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Low-Carbon Energy Development in Indonesia in Alignment with Intended Nationally Determined Contribution (INDC) by 2030

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  • Ucok W.R. Siagian

    () (Center for Research on Energy Policy, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung 40132, Indonesia)

  • Bintang B. Yuwono

    () (Center for Research on Energy Policy, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung 40132, Indonesia)

  • Shinichiro Fujimori

    () (National Institute for Environmental Studies, 16-2 Onogawa, Tsukuba 305-8506, Ibaraki, Japan
    International Institute for Applied Systems Analysis (IIASA), Laxenburg A-2361, Austria)

  • Toshihiko Masui

    () (National Institute for Environmental Studies, 16-2 Onogawa, Tsukuba 305-8506, Ibaraki, Japan)

Abstract

This study analyzed the role of low-carbon energy technologies in reducing the greenhouse gas emissions of Indonesia’s energy sector by 2030. The aim of this study was to provide insights into the Indonesian government’s approach to developing a strategy and plan for mitigating emissions and achieving Indonesia’s emission reduction targets by 2030, as pledged in the country’s Intended Nationally Determined Contribution. The Asia-Pacific Integrated Model/Computable General Equilibrium (AIM/CGE) model was used to quantify three scenarios that had the same socioeconomic assumptions: baseline, countermeasure (CM)1, and CM2, which had a higher emission reduction target than that of CM1. Results of the study showed that an Indonesian low-carbon energy system could be achieved with two pillars, namely, energy efficiency measures and deployment of less carbon-intensive energy systems (i.e., the use of renewable energy in the power and transport sectors, and the use of natural gas in the power sector and in transport). Emission reductions would also be satisfied through the electrification of end-user consumption where the electricity supply becomes decarbonized by deploying renewables for power generation. Under CM1, Indonesia could achieve a 15.5% emission reduction target (compared to the baseline scenario). This reduction could be achieved using efficiency measures that reduce final energy demand by 4%; This would require the deployment of geothermal power plants at a rate six times greater than the baseline scenario and four times the use of hydropower than that used in the baseline scenario. Greater carbon reductions (CM2; i.e., a 27% reduction) could be achieved with similar measures to CM1 but with more intensive penetration. Final energy demand would need to be cut by 13%, deployment of geothermal power plants would need to be seven times greater than at baseline, and hydropower use would need to be five times greater than the baseline case. Carbon prices under CM1 and CM2 were US$16 and US$63 (2005)/tCO 2 , respectively. The mitigation scenarios for 2030 both had a small positive effect on gross domestic product (GDP) compared to the baseline scenario (0.6% and 0.3% for CM1 and CM2, respectively). This is mainly due to the combination of two assumptions. The first is that there would be a great increase in coal-fired power in the baseline scenario. The other assumption is that there is low productivity in coal-related industries. Eventually, when factors such as capital and labor shift from coal-related industries to other low-carbon-emitting sectors in the CM cases are put in place, the total productivity of the economy would offset low-carbon investment.

Suggested Citation

  • Ucok W.R. Siagian & Bintang B. Yuwono & Shinichiro Fujimori & Toshihiko Masui, 2017. "Low-Carbon Energy Development in Indonesia in Alignment with Intended Nationally Determined Contribution (INDC) by 2030," Energies, MDPI, Open Access Journal, vol. 10(1), pages 1-15, January.
  • Handle: RePEc:gam:jeners:v:10:y:2017:i:1:p:52-:d:86932
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    References listed on IDEAS

    as
    1. Mittal, Shivika & Dai, Hancheng & Fujimori, Shinichiro & Masui, Toshihiko, 2016. "Bridging greenhouse gas emissions and renewable energy deployment target: Comparative assessment of China and India," Applied Energy, Elsevier, vol. 166(C), pages 301-313.
    2. Cecere, Grazia & Corrocher, Nicoletta & Gossart, Cédric & Ozman, Muge, 2014. "Technological pervasiveness and variety of innovators in Green ICT: A patent-based analysis," Research Policy, Elsevier, vol. 43(10), pages 1827-1839.
    3. Fujimori, Shinichiro & Masui, Toshihiko & Matsuoka, Yuzuru, 2014. "Development of a global computable general equilibrium model coupled with detailed energy end-use technology," Applied Energy, Elsevier, vol. 128(C), pages 296-306.
    4. Dai, Hancheng & Silva Herran, Diego & Fujimori, Shinichiro & Masui, Toshihiko, 2016. "Key factors affecting long-term penetration of global onshore wind energy integrating top-down and bottom-up approaches," Renewable Energy, Elsevier, vol. 85(C), pages 19-30.
    5. Thanh Tu Tran & Shinichiro Fujimori & Toshihiko Masui, 2016. "Realizing the Intended Nationally Determined Contribution: The Role of Renewable Energies in Vietnam," Energies, MDPI, Open Access Journal, vol. 9(8), pages 1-17, July.
    6. Fujimori, Shinichiro & Masui, Toshihiko & Matsuoka, Yuzuru, 2015. "Gains from emission trading under multiple stabilization targets and technological constraints," Energy Economics, Elsevier, vol. 48(C), pages 306-315.
    7. Jupesta, Joni, 2012. "Modeling technological changes in the biofuel production system in Indonesia," Applied Energy, Elsevier, vol. 90(1), pages 211-217.
    8. