal
production and reduce the volume of coal exports74.
5.1.4 Summary of evaluation results
From our evaluation, we found that indeed several policy instruments will provide a solid pathway to
support the development of RE as much cleaner energy, particularly in reference to NDC 2030 and NZE
2060 (see Table 8). We put ‘+’ sign to indicate whether a policy instrument performs well in a sub-criterion
and ‘-’ sign if otherwise (see Table 4 for further elaborations on each criterion). We left the cell blank if
the data was not enough to justify our assessment. From all of the sub-criteria, only competitiveness
and flexibility of policy instruments that could be used to assess all proposed policy instruments. When
looking at the policy instruments, only all of the mandatory instruments and limitations on coal export
could be evaluated against all sub-criteria. However, neglecting additional effect on the increase of RE
share in the energy mix as a secondary sub-criterion, galvanising the role of DEN in Indonesian energy
policy making could also be considered wholly evaluated.

73 https://iesr.or.id/ruu-ebet-tidak-efektif-mendukung-transisi-energi-di-indonesia (in Bahasa Indonesia).
74 https://www.walhi.or.id/larangan-ekspor-batubara-bukan-disebabkan-krisis-energi-namun-krisis-ketergantungan-bahan-bakar-fosil (in Bahasa
Indonesia).

Table 8 Scorecard of energy policy evaluation analysis result
Evaluation criteria Mandatory Instruments Voluntary Instruments
Main criteria Sub criteria NRE Act Incen- Enabling Galva- RE and bridging fuel Coal supplier disincentive Direct consumer
tivising the nising supplier incentive incentives for rene-
RE IPPs carbon the role wables utilisation
through market of DEN
Feed- in Indo- in the
in-tariff nesia energy
policy policy
making
Provi- Locali- Deve- Mini- Higher Limit- Subsi- Sim-

ding sation loping mising tax on ations dised plified
legal on RE CCUS Politi- coal on coal elect- proce-
basis techno- techno- cally- supplier export ricity dure for
for DEN logies logies Exposed price instal-
to lead Persons from ling
the in coal PLN home
energy sector solar
policy- PV
making
Increase of rene- Direct effect on the

wables share in the increase of renewables
energy mix and en- share in the energy + + + — — + + + + +
vironmental effects mix
Additional effects on
on the increase of
renewables share in + + + — + +
the energy mix
Political and social Competitiveness

acceptability + + + + + + + — — — +
Social equity
— — + + — — + + + +
Flexibility
+ + + + + + + + + + +
Transparency and
accountability — — — + —
Feasibility of imple- Implementation

mentation network capacity — — + — — — — —
Administrative
feasibility — — — — — — — — — +
Market readiness
+ — — — — — — — —
Sustainability
— — + — + + — — —
Source: Authors’ analysis, 2022

Regarding the scorecard, our evaluation of proposed policy instruments shows different performance
against evaluation criteria. For the increase of renewable energy share in the energy mix, all policy
instruments except galvanising the role of DEN and providing supports necessary for RE technology
localisation will possibly give direct effects to the increase of renewable energy share. However,
we consider that the direct effect of developing CCUS technologies is counterproductive towards
the increase of renewable energy as it backs up the argument to extend the use of coal. We could
not provide assessment to the performance to the subsidised electricity price from PLN due to
the networked electricity from PLN is mainly generated from coal power plant thus more elaborate
data collection is necessary to further this assessment. For the competitiveness criterion, all policy
instruments, except the disincentives towards coal sector, show possibly high national economic
agility to react to international or national changes. While the climate crisis has been globally
acknowledged, the long established fossil fuel industry in Indonesia, including coal sector, still shows
resistance in pivoting or even changing direction into slightly leaning towards RE.
For the social equity criterion, although the NRE Act and feed-in tariff policy encourage RE sector,
more operational regulation is needed to ensure that the maintenance cost of electricity infrastructure
is equitably shared towards all consumers. This includes particularly the PLN consumers that also
use the solar PV, for example, for the risks of electricity network infrastructure getting depleted
faster. The localisation of technology is also needed here, where the R&D capacity should be
planned by the government and the companies whose financial capacity is adequate. From this the
innovation diffusion can occur where smaller companies can gain the technological transfer. From
the consumer perspective, the RE is also segmented, where solar PV is accessible for those who can
afford it, particularly in urban area. In frontier area, micro hydro power plant is among the cheapest RE
technology that can improve their access towards electricity. Other than these, all policy instruments
perform well in this criterion.
For the flexibility criterion, we assessed that all policy instruments are easily manipulate–either to be
more efficient in term of operation or rather, to be changed completely and the overall progress goes
back several steps. This situation owes to the informality in the Indonesian governance that allow the
practices to be perpetuated. Furthermore, in the transparency and accountability criterion, only five
policy instruments that can be evaluated due to the data availability, where mostly there are loopholes–
either overlapping regulations or the strategic position of a regulation to improve–all of which
manifest in relation to the influence of PEPs from the coal sector. Thus, we think that strong political
commitments towards transition to RE and achieving NDC should manifest.
In the implementation network capacity, there are three policy instruments that cannot be assessed
due to data availability. However, only enabling carbon market remains well performing against this
criterion. This has to do with the efforts to synchronise the tax regulations before enabling the carbon
market instruments. In contrast, all policy instruments do not perform well due to the horizontal and
vertical silos inside the GoI, which in return makes the situation difficult to synergise in achieving NDC.
The total work bore by the government in doing all policy instruments also considerably huge, due to
the similar reasons aforementioned. However, the incentive for PLN consumers for installing solar PV
can easily be done since it is done only by PLN based on the demand situation. For market readiness,
only the NRE Act that could possibly be accepted by the market, as the national growth of RE sector
keeps increasing. While consumer could be directed into RE-based electricity, the resistance from
coal sector will be substantial. This situation is similar to the performance of all policy instruments

