Electric cars way of future

Presidential regulation prepared to incentivize electric vehicle production

Regulation, adjusted tax to help RI compete with neighboring countries: Minister

The government has said that Indonesia has the potential to become an exporter of electric vehicles in the future, even though regulations on the industry are not yet in place and production will not begin anytime soon.

A proposed presidential regulation (Perpres) on electric vehicles (EVs) is the main reason for the government having such a dream. The upcoming regulation will incentivize the use of EVs by changing the luxury goods tax (PPnBM) calculation for vehicles so that it is based on carbon emissions rather than engine capacity.

The Finance Ministry and Industry Ministry brought the proposal to the House of Representatives earlier this week, saying that it would spur the country’s automotive exports.

Industry Minister Airlangga Hartarto said on Wednesday the regulation was expected to be established by the end of the first half of 2019. Its implementation and the subsequent commercial production of EVs, meanwhile, were targeted to begin in 2021.

The two-year gap, said Airlangga, gives automakers time to prepare, as Japanese and European manufacturers, which dominated Indonesia’s automotive market, had agreed to the transition period.

“We aim to manufacture 400,000 electric vehicles in 2025, which is about 20 percent of the overall installed vehicle production capacity,” Airlangga said on the sidelines of a Trade Ministry meeting. “We are encouraging any investments that can support this export-oriented policy.”

The automotive sector is one of the priority sectors in Indonesia, contributing 10 percent to gross domestic product (GDP) in 2018.

However, both domestic and foreign sales of Indonesian automotive vehicles have stagnated over the past several years for various reasons, such as a lack of vehicle variety, fiscal constraints and an inability to meet higher international standards.

This year, the Association of Indonesian Automotive Manufacturers (Gaikindo) has set a sales target of 1.1 million units. It is unchanged from the 2018 target and is even lower than that year’s sales of 1.15 million units.

Gaikindo did not reveal its export target this year but pointed that the exports of completely built-up (CBU) vehicles had increased by 14.4 percent to 264,553 units in 2018.

With the presidential regulation and adjusted luxury cars tax, Indonesia would be able to compete with neighboring countries that also produced EVs, such as Thailand, which had already ratified a trade agreement with Australia, India and Japan, said Airlangga.

He mentioned the recent signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), saying it could provide Indonesia access to Australia’s vehicle market of 1.2 million units per year.

“Automotive vehicles could be our top export to Australia, because they have a market of 1.2 million cars but they have closed down all of their automotive manufacturers […] as they were not profitable enough,” he said.

Additionally, the planned reg- ulation would stipulate a 35 percent local content requirement for locally made EVs.

Therefore, said Airlangga, his office would ensure the availability of industries that supported the production of EVs, such as batteries and electric motors.

Finance Minister Sri Mulyani Indrawati refrained from confirming whether the regulation would be issued soon.

“We have consulted the House so we will wait and see what happens,” Sri Mulyani said separately. “We will surely take into account the feedback from the lawmakers and industrial [players] regarding this tax.”

Gaikindo chairman Yohannes Nangoi said automakers had acknowledged the importance of advancing with EV technology and had thus appointed a new, additional cochairman in the association to oversee the matter of future technology.

“The development of automotive technology, ranging from hybrid, plug-in hybrid and electric [vehicles], is going rapidly, and Gaikindo believes it is necessary to keep on delving into these future technologies and get Indonesia ready to partake in it,” Yohannes said in a recent statement.

Source: Jakarta Post, 15 March 2019

Good time for RI to push clean energy, experts say

The continuous decline in oil prices that has led to a lower contribution to national revenue should be a wake-up call for the government to immediately kick off fiscal reform that would speed up the use of renewable energy, a recent discussion said.

According to a new report released by the Canada-based International Institute for Sustainable Development (IISD), most revenue from the oil and gas sector was indirectly allocated for fossil fuel consumption.

Based on the research that looked into the 2014-2016 fiscal years, the average contribution of the oil and gas sector stood at Rp 190 trillion (US$16 billion) annually or 18 percent of government revenue, but 14 percent of which was later channeled for fossil fuel subsidies.

