POLICY AND NATIONAL PLANNING FOR NEW AND RENEWABLE ENERGY

POLICY AND NATIONAL PLANNING FOR NEW AND RENEWABLE ENERGY By : M. Sjachdirin Directorate of New, Renewable Energy And Energy Conservation Directorate General of New, Renewable Energy And Energy Conservation Ministry of Energy and Mineral Resources Makasar, 18 October 2010

OUTLINE 1. Energy Issues 2. Transformation of the Energy Paradigm (Green Energy Initiatives) 3. Policy For Renewable Energy And Energy Conservation 4. National Emission Reduction Target

DEMAND (in million BOE) 20 % 4 % 439 DEVELOPMENT OF ENERGY CONSUMTION VS SUPPLY 2000-2009 619 454 451 491 509 511 513 552 645 Update 27-09-2010 Household 13 % Commercial 4 % Transport 37 % 32 % 44 % Industry 52 % 60 % Oil 43 % 13 % 22 % 5 % 727 SUPPLY (in million BOE) 772 800 859 873 896 897 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 956 1014 1065 Coal 34 % NRE 4 % Natural Gas 19 %

DEVELOPMENT AND SUBSIDIES OF FOSSIL ENERGY SHARE 2000 2009 A. Share of Total Development (in million BOE) 727 772 800 859 873 896 897 956 1014 1065 RE 4 % 19 % Coal; Average Increase In the last 10 years : 34 % Gas 1.Oil : 0,52 %/ year 2.Coal : 13,70 %/year 3.Gas : 1,81 %/year 43 % Oil 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 B. Development of Fossil Subsidies (in trillion Rupiah) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1. Electricity 2. Electricity (Fossil ) 3. Oil Fossil Total Subsidy 3,93 4,30 4,10 3,36 3,31 10,65 33,90 37,48 78,58 53,72 3.30 3.55 3.49 2.92 2.86 9.20 29.75 32.63 68.16 46.14 55.64 63.26 31.75 30.04 59.18 103.35 64.21 83.79 139.03 45.04 58.94 66.81 35.24 32.96 62.04 112.55 93.96 116.42 207.19 91.18

ENERGY CONDITION Geothermal 1,32% Oil 49,92% National Primary Energy Mix 2008 1014 million BOE Hydro 2,86% Coal 31,84% Gas 19,06% Energy Elasticity = 1,63 Non Fossil Energy Share < 5% 1. Public Access to energy is still limited : a. Electrification Ratio 2008 was 66% (34% of households not yet electrified); b. Development of energy infrastructure (rural/remote areas and outer islands generally have not yet access to energy; 2. Growth in energy consumption an average of 7% per year, not yet balanced with enough energy supply; 3. Dependence on fossil energy is still high, the more limited reserves; 4. Utilization of renewable energy and implementing energy conservation is not optimal; 5. Linkages with environmental issues : a. Climate change mitigation; b. Carbon trading; c. A national commitment to reducing emissions 26% by 2020; 6. Investment for development in energy sector is limited.

Development of New, Renewable Energy and Energy Conservation UU 10/1997 UU 27/2003 UU 30/2007 UU 30/2009 UNFCCC *) President s Policy Directives in Tampak Siring (2010) Green Values Climate Change Mitigation No.8 : Energy Security No.10 : Strengthen for Green Economy Increasing Fossil Energy Consumption Efforts to develop New, Renewable Energy and Efficient Energy Utilization GREEN ENERGY CONCEPT: 1. Make efficient for energy use 2. Use Renewable Energy 3. Use clean technology for fossil or non fossil energy Green Energy 0 Green Industry Green Transportation Energy Security, Public Welfare and Sustainable Development *) United Nations Framework Convention on Climate Change

Paradigm Change In Energy Management ENERGY SUPPLY SIDE MANAGEMENT ENERGY DEMAND SIDE MANAGEMENT SUPPLY DEMAND DEMAND SUPPLY Fossil Energy and Cots Regardless of (even subsidized) Renewable Energy as Alternatif Sectoral Energy Demand That has not efficient : - Household - Transportation - Industry - Commersial Efficient Sectoral Energy Demand : - Household - Transportation - Industry - Commersial (CONSERVATION Maximized the supply and use of Renewable Energy (DIVERSIFICATION) Fossil energy as a factor for balancing Currently : In the Future : 1. Energy needs has not been efficient, 2. Energy requirements is met by fossil (energy with whatever costs even subsidized) 3. Renewable energy is only as an alternative 4. Renewable energy sources that are not utilized is wasted the gift of God 1. Making efficient for energy demand 2. Maximize the supply and use of renewable energy 3. Fossil Energy is used as a factor for balancing 4. Fossil energy sources are not utilized as a legacy for posterity / exported

