Indonesia’s total electricity consumption for the year 2018 was 263.32 Terawatt hours (TWh), nearly a 10-fold increase from their total electricity consumption of 29.48 TWh in 1990. Most of Indonesia’s 2018 electricity usage was primarily derived from coal. The second-largest source of electricity for the country was natural gas, followed by hydropower, geothermal power, oil, biofuels, and other renewable sources (wind, solar, waste) respectively.
Electricity consumption has been rising rapidly in the last 20 years, which is to be expected considering the country’s accelerated pace of development. Since 2000, the use of coal as a source of electricity has grown exponentially and currently makes up more than 50% of Indonesia’s total electricity consumption. In 1990, oil accounted for almost 50% of Indonesia’s electricity usage but today it accounts for less than 10%.
Cleaner sources of electricity such as geothermal energy, biofuels, and natural gas have risen in usage. A notable change in the country is that natural gas currently accounts for approximately 20% of electricity sources whereas in 1990 it accounted for less than 10%. Indonesia’s main exports stand to be coal, palm oil, and oil products; their main energy imports are crude petroleum and refined petroleum (amongst other things). This indicates that Indonesia’s main sources of electricity are derived locally.
Indonesia’s policies on energy are considered protectionist as they limit the number of imports and ultimately aim to increase both the exporting and availability of oil and gas. The Indonesian government heavily regulates oil extraction so to speed up clearance for the exploration of new reserves. Indonesia’s oil reserves are currently in decline however and the government has shifted its focus to natural gas. One of the issues with natural gas, as well as oil, is that Indonesia lacks the necessary infrastructure to find new sources of these commodities. Due to this dilemma, the government is focused on implementing policies that will allow for increased foreign investment to fund new infrastructure. Such policy changes include the rewriting of tax and labour laws.
Although protectionist policies have aided the country throughout its developing years by prioritizing local businesses, Indonesia will need to loosen such regulations if it is to continue increasing its market share in the oil and gas industry through globalization. From the new policies implemented, it is evident that the Indonesian government recognize the need for this change. It is my recommendation that these actors implement policies promoting investment within the renewable energy sector. Much like the gas and oil industry, the renewable energy industry relies on infrastructure and improving technologies. Recently, Indonesia has expanded its biofuel market and increased its usage of hydropower but there still remains a great amount of untapped energy especial within Indonesia’s hydropower sectors; the increased investment could expand the markets of other renewable sources as well.
Siti Nurbaya Bakar, Minister of Environment and Forestry
This Post was submitted by Climate Scorecard Indonesia Country Manager Ruby Orim