“As revenue from fossil fuels declines, it is more important than ever for this clean energy transition to be accelerated. Indonesia’s past shows it can grow its economy without expanding fossil fuel extraction,” IISD senior policy adviser and lead for Indonesia Philip Gass said.

Without increasing revenue, the fossil fuel subsidy would only encourage the wasteful consumption of energy, leading to faster depletion of Indonesia’s oil, gas and coal reserves, the report further stated.

The institution believes that further fiscal reform on fossil fuel subsidies is also possible as past experiences of cutting off the fuel subsidy in 2014, which saved around Rp 200 trillion, was a success story that could be repeated again.

“In 2014’s fuel subsidy cut, the government was able to make greater investments in infrastructure and provide greater support for communities and social assistance programs. […] More subsidy reform will push for cleaner energy,” IISD Indonesia coordinator Lucky Lontoh said.

The report recommends that the government phase out various energy subsidies and push for the greater role of renewable energy. The experts said in the report that developing renewable energy was suitable for Indonesia not only because it was more and more cost competitive but also because the country had plenty of clean energy resources like geothermal energy.

The contribution of clean energy power plants in 2018 stood at around 12 percent, while coalbased electricity stood at more than 50 percent and will likely do so until 2027.

The Energy and Mineral Resources Ministry’s director for new and renewable energy, Harris, said earlier that Indonesia had a lot of untapped clean energy potential.

“To date, we have only utilized 2 percent of our renewable energy potential, but luckily our geothermal energy has become one of the world’s biggest producers,” he said recently.

Based on the ministry’s recent data, Indonesia has 442 gigawatts of renewable energy capacity, but only 9.42 GW or 2 percent has been installed.

Furthermore, the fiscal transition toward cleaner energy faces a challenge from the relationship between the government and its people that dictate policy, said energy expert from Jakarta-based Paramadina University Emanuel Bria.

“We have learned that our targets on clean energy, such as in the National Medium-Term Development Plan, were always missed. And it is because the market dictates our policies, such that this year coal production exceeded the initial plan,” he said.

The IIDS acknowledged that a radical fiscal transition in the energy sector would be hard to attain, so they believe that the transition is a long-term goal with small steps that could be taken soon, such as increasing the use of abundant natural gas.

Source: Jakarta Post, 21 February 2019

Mandatory green buildings aim to save on energy costs

For metropolitan Jakarta, a green building is no longer a mere concept. With a gubernatorial regulation on “green” buildings issued in 2012, the administration set mandatory requirements for buildings to be built based on eco-friendly principals that can lower their environmental impacts.

The regulation, the first green building code in the country, stipulates that any developer who wants to construct a new building must make it energy efficient and water efficient. As well, indoor air quality, waste and spatial management and construction must comply with green standards. Otherwise, developers would not be given construction permits.

To support the regulation, the city implemented an international standard for green buildings called Excellence in Design for Greater Efficiencies (Edge) in 2015. By 2018, 339 new buildings in the capital were certified with Edge, said Sandra Pranto, the leader of the Indonesian Green Building Program at the International Finance Corporation (IFC).

“The potential energy cost saving is up to US$90 million,” Sandra said on Wednesday.

The city now wants to expand the reach of the regulation. It currently applies to buildings that cover an area of more than 50,000 square meters, but the city plans to soon revise that to 20,000 sq m, according to Oswar Mungkasa, the Jakarta governor’s special staff member for spatial and environmental affairs.

“We are currently revising the regulation and planning to complete it in a few weeks,” he told The Jakarta Post.

The buildings include offices, apartments, shopping centers, hotels, hospitals and schools.

In order to help developers, the city established the greenbuilding.jakarta.go.id website to provide guidelines for building plans to meet the requirements.

Oswar mentioned the Jakarta 30:30 Commitment, by which the administration plans to reduce energy consumption, carbon emissions and water consumption, each by 30 percent, by 2030 through green building measures.

In the future, Oswar said the city would establish a special team to supervise the construction of green buildings. The city also aimed to help existing buildings operate more sustainably.

