Major Indonesian energy firms reaffirmed their commitment to decarbonisation at the UN Cop 29 climate summit in Baku, Azerbaijan, but also indicated the challenges they face in achieving targets.
Indonesian state-owned utility PLN is in the process of redesigning its national electricity plan and from now until 2040 needs to add around 102GW of additional capacity, the firm's president director Darmawan Prasodjo said yesterday. Out of this, 75pc is to come from renewable energy, 5GW from nuclear power and 22GW from gas.
But there is a mismatch between the location of large-scale renewable energy resources such as geothermal and hydropower plants, and demand centres, said Darmawan.
Up to 70,000km of transmission lines have to be built to move energy from those resources to the centre of demand, said Darmawan. Additionally, a smart grid is also necessary to deal with intermittency in variable renewable energy sources such as wind and power. But the price tag to develop these transmission lines and smart grid would amount to a whopping $235bn over 2024-40.
State-owned energy firm Pertamina has allocated 8pc of its capital investment towards new and renewable energy over 2025-29, said its chief executive officer John Anis, without disclosing the exact amount.
The company also identified targets it hopes to achieve by 2029 as part of its low-carbon business growth, such as 60mn kilolitres of biofuels sales, 1.4GW of geothermal capacity and 1.5mn t of CO2 reductions with carbon capture and storage (CCS).
The firm also declared support for the zero routine flaring initiative by the World Bank. "Pertamina is one of the most important oil and gas companies in southeast Asia, producing more than 1mn b/d, and is a key factor for the Indonesian economy," said Demetrios Papathanasiou, global director for the World Bank, emphasising the importance of Pertamina's move to develop oil and gas without gas flaring.
Companies need to diversify, divest and decarbonise, said Retina Rosabai, director and group chief financial officer of coal firm Indika Energy. To diversify, firms first need to divest, because funding is limited, she said, adding that Indika has divested from coal-related assets, coal contract mining and coal logistics. But there is still much uncertainty over rules and regulations, although Indonesia's new climate envoy Hashim Djojohadikusumo reaffirmed the country's commitment to climate goals, which will raise confidence, Retina said. Hashim is the brother of Indonesian president Prabowo Subianto, who took office last month.
Hashim also reiterated that CCS holds huge potential in Indonesia, with an estimated 500 gigatonnes of CO2 storage capacity. Additionally, the country has also verified 575mn t of CO2 for offtake, with some parties already making commitments to purchase various amounts, he said. The government is also finalising the assessment of a further 600mn t of CO2, which is expected to be offered in the next few months, he said.