against the sustanability criterion, where only three of them, i.e., enabling carbon market, localising RE
technologies, and developing CCUS technology, can be sustainable in long term.
The evaluation results then signify the role of government and private sector, which is displayed in
Table 9 below.
Table 9 The role of government and private sector toward renewable energy development in Indonesia
Main evaluation criteria Sub criteria Government Private Sector
Increase of renewables Direct effect on the increase ∙ Addressing vertical and horizontal silos; ∙ Investing in the RE sector;
share in the energy mix and of renewables share in the ∙ Linking the technology development plan ∙ Diversifying to RE sector (for coal com-
environmental effects energy mix with the renewable energy plan; panies);
∙ More commitments towards RE policy-ma- ∙ Actively contributing to R&D in the RE
king;
∙ Creating an incentive mechanism towards
a nurturing investment climate for NRE
investors, while disincentivising fossil fuel
investors.
Additional effects on the – –

increase of renewables
share in the energy mix
Political and social accep- Competitiveness Committing to international pledge on ∙ Participating in the RE industry develop-
tability climate policies; ment;
∙ Addressing vertical and horizontal silos; ∙ Investing in the RE sector;
∙ Ensuring a stronger policy trajectory ∙ Diversifying to RE sector (for coal
towards just transition; companies);
∙ Eliminating the PEPs from official ∙ Actively contributing to R&D in the RE
positions; sector.
∙ Ensuring transparency and accountabili-
ty in the energy policy-making process.
Social equity ∙ Invigorating DEN’s authority in energy ∙ Participating in the RE industry develop-
policy-making; ment;
∙ Addressing vertical and horizontal silos; ∙ Investing in RE sector;
∙ Ensuring a stronger policy trajectory ∙ Diversifying to RE sector (for coal com-
towards just transition; panies);
∙ Eliminating the PEPs from official posi- ∙ Actively contributing to R&D in RE sector.
tions;
∙ Ensuring transparency and accountability
in the energy policy-making process;
Incentivising RE-based electricity consu-
mers.
Flexibility ∙ Invigorating DEN’s authority in energy ∙ Avoiding having strategic official positions
policy-making; to limit PEPs;
∙ Addressing vertical and horizontal silos; ∙ Participating in the RE industry develop-
∙ Ensuring a stronger policy trajectory ment;
towards just transition; ∙ Investing in the RE sector;
∙ Eliminating the PEPs from official posi- ∙ Diversifying to RE sector (for coal com-
tions; panies).
∙ Incentivising RE-based electricity consu-
mers.

Transparency and accoun- Ensuring transparency and accountability in Avoid having strategic official positions.
tability the energy policy-making process.
Feasibility of implementation Implementation network ∙ More authority on DEN in the energy policy- Supporting the capacity development of
capacity making; official personnel.
∙ Addressing horizontal and vertical silos in
the government;
∙ More training to officials to support NDC-
achieving implementation;
∙ Ensuring transparency and accountability
in the energy policy-making process
Administrative feasibility Clearer authorities and functions for perti- Supporting the capacity development of
nent ministries and/or offices. certain ministries/authorities.
Market readiness ∙ Ensuring a stronger policy trajectory ∙ Avoid having strategic official positions to
towards just transition; limit PEPs;
∙ Incentivising RE-based electricity consu- ∙ Participating in the RE industry develop-
mers; ment; Investing in the RE sector;
∙ Disincentivising the fossil fuel industry. ∙ Diversifying to RE sector (for coal com-
panies);
∙ Actively contributing to R&D of RE and
bridging fuels.
Sustainability ∙ Ensuring a stronger policy trajectory ∙ Avoiding having strategic official positions
towards just transition; to limit PEPs;
∙ Incentivising RE-based electricity consu- ∙ Participating in the RE industry develop-
mers; ment; Investing in the RE sector;
∙ Disincentivising the fossil fuel industry ∙ Diversifying to RE sector (for coal com-
panies);
∙ Actively contributing to R&D of RE and
bridging fuels.
Source: Horowitz et al., 2018
5.2 The Baseline Condition Enabling the Private Sector’s

Involvement in The Indonesian Energy Landscape
To provide context to energy policy evaluation, several baseline conditions where the private sector
have been involved should also be constituted. In this study, three conditions remain substantial in
providing a landscape where the private sector is regulated by and also acts upon.
— Condition 1: That Indonesian climate-energy policy trajectory is converging and favouring RE
In 2021, GoI has updated NDC. While the emission targets for both scenarios remains similar, the main
differences in the newest commitment include the synchronisation of the NDC document with National
Medium-Term Development Plan 2020-2024 and the vision of Indonesia 2045, along with the Long
Term Strategy to adhere to the Paris Agreement75. Other differences will be displayed on Table 10.
75 https://iesr.or.id/simak-6-perbedaan-pada-ndc-indonesia-tahun-2015-dan-ndc-hasil-pemutakhiran-2021 (in Bahasa Indonesia)