Sandra from the IFC — which has been assisting the city’s green building initiative, admitted that campaigning for green building concepts in Indonesia is not easy. Even though the Public Works and Housing Ministry issued a ministerial regulation in 2015 on green buildings, many issues remained to be tackled.

It takes all parties to fully support green buildings, she said. Not only should the developers realize the importance of sustainable construction, the banks must support them with green financing. Moreover, Sandra said there should be greater general knowledge in the market about the differences between regular and green buildings since green buildings are more expensive to put up.

“Constructing new buildings with a green concept might increase costs by 2 to 10 percent, but later the building owners would experience cost savings for energy and water of up to 20 percent because of the green concept,” Sandra said.

There has been much research, Sandra added, indicating that green buildings are also more comfortable places to work or live.

Among the developers that have implemented green standards in their buildings is Asia Green Real Estate, which operates mostly in Indonesia and China and has built several green buildings across the city, both independently and through partnerships with private Indonesian developers.

Asia Green Real Estate partner Alex Buechi said that, despite the urgency, the green building movement in Indonesia is mostly driven by a very small number of developers.

“It’s hard for green buildings to make sense [to people]. Hence, they have to be mandatory,” he said.

He explained that something had to ensure developers that they would get benefits from constructing green buildings and home buyers or tenants that they would be more comfortable in them.

Source: Jakarta Post, 16 February 2019

City digs for solution to landfill’s limited capacity

In an effort to tackle its rapidly growing waste problem at the Bantar Gebang landfill in Bekasi, West Java, the city administration is set to start landfill mining, or digging up trash to be processed and used as a form of alternative energy.
The method is a stark departure from its usual strategy of simply letting the waste accumulate, then cover it with red soil and hope that is enough to prevent contamination.
“With landfill mining, [we can] reduce the amount of waste piling up [at Bantar Gebang]. The system would also allow us to employ the scavengers of the area to collect waste and process it into an alternative source of fuel to replace coal,” Jakarta Environmental Agency head, Isnawa Adji, said at the landfill on Tuesday.
This would be the first time landfill mining is used in Indonesia, making Bantar Gebang a pilot project for the waste management method in the country, Isnawa said, adding that the implementation would be supported by the Cipta Karya Directorate General of the Public Works and Housing Ministry, the Agency for the Assessment and Application of Technology and the Bandung Institute of Technology. The agency has proposed a budget of Rp 80 billion (US$ 5.67 million) for the project.
The administration has forged a cooperation agreement with cement manufacturer PT Holcim Indonesia Tbk, which will use the processed waste to power its cement factory.
The city aims to breathe new life to Bantar Gebang, on which it has solely relied to hold the around 8,000 tons of waste it produces every day. Studies have reported that Jakarta and Bekasi are racing against time as the landfill will reach its maximum capacity by 2021.
The administration also plans to use Bantar Gebang as a re- search site for waste management by renovating the landfill’s operational office.
“We will build a research center. It will feature a laboratory, classrooms, meeting rooms and an exhibition room,” Isnawa said.
Operating since 1989, landfill will soon be supported by Jakarta’s own Intermediate Treatment Facility (ITF) in Sunter, North Jakarta, which kicked off construction in December in a bid to reduce the capital’s dependence on Bantar Gebang.
The new treatment facility will be able to process around 2,200 tons of waste per day.
Jakarta Governor Anies Baswedan along with Bekasi Mayor Rahmat Effendi inaugurated a car wash for garbage trucks and a nearby mosque on Tuesday as additional facilities for the landfill. By washing the garbage trucks, the administration hopes to reduce the stench they bring to nearby neighborhoods.
The event marked Anies’ firstever official visit to Bantar Gebang since he became governor and following a dispute with Bekasi over a grant the latter had requested as “stink money”.
The Jakarta administration previously refused to give its Bekasi counterpart Rp 2 trillion to compensate residents for the daily stench coming from the landfill. In retaliation, the Bekasi Transportation Agency blocked Jakarta garbage trucks from traveling to the dump site.
“We will continue to work with Bekasi so that we will be integrated both economically and socially,” Anies said. “We govern an area that is separated by borders but we are truly working together under the same Indonesian flag.”
In the long run, he added, both cities should combat the waste problem for future generations until “no mountains of trash can be seen in the area”.
According to Jakarta’s midterm development plan, the administration aims to reduce its waste to 1,050 ton per day with waste management efforts, which includes a plan to build three more ITFs to independently manage its own waste.
“Don’t let [the mountains of trash] be a monument for our grandchildren. It should instead be in a museum to show that we have learned from the past,” Anies said.

