.png)
HIGHLIGHTS FROM THE "INDONESIA-CANADA ENERGY TRANSITION" WEBINAR BY BAHAR AND OSLER
Updated: Oct 11, 2022
In connection to the joint webinar organized by Bahar and Osler, we understand that collaboration between multi-stakeholders is the key to implement the smooth energy transition. Such collaboration shall be done in multi-aspects, such us development of technology and financial supports. Below are the highlights from the webinar:
UPDATE ON CANADA/ASEAN/INDONESIAN TRADE NEGOTIATIONS
The FTA is not negotiated yet as the Indonesian government is currently finalizing ToR and also the work plan for the negotiation process. The first negotiation is expected to be conducted in the first quarter of 2022 (hopefully can be finalized within two years.
ASEAN – Canada FTA will include the environment sector (hence natural resource and also clean technology shall be included). In addition to the environment sector, ASEAN and Canada also established the economic and technical cooperation, capacity building projects (Expert Deployment Mechanism for Trade and Development/ EDM), and the trade policy dialogue. Due to the importance of clean energy and technology issues, the Government of Indonesia sees that such issues can be included under the economic and technical cooperation, EDM, and the trade policy dialogue agendas.
ENERGY TRANSITION
Indonesian Regulatory Update
The government of Indonesia is currently finalizing a Presidential Regulation regarding the purchase of electricity from renewable energy source, this means of stance is to regulate the selling price of new and renewable energy electricity to be more competitive while still considering fairness and affordability. In addition, is also regulates the implementation of procurement which is carried out in the transparent way in the government.
The Ministry of Energy and Mineral resource is also in discussion of the government's proposal regarding the draft of the new and renewable energy law that is drafted by Parliament, which includes the simplifications of permits for the use of new and renewable energy synchronizations to the job creation law and then the concept of New Energy exploitation and others and also the concept and mechanisms for providing facilities and infrastructures to accelerate the development of renewable energy including the provision of electric transmission, application of smart technology, and a renewable energy storage facilities and all renewable energy production facilities.
For the revision of the rooftop solar PV regulation that have been set up through the Minister of Energy and Mineral Resources Regulation Number 26 of 2021 on rooftop solar PV. Through this regulation, the government tried to expand the market for rooftop solar PV increase the value of exported electricity and provide easy and fast procedure to the implementation of online systems and for the long term, Indonesia has compiled a roadmap toward carbon neutrality by 2060. There are several milestones in the roadmap, including the retirement of coal power plants, the use of new energy such as hydrogen starting in 2031, the use of nuclear energy and also the use of electric vehicles to abandon fossil fuel-based vehicles.
In line with the long-term strategy of the energy sector, the PLN has issued RUPTL 2021- 2030 where it includes higher portion of new and renewable energy projects, where the RUPTL also encourages the role of IPP by increasing the share of new and renewable energy power generation and increase the quota for the construction of power plants with the IPP scheme. New and renewable power plant capacity will be contributed about 51.6% from the additional power generation capacity until 2030 or around 20.9 GW.
Learning on Clean Tech Innovation from Acceleware
Acceleware is a clean tech innovator with their first development is a technology that can use radio frequency energy to electrify the production of heavy oil assets by injecting energy into the formation that heats the water in the formation, which then heats the oil and allows it to mobilize and flow to a producer.
By implementing Acceleware technology on the renewable power as a source, it can entirely eliminate upstream emissions that typically go with a thermal heavy oil production. Hence the advantages resulted from the technology is not only it will produce less emissions, but also cutting down the capital cost.
Acceleware is currently at the final stage of pilot testing this technology in Canada. Once proven, we see this technology being very quick to roll out and help to bring down the emissions on a per barrel basis right away while oil demand exists or while fossil fuel demand exists downstream.