POLICY DIRECTION Update 4-10-2010 BAU** NRE; 3,1% PERPRES 5/2006 VISION 25/25 NRE; 4,4% Oil; 43,9% Gas; 21,0% Coal; 30,7% Oil; 41,7% Gas; 20,6% Coal; 34,6% NRE; 17% Oil; 20% Batubara ; 33% Gas; 30% NRE; 25% Oil; 20% Coal; 32% Gas; 23% 5100 BOE 3,1% 34.6% 3200 BOE 3200 BOE ENERGY CONSERVATION (37,25%) NRE Coal Gas Oil 1131,3 BOE 4,4 % 30,7 % 21 % 43,9% 20,6% 41.7% 25 % NRE 32 % Coal 23 % Gas 20 % Oil ENERGY DIVERSIFICATION 2010* 2015 2020 Source: *DEN, **Blueprint PEN 2006-2025 2025

POLICY 1. Energy conservation is done by increasing the efficient use of energy, ranging from upstream to down stream side (Demand Side). 2. Diversification of energy carried out to increase their share of new and renewable energy use (Supply Side).

NEW, RENEWABLE ENERGY AND ENERGY CONSERVATION DEVELOPMENT STRATEGY Supply Side Strategy : Implement mandatory for utilizing NRE Increasing the use of NRE Use of cleaner fuels (fuel switching) Demand Side Strategy : Implement commitments efficient energy utilization Use cleaner fuels (fuel switching) Applying the principles of energy saving Use of clean and efficient energy technologies Cultivate the attitude of life saving energy

NRE DEVELOPMENT AGENDA 1. Improvement and harmonization legislation for New, Renewable Energy (NRE) and Conservation Energy (CE) 2. Improvement Master Plan for Diversification and Conservation Energy 3. Increase energy utilization efficiency 4. Geothermal development 5. Bioenergy development 6. NRE development 7. Development and application of clean energy technologies 8. Increasing local content and supporting industries NRECE 9. Increasing for Self Community Organization for rural energy 10. Increasing for Self Community Organization in the city through low carbon city (solar cell etc ) 11. Increased research and development for NRECE 12. Increased education and training for NRECE

COMMITMENT ON CLIMATE CHANGE President s Commitment to the G-20 Pittsburgh and COP15 for reducing greenhouse gas emissions by 2020 Self Efforts 26% 41% Self Efforts and International Support Forestry 14% Energy 6% Waste 6% Trough New, Renewable Energy Development and Implementation of energy conservation by all sectors

Sector Contribution for Achieving National Emission Mitigation Target in 2020 Four Priority Sectors for Emissions Reduction Energy (5-6%%); Forestry (88%); Agriculture (1%); and Waste (6%) Emission in the energy sector mainly due to : Power Plant, partly because of fuel used i.e oil and coal as well as some others from the high energy intensity is almost two times higher than developed countries (Japan) for the same increased in GDP Sector BAU Emission GtCO2 Target Reduction GtCO2 Percentage Reduction (%) Energy Power Sector - power supply and transmission 1 0,03 3% Industry - reduced energy intensity 0,06 0,001 2% Transport 0,01 0,008 80% Forestry Peatland Conservation 1,09 0,28 26% Carbon Sink Enhancement, Sustainable Forest, Forest Fire Prevention, and Reduced Deforestation 0,49 0,392 80% Agriculture Reduced burn and slash cultivation, chemical fertilizer 0,06 0,008 13% Waste Solid waste management 0,25 0,048 19% Total 2,95 0,767 26% 14

National Commitment Energy sector : power, industry, and transportation Action Plan National Commitment (26%) Beyond National Commitment ( 41%) Energy Efficiency Energy audit on the use of electricity in buildings or industries, including cement factories - Renewable Energy Develop a number small scale electricity generation from micro-hydro, solar and wind power, biomass, etc. Develop large scale privately funded geothermal power plant and bio-fuel mostly for transportation Fuel Switching Clean Technology Green Transportation Develop biogas utilization and construct city gas network that are used for household. Construct and maintain a number of mini Liquefied Petroleum Gas (LPG) terminal to facilitate a wider use of LPG as a substitute for kerosene Develop super-critical coal-based power plants and Carbon Capture Storage (CCS) facilities Develop rail-based mass rapid transport for urban areas, including double tracks and electrification of existing rail-based transport modes 15