Source: Jakarta Post, 16 January 2019

Govt to maintain cheap electricity

In the months leading up to the presidential election in April, the government looks to keep electricity affordable for most people by controlling the price of coal.
Bambang Gatot Ariyono, the mineral and coal director general at the Energy and Mineral Resources Ministry, said his office had no plan to revise its policy on coal at least until the end of this year.
Currently, the price of coal that is used to fuel most of stateowned electricity firm PLN’s power plants is capped at US$70 per ton.
“We will continue the DMO policy [25 percent from total production], including the price cap [$70] just as stipulated in the ministerial regulation,” he said, referring to the obligation for coal miners to sell a quarter of their output to PLN, known as the domestic market obligation (DMO).
As of December 2018, data from the ministry show that PLN purchased 95 million tons of coal at a price of $70 or less per ton, exceeding the target of 92 million tons.
The ministry’s electricity director general, Andy Noorsaman Sommeng, said he believed the DMO for coal and the coal price cap for PLN should suffice to prevent electricity prices from rising.
“Fortunately, in recent months, the global price of crude oil has been low at around $60 dollars per barrel. PLN had been worrying about its finances when the oil price stood at $80 dollars per barrel,” he said recently.
PLN announced $1.22 billion in losses as of the end of the third quarter of 2018, compared to Rp 3.04 trillion in profit in the corresponding period of 2017.
Andy added that the energy ministry’s regulation on the utilization of natural gas for power plants, which sets the maximum gas price at 14.5 percent of the Indonesian Crude Price (ICP), had also helped take the pressure off PLN.
According to government planning, natural gas will contribute around 20 percent of the fuel for PLN power plants in the period of 2018-2027, making it the secondmost important energy source for the power producer.
Andy said that, aside from keeping electricity affordable for the people, containing the power price was also meant to entice global investors, especially for the industrial sector that needs competitive electricity prices.
“If electricity is cheap, then [industries] will create products with competitive prices, and that will boost their exports,” he said.
As of December 2018, the electricity rates for small businesses to big industries was 7-8 US cents per kilowatt hour, making Indonesia one of the most competitive markets in Southeast Asia.
Investment into the electricity sector amounted to $11.28 billion last year, falling 7.6 percent short of the target.
PLN finance director Sarwono Sudarto said the firm’s financial performance had been helped by the DMO policy and the coal price cap at $70 per ton.
“As an internal measure [to help with the obligation to keep electricity prices fixed], we will continue our own efficiency measures, such as cutting the electricity transmission cost by placing power plants near the energy source,” he said separately.
Energy expert Fabby Tumiwa, who is also the executive director of local energy think tank Institute for Essential Services Reform (IESR), said the policy to keep electricity cheap was not in line with the government’s plans for renewable energy.
“Coal-fueled power plants will generate cheaper electricity as they get help from the DMO policy [including the price cap],” he said, adding that renewable energy producers were hard-pressed to compete on prices with coalfired power plants.