In terms of the Indonesian context, the various heavy oil assets that are produced in Indonesia, we think that's a definite possible fit there to take this technology and bring it in where powers available and interesting to hear the renewable power updates. It's also a technology that plays very well with a renewable power development program in that it's not a steam production technology usually needs to run 24/7 and all year, but this technology can turn up and down or off and on so it's well suited to using intermittent or off-peak renewable power, which can then help finance and support the underlying returns on the investment in renewable projects.
Learning on Energy Transition from Medco Power Indonesia
I think Medco energy is one of the biggest integrated energy company in the region. We have three big platform. EP, Power, and Mining. Medco power I currently operating a 3300 Mega IPP and also ONM. Medco Power also has a mining to support future utilization agenda (one of the biggest copper and gold producers in Indonesia.
Medco is one of the first Southeast Asian oil and gas companies and integrated energy companies to announce the plan on achieving net zero emission by 2050. Such goal will be achieved by three strategies: (i) reduce the emission intensities (including carbon removal and offset; (ii) real business of transition to low carbon energy (grow portfolio from solar, geothermal, hydro and wind, with the priority on gas energy to power)1; (iii) opening for businesses related to the copper sectors, as Medco is building a copper smelter to be finalized by 2024.
In implementing the energy transition, affordable renewable energy policy is very important to attract the investor. After that, proper technology solution to meet the local setting is very important, and the last but not least, people society and business awareness on green economy to boost the rapid transition.
Regulatory Framework on Energy Transition in Canada
The Canadian political system both has a federal government and a number of provincial governments. Both levels of the governments have been very active in their promotion of energy transition in Canada. Specific government initiatives largely break down into promulgating legislation that it is aimed at reducing emissions, providing financial assistance and tax incentives to energy transition projects and R&D, and promoting innovation hubs to develop the technology that will drive the energy transition going forward.
The federal government and a number of the provincial governments have actually implemented a tax on carbon emissions, and I think Catherine noted that at the offset. And interestingly in Alberta, which has its own provincial carbon taxation regime the funds raised from the carbon tax are used to support energy efficiency initiatives and the useful turn of fuels.
Canada currently has the system regulation that requires a certain amount of renewable content in our fuel, but we expect to implement new standards this year that will kind of change that and instead of having a requirement for renewable component, there will be a hard cap on carbon emissions from those liquid fuel. And more importantly, that cap will ratchet down year over year with the result should it dramatically reduce emissions.
On the financial incentive front, again, both the provincial and the federal government are providing financial incentives and tax credits across a whole spectrum of initiatives, right from early stage of R&D, to commercial scale projects. Alberta is investing USD 160 million in seven carbon capture projects, and used it to become a carbon capture hub, Saskatchewan is partners with the federal government to provide more than USD 300 million as a part of the green infrastructure projects and the investing in Canada infrastructure program. So, as I mentioned, there are a number of federal exponentially sponsored innovation hub, such as the federal government’s clean growth hub, and Alberta’s energy transition center that bring together light-minded people, knowledge sharing, hopefully the output is disrupted technology that drives energy transition.
In addition to the supportive regulations, implementation of clean technology is also important. Mike’s Acceleware technology is just one good example of that. They certainly can be deployed in Indonesia and other parts of the world.
ROLE OF STATE-OWNED AND PRIVATE OIL AND GAS COMPANIES IN THE DEVELOPMENT OF LOW CARBON AND RENEWABLE ENERGY
Role of Suncor on Development of Low Carbon and Renewable Energy
Suncor’s net-zero ambition has sort of a few prongs to it. One is decarbonization of Suncor’s base operations that is related to fuel switching (i.e. switching from petroleum coal to natural gas, or electrification of equipment, or hydrogen-fired cogeneration). Second is energy efficiency improvements in both operations and in equipment. Third is capturing sequestration.
Suncor’s decarbonization journey is around hydrogen, renewable fuels, and renewable electricity. All of which are input to Suncor’s upstream production and upgrading & refining businesses. In addition to support its internal system, Suncor also produces additional volumes that will be sold to customers, hence Suncor can provide them with low carbon energy solutions.