Table 10 Differences between the NDC 2016 and NDC 2021
Point NDC 2016 NDC 2021
Synchronisation with national Referring the Nawa Cita concept76 Referring National Medium-Term Development
strategy Plan (RPJMN) 2020-2024 and the vision of
Indonesia 2045*
The GHGs emission projection Energy sector CM2 scenario: 1,271 MtCO 2e Energy sector CM2 scenario: 1,407 MtCO 2e
in BAU scenario FOLU sector CM2 scenario: 64 MtCO 2e FOLU sector CM2 scenario: 68 MtCO 2e
Emission reduction target: Emission reduction target:
• Energy sector CM2 scenario: 398 MtCO 2e • E nergy sector CM2 scenario: 441 MtCO 2e
• FOLU sector CM2 scenario: 650 MtCO 2e • FOLU sector CM2 scenario: 692 MtCO 2e
Long Term Strategy Not available Available, adhering to Paris Agreement

Article 4.19 (including gender equality and job
decency)
Explanation on assumption on Not available Available

BAU scenario and targets
The GoI’s commitment in inter- Not available Available

national conventions
The translation of Katowice Not available Available

Package as the operationa-
lisation procedure of Paris
Agreement
Source: IESR, 2021 77
Beside the update of NDC in 2021, the GoI also declared intention to reach NZE by 2060 in COP2678.
The main goal of this intention is to maintain the green economy growth while at the same time avoid
middle income trap. By this goal, the NZE will also adhere to the NDC and the Indonesia 2045 vision, all
of which also consider the budgeting reallocation after Covid-19 pandemic, no trade-off between NZE
target and green economy growth, and governmental comprehensive and cross-sectoral capacity. The
budget needed to reach NZE is approximated by MoNDP at USD 1 billion from 2021-2060, apart from the
additional cost that will account for 3-5 % of annual GDP79.
From our evaluation, the convergence of energy policy trajectory will happen if strong political
commitment is present. While our assessment of several policy instruments shows that the
influences of PEPs from the coal sector are still present in energy policy making and potentially will
last, the political commitment can be enhanced by improving the capacity and thus heightening the
76 T he Nawa Cita concept covers nine priorities for national development that were introduced by President Joko Widodo at the beginning of his first
term in 2014.
77 https://iesr.or.id/simak-6-perbedaan-pada-ndc-indonesia-tahun-2015-dan-ndc-hasil-pemutakhiran-2021 (in Bahasa Indonesia).
78 https://migas.esdm.go.id/post/read/cop-ke-26-menteri-esdm-sampaikan-komitmen-indonesia-capai-net-zero-emission (in Bahasa Indonesia).
79 https://ekonomi.bisnis.com/read/20211215/9/1478077/upaya-swasta-dukung-indonesia-gapai-net-zero-emission (in Bahasa Indonesia).

feasibility of implementing such policy measures. This improvement can target the implementation
network capacity, administrative feasibility, and flexibility of policy instruments to be manipulated in
a counterproductive way. Thus, such an integrated approach can influence both market readiness in
embracing clean energy transition and sustainability of policy instruments themselves.
— Condition 2: That DEN not only has more authority but also more independence from PEPs from
industry sector
Another condition that relates to Condition 1 is that DEN might be given more authority in leading the
energy policy making process and independence from coal sector’s PEPs. The energy policy trajectory
that is converging by the NDC 2021 and the NZE 2060 needs to be complemented by the policies in a
bottom-up approach.
From our evaluation assessment, providing more authority and emphasising the independence of
DEN will improve the political and social acceptability. This criterion can be elaborated into four sub-
criteria: competitiveness, social equity, flexibility, and transparency and accountability, where all
of which shows supremacy over the other two criteria. The assessment shows also that indeed the
complex energy policy making process does not necessarily result both in the increase of RE share
in the energy mix and the feasibility of implementation. Particularly for the latter, a rigorous effort to
situate and rearrange the policies to be convergent might be hurdled by the political lobbying from the
coal sector, which is exactly why the DEN needs to be free from such influence.
— Condition 3: That BPDLH has adequate capacity to manage and allocate financial resources to
energy transition
As BPDLH was established in 2019, the agency was set to implement the NDC 2016 as the gatekeeper
of the environment and forestry fund management in Indonesia. This function seemingly has been
emphasised by NZE 2060 as the new long term target. As stipulated by Ministerial Regulation of
Finance 124/2020, BPDLH has responsibilities to manage the environmental fund, including climate
fund, that is from both national and international sources, and can allocate it to national and sub-
national governments, citizens, and researchers80.
In the RE sector, BPDLH needs to untangle the overarching problems of RE project’s bankability.
However, several conditions81 to improve the BPDLH’s capacity in doing so include:
• Strong buy-ins from sectoral government interests, which in this case include PLN, MoEMR, and
MoSOE;
• Budget for competent technical and financial staff to evaluate and assess RE project as BPDLH’s
operational expenditure;
• A platform for monitoring and evaluation for project’s pipeline along with its synergy between
current platforms from other ministries, e.g. KRISNA as a budgeting performance evaluation
system in MoNDP and the MRV system from MoEF; and
80 h ttps://www.kemenkeu.go.id/publikasi/berita/bpdlh-akan-kelola-dana-untuk-program-lingkungan-hidup-dan-perubahan-iklim/ (in Bahasa Indo-

nesia).
81 https://fiskal.kemenkeu.go.id/kajian/2021/04/09/120723052679068-optimalisasi-bpdlh-dalam-pengembangan-energi-terbarukan-di-sektor-ke-
tenagalistrikan (in Bahasa Indonesia).

• Capacity improvement and synergy with other financial institutions, such as Jamkrindo (a credit
guarantee company), Askrindo (a credit insurance company), and other special mission vehicles
from MoF82.
Other technical conditions include that a project already has an offtaker, that a project is reaching
financial close, and that a project is given to the developer who has fulfilled obligations. These
conditions remain uppermost to ensure the gatekeeping function of BPDLH in securing and allocating
ICF. However, another opportunity also rises as commercial banks also do research regarding the
changing global pattern that now is leaning towards green economy investment83. However, By
synchronising these efforts, the strong financial support and management towards NDC achievement,
particularly also navigating the Sustainable Finance Roadmap Phase II (2021 - 2025) (OJK, n.d.).
5.3 The private sector’s roles in the Indonesian RE sector

From the literature review and our assessment of proposed policy instruments, we found several roles
in the Indonesian RE landscape that could be fulfilled by the private sector, particularly in accordance
with the NDC achievement by 2030 and NZE targets in 2060.
— Policy entrepreneur
From Kingdon’s multiple streams approach (Kingdon, 1995), the presence of policy entrepreneurs
will emerge around the rise of policy opportunity windows. The discernible qualities of policy
entrepreneurs include their persistence; their negotiation skills; and their ability to be present,
listened to, and recognised by either technical expertise, leadership, or strategic position as
policymakers. As they possess entrepreneurial skills, certain moments will be seized by them to
further their ideas and take action upon them.
From our analysis, the private sector coming from coal or RE background can be policy entrepreneurs,
although in the Indonesian case, the previous seems to be more influential. This situation may be
resulted from the official coal establishment that has been operating for more than five decades,
compared to the RE policy making champions that seize the opportunity windows from the recent
global climate commitments i.e. NDC. Several bureaucratic positions have been strategically filled
by PEPs from the coal sector, which resulted in an echo chamber that navigates the Indonesian
energy trilemma to lean on the discourse of coal as a bridging fuel, considering the coal abundance
in the nation. From this, RE is considered to fulfil the gap where frontier areas are still disconnected
from PLN’s electricity grid (Wibisono et al., 2022). Such narratives need to be moderated either by
the presence of PEPs from the RE sector, or rather, by limiting the influence of PEPs from the coal
sector. While the government could mobilise a reform of pertinent regulations i.e. Civil Servants Act
and/or stricter policies to prohibit double directorial positions in state-owned enterprises, political
commitment in favour of NDC achievement by 2030 needs to outweigh the short-term economic gains.
82 https://www.idnfinancials.com/news/34084/government-inject-jamkrindo-askrindo
83 Interview with Respondent Y1 - C, 2020.

Further illustration of policy entrepreneurs in the Indonesian energy sector will be elaborated in
Section 5.5.
— Advocate
Apart from being a policy entrepreneur, the private sector can also advocate for their causes through
think tanks or RE company associations. This network can successfully raise the important discourses
that should be responded to by the government. For example, The Indonesian Solar Energy Association
(AESI) consider the TKDN as a challenge in improving the economic viability of solar PV projects84.
As many of the AESI members also work on think tanks such as Institute for Essential Services
Reform (IESR), the advocacy is often based on thorough studies (see IESR, 2021b). The association is
consistently approaching the government through DEN to discuss the possibility to relax TKDN policy,
although up to the report writing, no follow up on this policy was done by the government.
— Financier
The development of financial instruments to support the RE sector has also allowed Indonesia to
mobilise domestic and international funds. GoI has introduced green sukuk as a Sharia laws-compliant
green bond in 2018 to support low carbon developments (May and von Lüpke, 2020). During 2018-
2019, green sukuk accounts for a total of US$2 billion. However, to attract financiers in Indonesia,
the public-private partnership needs to be carefully designed since their coalition differs from one
country to another. For example, wind power plants in China are government-centred, as the state-
owned investors collaborate with state-owned banks and sub-national governments (Zhang, 2020).
Another immediate example is the presence of National Development Banks (NDBs), which also play
an important role in financing the RE projects. KfW from Germany supports access to finance for a
broad range of market participants, including households, private companies, municipalities, and large
corporations under FiT policies. The institutional stability provides the opportunities for these KfW and
the NDBs from China and Indiato have consistently funded renewables for decades (Zhang, 2022). This
institutional stability arguably allows for these NDBs to test business models into different political
situations, policy context, and markets (ibid.).
— Research and development contributor
Although the GoI has BPPT as the agency to think on the research and development side, a study
found that different levels of roadmaps will comprise different directions (Amer & Daim, 2010). The
national roadmap of RE development tends to focus on the energy trilemma of the nation and how
energy policy should be formulated. This roadmap also covers the growth direction for industry
and also as important, a framework for public-private partnerships. In Indonesia, KEN, RUEN, and
RIPIN aggregately exemplify the national roadmap of RE development. However, more technical
regulations are needed as specific frameworks for public-private partnerships are not directed in
these strategic policies. In this area, Presidential Regulation 38/2015 and Ministerial Regulation of
National Development Planning 2/2020 are among the strategic policies for public-private partnership.
However, the national human development master plan should be developed altogether, as several RE
technologies require higher technological adeptability (Mohd Chachuli et al. 2021).
84 Interview with Respondent E, 2022.

The industrial/sectoral roadmaps, nonetheless, are used to identify vision, common needs and
evaluate barriers, constraints and risks faced by the industry from technical, political, and commercial
aspects (ibid.). This type of roadmap can be developed by either industries who collectively participate
in the industry associations or the collaboration between industry and government. The contents
of this type of roadmap include a detailed analysis of industry and emphasise on relevant emerging
technologies, market issues, technology development strategy, R&D challenges, commercialisation
obstructions, and industry performance targets. Up to writing of this report, the industrial/sectoral
roadmaps for RE development in general and RE development by energy sources in particular have not
yet been made.
The third type of roadmap is organisational roadmap. The best practice in developing this roadmap
is done by Bonneville Power Administration who invited major actors in RE technology development
in a workshop (ibid.). The workshop provided findings for BPA to rank business drivers, business
challenges, opportunities, targets, promising technologies, technological gaps that hinder deployment
of promising technologies, and prioritised renewable energy-related R&D investments suitable for
the company. In the Indonesian context, RUPTL for the IUPTL holders including PLN and other IPPs
could be also tailored to the development of the RE technologies. This roadmap can also benefit from
the inputs from the Research and Development Centre for Electricity, NRE, and Energy Conservation
Technologies of MoEMR and BPPT.
Apart from the technological deployment roadmaps, the same fraction of attention should also
be directed to the innovation process and diffusion of the RE technologies development. Several
studies have documented the positive impacts of public R&D investments in both different national
settings (Chang et al., 2022; Huang et al., 2012; Margolis and Kammen, 1999; Miremadi et al., 2019;
Mohd Chachuli et al., 2021; Plank and Doblinger, 2018; Qi et al., 2022; Wu et al., 2020; Yu et al. 2016)
and regional one (Grafström et al., 2020; Khezri et al., 2021; Kim and Kim, 2015; Ni et al., 2022; Wang
et al., 2018). Nevertheless, the performance of RE technologies against financial or effort investment
tends to follow an S-shaped curve: slow initial improvement, followed by accelerated improvement,
and diminishing improvement (Schilling and Esmundo, 2008). Several RE technologies i.e. wind and
geothermal have more economical viability than fossil fuels in a short timespan. However, more
spotlights to solar PV investment from the government, weighed down also by the excessive coal
subsidies are counterproductive for other RE technologies since the innovation performance of these
technologies have been already flattening.
From this, selective funding mechanisms that come directly from the government can encourage
the competitiveness of private companies in doing R&D (Plank and Doblinger, 2018; Yu et al., 2016).
The mechanism can emphasise on the applicant’s research capacity and their previous performance.
The mechanism should also provide the progress-based incentives where after the funding agencies
re-assess the R&D in several time spans, they allocate bonus-payments depending on patent citation
data or the assessment of an external jury (Plank and Doblinger, 2018). Furthermore, the patents can
be qualitatively assessed to increase the robustness of evaluation measures. From such a process,
the government’s R&D funding mechanism can allocate the financial resources, both from national
and international sources, efficiently. The efficient allocation of R&D funds is needed particularly to
implement a nurturing R&D culture where the failure is tolerable to some extent and venturing out into
the uncertainty of R&D projects that are technologically, economically, and socially relevant. Another
mechanism that should also be developed is the policy instruments to support the collaboration

between academic and research institutions and the private companies as both support for the
downstreaming research results from the materials and replicability and escalation capacity (Huang et
al., 2012). The policy instruments can be incorporated to the R&D funding mechanism aforementioned.
5.4 Contextualising the evaluation results into

Kingdon’s multiple streams approach
From our evaluation assessment and analysis, the relationship between government and the private
sector is present and should be strengthened in order to achieve NDC by 2030 and transition to NZE
by 2060. However, the imminent policy windows to catalyse the overall efforts need to be carefully
seized. From Figure 13, a nearby policy window will open in 2024 as the presidential election will be held
in that year. Several factors are also building up the situations, particularly the remaining dominance
of coal over RE, financial refocusing due to Covid-19 pandemic and new capital city relocation, and
other measures to mobilise local and international finance to the achievement of climate pledge. Our
evaluation shows that institutional arrangement through policy instruments can be directed to support
the development of RE as clean energy sources. However, a strong political commitment from the
government is the vital component to ensure the implementation runs smoothly.
Figure 13 Multiple streams in Indonesian energy sector towards NDC achievement and NZE 2060
Problem Stream
Presidential election
Problem Stream
In 2024
International financial
mobilisation NDC target
Operationa
NDC 2030
lisation
Political Stream
Political Stream
DEN’s authority PEPs from Transparency &

Echo chamber Coordination Accountability
& independence coal sector
Mechanism
Policy Windows
Policy Stream
Policy Stream
Policy Instruments
State budget reallocation

after Covid- 19 and capital relocation
Source: Authors’ analysis, 2022

5.5 Key takeaways
• Several policy instruments could be developed and categorised whether they are mandatory
or voluntary instruments, and then assessed in the context of energy policy trajectory towards
achieving NDC by 2030 and even longer term strategies.
• Different dimensions and contexts of energy policy should be strategically evaluated before going
deeper into more technical regulation assessment.
• Our proposed policy instruments were assessed as being able to provide a solid pathway to
support the development of RE as much cleaner energy in Indonesia, particularly in reference to
NDC 2030 and NZE 2060.
• Three main conditions remain vital in implementing our proposed policy instruments: the
converging agenda setting towards RE in energy policy making, the independence of DEN from
the coal sector’s influence, and the enhancement of BPDLH as the environmental fund manager in
Indonesia.
• We found that the private sector can substantially contribute to the advancement of the RE sector
by being policy entrepreneurs, advocates, financiers, and/or R&D contributors.
• From Kingdon’s multiple streams approach, a policy window will be open due to several factors,
and thus needs a strong political commitment to focus the efforts towards the achievement of
NDC by 2030 and NZE by 2060.

Chapter six
Conclusion

6. Conclusion
In this section, we will summarise our findings based on literature review and our analysis . We then
highlight our academic contribution to growing literature on the roles of the private sector in the
energy landscape. We close our conclusion by presenting our limitations, both on methodology, overall
results, and SNAPFI project context and suggesting further research directions.
6.1 Summary of findings and practical recommendations

This study explores to what extent the climate-energy policies can enhance the private sector role
in the context of NDC achievement by 2030 and NZE by 2060. We used public policy evaluation
analysis and content analysis to investigate the relationship. Several mandatory and voluntary policy
instruments were developed to assess their impacts on achieving NDC by 2030. Such a measure was
taken since the Indonesian energy landscape has been heavily influenced by the coal sector, where RE
sources need to be escalated to catalyse the climate pledge achievement.
Our evaluation assessment of these policy instruments, however, shows mixed results. While several
policy instruments have been prepared and/or enacted, several instruments indeed are able to
increase the RE shares in the energy mix, as stipulated in both RUEN and NDC. However, the political
and social accessibility and feasibility of implementing such instruments are complex. Informality
practices in Indonesian governance has enabled energy policy making and implementation favouring
the coal sector than RE, particularly in navigating energy trilemma. As RE requires more capital to
be established as dominant in the Indonesian energy regime, the discourse needs to be moderated
and upheld. Hence, the mandatory and voluntary policy instruments can be collectively effective in
cementing a pathway to achieve NDC by 2030 and NZE by 2060.
From this point, three main conditions remain vital in implementing our proposed policy instruments.
The development of RE requires the converging agenda setting in energy policy making. The influence
of PEPs from the coal sector are hindering productive efforts toward a cleaner energy transition.
An integrated approach that combines the advancement of implementation network capacity,
administrative feasibility, and flexibility of policy instruments to be manipulated is needed to influence
both market readiness in embracing clean energy transition and sustainability of policy instruments
themselves. The second condition is the independence of DEN from the coal sector’s influence.
Providing more authority and emphasising the independence of DEN will improve the political and
social acceptability towards the clean energy transition. The third condition is that BPDLH as the
environmental fund manager in Indonesia needs to be enhanced. The current global discourse
that revolves around collective actions to mitigate and adapt to climate change also signifies the
importance of ICF. The capacity to mobilise finance from international sources needs to be equipped
to BPDLH, particularly concerning the challenges in developing new RE projects. Here, other policy
instruments must be developed to improve all these conditions.
We also found that the private sector has an influential role in helping the GoI in achieving NDC by
2030. The emergence of RE technologies in Indonesia has invited companies of all sizes to utilise such
opportunities. In this study, we found that being policy entrepreneur, advocate, financier, and/or R&D

contributor is possible for the private sector. While this study encourages their contribution to the
escalating RE sector in Indonesia, the GoI needs to develop stronger mechanisms to support them.
These mechanisms include the linking National Industry Master Plan (RIPIN) 2015-2035 to the national
technology development roadmap and human resources development master plan–where both are still
not made yet and a selective R&D fund allocation mechanism tailored to the geographical context of
the private sector.
As this is the third-year study of SNAPFI project, we also found that Kingdon’s multiple streams
approach (Kingdon, 1995) can be used to assess the emerging factors surrounding the opening of
policy windows. An immediate policy window will be open in 2024, mainly to the presidential election,
and thus needs a strong political commitment to focus the efforts towards the achievement of NDC by
2030 and NZE by 2060.
6.2 Academic contribution to literature

Centred in the political economy dimension of the Indonesian energy landscape, this study has
developed an evaluation framework to assess the policy instruments that are in place, being prepared,
and/or proposed by the evaluator themselves. We also provide the scorecard that documents our
assessment, where it can be incorporated into strategic energy policy making. Our evaluation
assessment should add more structure to previous qualitative energy policy evaluation (Chen, 2011;
Klessmann et al. 2011; Yoon and Sim, 2015), complement the quantitative energy policy evaluation
(Carley, 2009; Lee and Shih, 2010; Zhang et al. 2014), and provide a different standpoint to more
technical assessment that has been growing in the literature (Gatzert and Vogl, 2016; Hu et al., 2021;
Liu et al., 2018; Menegaki, 2018; Wang and Zhan, 2019). This assessment is also adding energy policy
evaluation literature in the context of Indonesia, both quantitatively (Andadari et al. 2014; Hidayatno et
al., 2020; Kraal, 2019; Othman et al., 2009; Sambodo and Novandra, 2019) or qualitatively (Jaelani et al.,
2017; Santika et al., 2020).
In this study, we also specified the possible roles of the private sector, particularly in the RE
development. These roles have added the private sector’s role categorisation in the Indonesian RE
sector (Maulidia et al., 2019). We also contextualise RE value chain theoretical frameworks into the
Indonesian context with its pertinent stakeholders (Llera et al., 2013; Maulidia et al., 2019).
As Kingdon’s multiple streams approach (Kingdon, 1995) is used to illustrate the policy windows
as opportunities yet to be seized, our evaluation assessment also becomes one of structured
operationalisation of this theory.
6.3 Study limitations and further research