Source: Jakarta Post, 15 January 2019

Government levels up use of biofuel in power generation

The government is working to further increase the domestic use of biofuel as part of the policy to reduce oil imports. After requiring the use of biofuel for transportation, railways and heavy machinery at mining sites, the government will boost the use of biofuel in power generation.
For this purpose, the government will ask state electricity company PLN to soon convert its diesel-fueled power plants into biodiesel-fueled power plants.
The government will also issue a regulation allowing private biodiesel-fueled power producers to sell power to PLN.
The Energy and Mineral Resources Ministry’s director general for renewable energy, Rida Mulyana, said increasing the utilization of bioenergy is one of the ministry’s priorities this year.
“We will intensify the use of [bioenergy] this year. That is not only from the [implementation of] the B20 policy,” he said, referring to the policy to blend 20 percent biofuel with diesel to reduce oil imports.
The ministry’s bioenergy director, Andriah Feby Misna, meanwhile, said transforming PLN’s diesel-fueled plants into 100 percent palm oil-based power plants could take two years.
“[PLN] has the roadmap [on biofuel power plants], the target is within two years. Yet, it is likely that only some of the diesel-fueled power plants will be altered [to use biofuel],” she said recently.
At present, Feby said some of PLN’s power plants use biofuel by blending it with diesel or biodiesel.
Previously, Energy and Mineral Resources Minister Ignasius Jonan said PLN had around 2,000 megawatts diesel-fueled power plants and he had urged PLN to convert them to biofuelbased plants in order to decrease the dependency on oil.
As of November 2017, the power plants that use fossil fuel — diesel and coal — accounted for 10 percent of installed capacity at 54.5 gigawatts.
In the future, diesel-fueled power plants would only be allowed in border regions and remote areas that could not be served by PLN’s main electricity networks, according to PLN.
PLN believes the measure would significantly reduce production costs because the distribution of oil to remote areas such as some regions in Papua is very expensive.
PLN used around 3 million kiloliters of oil last year, while in 2022 it is projected to be 500,000 kl.
Meanwhile, for the biodiesel policy, the government has set a target to deliver 6.2 million kl of biofuel this year, a 58.5 percent increase from 2018. The amount is allocated mainly for the transportation sector.
Feby further said PLN, in collaboration with the Agency for the Assessment and Application of Technology, had conducted a study on coal-fired power plant’s adaptability to use biodiesel. “PLN has utilized biodiesel of up to a 30 percent blend for dieselfueled power plants,” she said.
Regarding the private sector, the government issued last December Energy and Mineral Resources Ministerial Regulation No. 53/2018 on renewable energy that includes independent biofuel power plants as another type of renewable energy sector that could generate power for PLN.
The regulation, which was a revision to Regulation No. 50/2017 of the same title, defines biofuel power plants as electricity generators that are fueled with liquid vegetable oil.
Before it could make electricity sales and obtain purchase contracts with PLN, a power producer needs to ensure that it has secured the stock of biofuels until the contract’s end.
“The requirement is to lower the transportation cost [of biofuel to the power plant] or basically a mine-mouth power plant,” Feby said.
Energy watchdog Institute for Essential Services Reform executive director Fabby Tumiwa believes the regulation could become problematic for investors because of the build-own-operate-transfer (BOOT) policy.
“Though it was meant to increase the use of biofuel in electricity generation, we need to wait to see investors’ reaction over the problematic BOOT policy,” he told The Jakarta Post.
The BOOT policy obliges investors to transfer renewable projects to PLN at the end of the power purchase agreement.
However, Fabby acknowledged the positive side of one of the articles in the contract’s mechanism, which is under the business-to-business (B2B) scheme that is more flexible for investors.
“Electricity rates from biofuel power plants is set under a B2B scheme, which isn’t [like other type of renewable energies] based on electricity supply cost,” he said.
The price cap on renewable energy-based electricity excluding biofuel is set at a maximum 85 percent of electricity supply costs in each region.
The Indonesian Biofuel Producers Association (APROBI) is upbeat that it can fulfill biofuel demand for power plants because of similarities with the mechanism in the B20 policy.
“The supply for power plants is similar with the material for the B20 policy, which can use fatty acid methyl ester,” APROBI chairman Paulus Tjakrawan said.

Source: Jakarta Post, 8 January 2019

Nias to ramp up electricity project

MEDAN: Nias Island, a remote yet beautiful island in North Sumatra where around 30 percent of its population is still short of electricity, is determined to achieve 100 percent electrification this year.
State-owned electricity firm PLN has allocated Rp 354 billion (US$24.8 million) for village electrification projects in Nias this year, a significant increase from Rp 90 billion in 2018 and Rp 50 million in 2017.
Citing a recent meeting between all local administrations in Nias, Regional Representatives Council member from North Sumatra, Parlindungan Purba, said all stakeholders were optimistic about the electrification programs on the island this year.
“In the meeting between relevant stakeholders and regents of Nias, as well as Gunung Sitoli’s mayor recently, everyone agreed that all villages in the region must have access to the power grid this year,” he said on Saturday. “Nias is a region with potential [in tourism and fisheries] but it lacks electricity.”
South Nias Tourism and Culture Agency head Anggreani Dachi said electricity was vital to spur economic growth.
“It’s difficult to develop Nias tourism when electricity problems still haunt us,” Anggreani said on Sunday.
Located off the western coast of North Sumatra, Nias is known for its world-class surfing spots.
During his visit to Nias in 2016, President Joko “Jokowi” Widodo instructed local administrations in the regency to focus on the two sectors with the most potential, tourism and fisheries, while the central government worked to solve electricity problems in the region.

Source: Jakarta Post, 7 January 2019

Pertamina speeds up green fuel test for production

State energy holding company Pertamina plans to further test the commercial production of green fuels to reduce ballooning oil imports, which account for more than half of national demand.
Green fuel is what Pertamina refers to as fuels that are processed in a refinery with treated crude palm oil, called refined bleached deodorized palm oil (RBDPO), through a treatment called coprocessing. There are three types of green fuel, namely gasoline, diesel and aviation turbine (avtur).
The processing method is different from 20 percent biodiesel blend, where the CPO material, fatty acid methyl ester, is blended only after the crude oil becomes fuel.
The Bandung Institute of Technology (ITB) said through coprocessing, the biofuel may have a higher blend than 20 percent.
“Biodiesel still contains oxygen, but with coprocessing the fuel’s specification becomes similar to fossil fuels and will even have a higher octane number,” ITB expert on chemical reaction and catalyst technology Subagjo said at a recent press briefing with Pertamina about green fuel.
There are four Pertamina refineries that have been earmarked for the green project, namely in Plaju in South Sumatra, Cilacap in Central Java, Dumai in Riau and Balongan in West Java.
The initial plant test in Plaju kicked off in early December for a week, while a second test will be rolled out this September for a month. Meanwhile, plant tests in Dumai, Cilacap and Balongan will be carried out in February, September and next year, respectively.
Pertamina refinery director Budi Santoso Syarif said on the same occasion that if the plant tests are successful, the company could then produce green gasoline with a research octane number of 92 at 487,800 kiloliters per month.
“The effort is in accordance with the government’s mission to [secure] foreign exchange. We could also reduce crude [imports] by 23,000 barrels per day, or the equivalent to [saving] US$500 million each year,” he said.
Data from Pertamina shows that the production of green liquefied petroleum gas, green diesel and green avtur could reach 104,000 tons per month, 11,500 barrel stream per day (bsd) and 11,700 bsd, respectively.
The plant tests, however, are facing obstacles in terms of RBDPO supply, which may delay commercial production of green fuel. Budi said RBDPO is a material that is generally utilized by margarine and cooking oil producers.
“RBDPO is mainly produced by private [companies], so basically we still depend on other people. Hence, we can’t be sure on the exact timeline for commercial production [of green fuel],” he said.
Budi explained that one of the examples of supply problems was during the plant test in Plaju, which was initially planned to kick off in October, but was delayed until December because of a lack of supply.
He further said the green projects have the potential to be included in the firm’s two refinery development plans, namely the Refinery Development Master Plan and the Grass Root Refinery.
“Five out of six refinery development projects are still in the negotiation phase. Hence it could be included in those projects,” he added.
In November, Statistics Indonesia recorded the country’s trade deficit at $2.05 billion. The increase was triggered by a $1.46 billion monthly deficit in oil and gas trade despite declining oil prices, both in international indexes and the Indonesia Crude Price, which set the oil price at $62.98 per barrel in November from $77.56 per barrel the month before.

Source: Jakarta Post, 5 January 2019