In addition, Suncor also made investments in technology companies, (i) Enerkem, a company that develops gasification technology that convertx heterogeneous municipal solid waste and non-recyclable plastic, into syngas; (ii) LanzaTech, a company that develops technology that converts waste gases; and (iii) British Airwats, a company that produces sustainable aviation fuel from ethanol.
Role of PLN on Development of Low Carbon and Renewable Energy
As a State Owned Enterprise, PLN is supporting the energy transition through doing same steps as the government in supporting the low-carbon development. As the greenest RUPTL, RUPTL 2021-2030 that has been recently issued by PLN stipulates deployment of renewable energy around 20.9 GW, that will be used as our basis for achieving carbon-neutral on 2060.
Under the RUPTL, PLN several programs, including: (i) diesel conversions into renewable energy that are going to be conducted this year; and (ii) biomass co-firing program (from the existing coal fired power plant). From the demand side, PLN tried to bosst the electricity growth with the development of new technology, new business concept, such as EV and renewable energy PV cage.
PLN is open for investment opportunities for local and foreign investors. As priority, 21 projects are ready to be implemented in 2022.
Role of Pertamina Power on Development of Low Carbon and Renewable Energy
Pertamina Power as the subholding of Pertamina, is mandated to do transformation of Pertamina from oil and gas into a low emission energy company. Pertamina Power has a geothermal business which already matured close to 700 MW and is expected to be expanded.
In supporting energy transition, Pertamina Power will conduct actions as follows: (i) involving heavily into hydrogen business (blue or green hydrogen); (ii) creating EV ecosystem (through Pertamina Powe’s;s subsidiary company); and (iii) agresively developing renewable energy projects - either solar, wind, or electric gas (to replace the energy used by Pertamina which are coming from coal fired and diesel or gas).
For the investment aspect Pertamina is planning to invest in: (i) carbon capture and storage system; and (ii) bioenergy.
Opportunity and Issue on Indonesian Regulatory Framework on Development of Low Carbon and Renewable Energy
Regulations in Indonesia related to the new and renewable energy are widespread. However, Bahar does applaud what Parliament has initiated to the bill on the new and renewable, including the proposed incentives under the bill. However, from the practitioners’ perspectives, it is necessary for the process to be sped up. To support this, implementation of the public and private dialogue is also very important for the regulations and to set up the mechanism in place.
Other issues are the supervision to make sure implementation of the regulation and financing of the new and renewable energy projects (particularly for the projects located in the regional areas/ owned by regional companies).
In connection to sustainability, ESG compliant is also very important for the energy transition to be effective and even faster, where the first step of the energy transition can be conducted by the investors through requiring the companies to be ESG-compliant that will gradually move the company into energy efficient.
Event
Energy Transition: Challenges and Opportunities in Indonesia and Canada and update on Canada – ASEAN Trade Negotiations
Date/Time
Wednesday, 26 January 2022 / 08:00-09:40
Panelists
Dina Kurniasari (Director of ASEAN Negotiation of Indonesian Ministry of Trade)
Brad Wall (Former Premier of the Province Saskatchewan, Advisor of Osler, Hoskin & Harcourt)
Ani Wiyanti (Coordinator for Investment and Cooperation, Directorate of Various New Energy and Renewable Energy of Ministry of Energy and Mineral Resources of Republic Indonesia
Mike Tourigny (COO of Acceleware Ltd.)
Eka Satria (CEO of PT Medco Power Indonesia)
Frank Turner (Head of Osler’s Asia Pacific Initiative)
Andrea Decore (Vice President Low Carbon Fuels & GHG Offsets - Suncor Energy)
Cita Dewi (Executive President of the Directorate of Megaprojects and New and Renewable Energy at Perusahaan Listrik Negara (PLN))
Dannif Danusaputro (CEO of PT Pertamina Power Indonesia)
Wahyuni Bahar (Founder and Chairman of Bahar Law & Consulting)
Moderator: Gregory Elms (Investment and Trade Advisor, and Vice Chairperson, Indonesia-Canada Chamber of Commerce)
Place
Zoom Application