While we have successfully conducted the energy policy making analysis in the context of the
Indonesian RE sector and how the private sector should contribute to the achievement of NDC 2030,
several limitations emerge. While the methodological framework in this study owes to a Regulatory
Impact Assessment or RIA (Radaelli, 2004; OECD, 1997; Shah, 2018), however we modified the

assessment only to the evaluation of current energy policy and discourses in Indonesia–not necessarily
include the AHP and cost benefit analysis that should improve the rigour of the study, particularly
that RIA is designed to conflate the pertinent expertise and extensive information to evaluate policies
(Radaelli, 2004). This practice leads to how we assess the policy instruments against all criteria. RIA
itself is designed to see whether the expert judgements indeed converge to certain dimensions of
policy instruments or not through a series of analytical hierarchy processes (AHP). To fill this gap, we
have tried to gather relevant news, interview excerpts, statistics, and all possible data sources to equip
ourselves with the capacity to evaluate. In the end, the lack, or rather, unavailability of data, gives us
hurdles to judge the performance of our proposed policy instruments.
As RIA is also an ex-ante evaluation technique, ex-post evaluation analysis along with mid-term
endline analysis also need to be done to see the impacts of policy instruments implemented by the
government, although it is still a long way to go to do endline analysis. The mid-term analysis here can
be combined with the analysis of how policy windows manifest (Kingdon et al, 1984).
From our interviews, our respondents are limited to the government and coal company
representatives, while only one respondent comes from the RE sector. To expand the extent of
representation of the latter, we elaborate on the statements from the previous and use keywords
to gather more information around the private sector roles in the energy sector. While considerably
limited, as this limitation is also noted in previous studies (Shah, 2018), our propositions related to
connecting the private sector roles with the NDC achievement by 2030 remain contextual to the
current situation in Indonesia.
From this point, several directions of further research manifest. More elaborations on the evaluation
criteria should be done to ensure that other policy dimensions are covered. As this study also adapts
the RIA framework, a proper RIA should also be done to also gather the expert judgement from the AHP
stage. This direction will provide a more structured evaluation towards Indonesian energy policies in
accordance with the NDC achievement. The expansion of the study scope that probes the connection
of climate finance policies with the role of private sectors is also suggested, particularly as Indonesia
also already has Sustainable Finance Roadmap Phase II (2021 - 2025) and those in the next phases.
For Kingdon’s multiple streams approach (Kingdon, 1995), a series of policy windows, particularly set
every five years in Indonesia due to the presidential election, can be threaded into a singular line. A
comprehensive illustration of Kingdon’s multiple streams approach can also be performed by referring
to the energy policy trajectory spanning for decades (see Maulidia et al. 2019). Therefore, the impact of
policy instruments related to RE energy could be thoroughly traced and acted upon.

Chapter seven
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Chapter eight
Appendix

8. Appendix
Interview Questions and Discussion Topics
A. Coordinating Ministry of Maritime Affairs and Investment
1. Coal sector governance: the core background
2. Actors involved in the Indonesian coal industry network and coalition
3. Lobbying and negotiation practices in the process of shifting from fossil fuels to renewable energy
4. Policy conditions in Indonesia and their relation to energy policy
5. The effect of global pressures on policy-making in the energy sector
6. Policy conditioning in the policy-making process in Indonesia
B. Geothermal Power Plant Company
1. Background of geothermal energy development
2. Financing mechanism for geothermal energy project development
3. Future development of geothermal energy in relation to the presidential regulation on carbon

economic value
4. Private developer opinion on renewable energy development in Indonesia
5. Private developer opinion on the Directorate General of Renewable Energy and Energy
Conservation in the development of renewable energy in Indonesia
C. Coal Company
1. Opinion about the NDC targets and other climate commitments from the Government of
Indonesia, and perception on the government’s effort and policy responding to the climate
change and energy sector.
2. Opinion/perception of climate-related policy or political support in Indonesia and its implication

to the enabling environment of energy sector development. To what extent climate policy in the
energy sector has influenced the development of the coal industry, including investment in the
coal sector.
3. Coal company perspective regarding CCS and co-firing technology in coal development.
4. What are the prospects and financing mechanisms for the coal industry in the midst of the lack
of government attractiveness, the shifting of investment in coal companies to renewable energy
industries and the increasingly stringent banking sector in providing loans for upstream coal
industry activities.

5. Possible barriers and opportunities in developing the coal industry, related to the climate-related
policy framework in Indonesia.
D. Asosiasi Energi Surya Indonesia-Indonesian Solar Energy Association (AESI)
1. To what extent climate policy in the energy sector has influenced the development of solar
energy, including investment in the solar energy sector.
2. Opinion or perception of policy or political support for the development of solar energy and the
achievement of the NDC target.
3. In achieving the NDC target, especially from the energy sector, New Renewable Energy (NRE) is
the backbone in reducing emissions in the Indonesian energy sector. How Indonesia‘s climate
change commitments, especially in the energy sector (including global commitments) affect the
development of solar energy? What is the role of AESI in promoting solar PV in the development
of renewable energy to achieve the NDC target?
4. Regarding climate change action, Indonesia received International Climate Finance (ICF). One
of the international funding is the Green Climate Fund (GCF) which is allocated for mitigation
actions in Indonesia. Related to this, how is AESI‘s perspective on the existence of ICF and to
what extent ICF has an effect on AESI‘s plans/strategies in the development of solar energy.
5. Barriers and challenges in adopting new renewable energy policies, especially related to solar
energy.
E. Dewan Energi Nasional- National Energy Council (DEN)
1. The role of DEN in supporting the energy transition towards renewable energy to achieve the NZE
target through the National Energy Policy.
2. Strategy by DEN to accelerate the achievement of the national energy mix target by 2025.
3. Opinion/perception on issues related to the informality in climate governance in the energy

