The 26th United Nations Climate Change Conference (COP26) will start in the United Kingdom at the end of this month. It will be a golden opportunity for Indonesia and Japan, which share similar energy challenges, to promote realistic approaches to carbon neutrality.
In Indonesia, disasters such as floods and landslides caused by abnormal weather have become more frequent and severe in recent years. Decarbonization, a response to climate change that causes extreme weather, is an urgent challenge that all countries, including Indonesia, have to address. As it assumes the Group of Twenty (G20) presidency next year, Indonesia is expected to take the lead in moving us toward decarbonization.
In order to achieve carbon neutrality, we need to reform the energy sector, which remains the main source of carbon emissions. In addition to introducing renewable energy, stable supply of energy and economic efficiency need to be considered. Any issues associated with energy transitions should be addressed in accordance with the circumstances of each country. Indonesia is characterized by the fact that its electricity demand is expected to increase with economic growth and that it is an exporter of fossil fuels.
In fact, Indonesia and Japan have similar energy architecture. Both are heavily dependent on fossil fuels as power sources (approximately 80 percent in Japan and 90 percent in Indonesia), have difficulty obtaining electricity from overseas due to our archipelagic geographies and will experience significant impact on people’s daily lives and industrial activities as a result of rising electricity costs. Japan can contribute to Indonesia’s energy transition by utilizing our technology and experience.
It has been two years since the previous COP was held. During this period, the return of the United States to the Paris Agreement has reenergized global discussions on climate change. One after another, countries have announced new emission reduction targets for greenhouse gases and declared carbon neutrality by the middle of this century. In the area of international finance, there has been a rapid movement, especially in the divestment of fossil fuel projects.
In light of the impact that these global decarbonization movements have on the international economy, climate change is a major theme at the G20. Indonesia has set “Recover Together, Recover Stronger” as the theme for next year’s G20, prioritizing green and sustainable economy as well as inclusiveness.
Indonesia has already taken a step toward decarbonization. In July of this year, Indonesia submitted a revised Nationally Determined Contributions and Long-Term Strategy for Low Carbon and Climate Resilience 2050 to the United Nations, expressing its commitment to achieving net-zero emissions by 2060 or sooner. Energy transition is an urgent matter for achieving decarbonization. Indonesia aims to increase the share of renewable energy in its domestic power generation to 23 percent by 2025 (about double the current level). Since energy is the foundation of industry and people’s everyday life, it is vital to achieve this goal while paying attention to stable supply and economic efficiency.
For Japan, Indonesia's energy transition is not “somebody else’s problem”. Indonesia has introduced advanced technologies from Japan for coal- and gas-fired power plants, which have supported the rapidly growing electricity demand, especially in Java, for many years. Over the next year, 1000 MW-class coal- (ultra-super-critical) and gas-fired power plants, such as Cirebon 2, Java 1, Central Java and Tanjung Jati B 5 & 6 will start their operations.
In addition to coal- and gas-fired power plants, financial cooperation and Japanese technology are being used in various projects, such as the Asahan hydroelectric plant as well as the Sarulla and Muara Laboh geothermal power plants in Sumatra. Indonesia and Japan have implemented 43 projects so far under the framework of the Joint Crediting Mechanism (JCM) – a project-based bilateral offset market mechanism that was initiated by the government of Japan – to support Indonesia's decarbonization and power supply.
The question is: How can we promote a realistic and sustainable energy transition while utilizing these major power sources to which Japan has contributed? There is great potential for cooperation between our two countries because we share the same challenges.
Japan believes that it is essential to make realistic energy transitions toward carbon neutrality in Asia that are suitable for the unique circumstances of each country. This would require engaging all kinds of technologies, such as gas utilization, co-firing using biomass, ammonia and so on, as well as carbon capture and storage (CCS)/carbon capture, utilization and storage (CCUS) technology that separates and recovers carbon dioxide.
In May of this year, Japan announced the "Asia Energy Transition Initiative" to support realistic energy transitions in the region. Specifically, this initiative will support the designing of energy transition road maps; promote the “Asia Transition Finance” concept; provide US$10 billion in financing for renewable energy, energy conservation, LNG and other similar projects; support technology development and deployment using the results of research funded by a 2 trillion yen ($17.63 billion) fund; and share knowledge through the "Asia CCUS Network.”
Specific projects are already underway in line with this initiative. For example, plant renovation study by applying biomass co-firing technology at the aging Suralaya coal power plants (Mitsubishi Power) and a study to produce blue ammonia using technology with PT Panca Amara Utama in Sulawesi (Mitsubishi Corporation) are underway. As for CCS/CCUS technology, Pertamina is leading a collaboration with JANUS, JGC Corporation and J-Power to conduct a feasibility study with the Bandung Institute of Technology at the Gundih gas field in Central Java. Similarly, JAPEX is conducting a study on the Sukowati oil field in East Java with the Research and Development Center for Oil and Gas (Lemigas).
In the midst of the global trend toward decarbonization, Indonesia's energy transition efforts will attract significant attention due to its G20 presidency next year. With this in mind, Japan will utilize our diverse and advanced technologies and engage with various ideas from industry, government and academia to cooperate with Indonesia. Japan will continue to work together with Indonesia toward our common goal of carbon neutrality.
Kanasugi Kenji, Ambassador of Japan to Indonesia
(These are his personal views and do not represent the views of the Government of Japan