sector from the perspective of DEN
4. Barriers and challenges in achieving the NDC and NZE targets, especially in terms of national
policies and regulations in the energy sector
F. Badan Riset Nasional Indonesia- National Research and Innovation Agency (BRIN)
1. Political perspective on centralised phenomena in Indonesian governance including in the energy

governance
2. Political perspective on the absence of boundaries between politicians and businessmen as

reflected in the number of politicians who hold concurrent positions as commissioners in state-
owned and private companies.
3. Related to the phenomenon of government administration which tends to be centralised, what

is the role of local government in the current political system, how is the tendency of local
governments to respond to global issues, and the extent to which the climate agenda has been
understood by the local government.

G. Medco Energy
1. Opinion about the NDC targets and other climate commitments from the Government of
Indonesia, and perception on the government’s effort and policy responding to the climate
change and energy sector.
2. Opinion/perception of climate-related policy or political support in Indonesia and its implication

to the enabling environment of energy sector development. To what extent climate policy in the
energy sector has influenced the development of the oil and gas industry, including investment
in the oil and gas sector.
3. History of Medco from a drilling company to become one of the leading oil and gas company,
including Medco‘s transition to have a long-term plan in the energy business by developing
the New Renewable Energy (EBT) business which leads to electricity. How is the development
strategy?
4. What are the prospects and financing mechanisms for the oil and gas industry in the midst of
the lack of government attractiveness, the shifting of investment in oil and gas companies to
renewable energy industries and the increasingly stringent banking sector in providing loans for
upstream oil and gas industry activities?
5. Possible barriers and opportunities in developing the oil and gas industry, related to the climate-
related policy framework in Indonesia.
6. Medco‘s involvement in policy making, for example involvement in public consultations, providing
input in drafting regulations/policies related to energy.


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National study September 2022

Climate Change Center, Institut Teknologi Bandung, Indonesia

2 Report of National Study on Energy Governance

Based on a decision of the German Bundestag

3 Report of National Study on Energy Governance

4 Report of National Study on Energy Governance

Table 1 Association of NRE companies in Indonesia

AESI Asosiasi Energi Surya Indonesia-Indonesian Solar Energy Association

5 Report of National Study on Energy Governance

6 Report of National Study on Energy Governance

7 Report of National Study on Energy Governance

8 Report of National Study on Energy Governance

9 Report of National Study on Energy Governance

10 Report of National Study on Energy Governance

11 Report of National Study on Energy Governance

ALL MITIGATION SECTOR

Source: Climate Policy Initiative, 2021

12 Report of National Study on Energy Governance

2.1 The Roles of Private Sector in The Coal Sector

13 Report of National Study on Energy Governance

14 Report of National Study on Energy Governance

Musi Prima Coal 2,01

Source: PLN (2021)

15 Report of National Study on Energy Governance

16 Report of National Study on Energy Governance

17 Report of National Study on Energy Governance

1. Asosiasi Produsen Biofuels Indonesia (Indonesian Biofuel Producers Association)

2. Asosiasi Produsen Bioethanol Indonesia (Indonesian Bioethanol Producers Association)

3. Asosiasi Panas Bumi Indonesia (Indonesian Geothermal Association)

4. Asosiasi Pengusaha Minihidro Indonesia (Indonesian Mini Hydro Entrepreneur Association)

18 Report of National Study on Energy Governance

19 Report of National Study on Energy Governance

20 Report of National Study on Energy Governance

3.1 Data collection

Table 2 List of respondents

Respon- Position/Profession Institutions

B Vice President Geothermal power plant company

C CEO Coal company

D Staff Coal company

E General Secretary AESI

G Political scientist BRIN

H C-level person Medco Energy

Y2 - A Public policy expert

Y2 - B Former Deputy Presidential Chief of Staff Office

Y2 - D Senior New Venture Development Star Energy Development

21 Report of National Study on Energy Governance

22 Report of National Study on Energy Governance

Mandatory/Voluntary Instruments Explanations

NRE Act Still in draft version

Incentivising IPPs in renewables sector (through feed-in-tariff policy)

Enabling the carbon market in Indonesia

Galvanising the role of DEN in the energy policy making

Localisation on RE technologies (battery and TKDN) Incentive for RE suppliers

Developing carbon capture and storage technologies Incentive for RE suppliers

Higher tax on coal supplier Disincentive for coal energy suppliers

Limitations on coal export Disincentive for coal energy suppliers

Subsidised electricity price from PLN

Simplified procedure for installing home solar PV

23 Report of National Study on Energy Governance

1. Memorandum of Understanding (MoU) on the Construction of a Public Electric Vehicle Charging

3 h ttps://migas.esdm.go.id/post/read/cop-ke-26-menteri-esdm-sampaikan-komitmen-indonesia-capai-net-zero-emission (in Bahasa Indonesia).

— Minimising Politically-Exposed Persons in coal sector

7 Interview with Respondent Y2 - A, 2021.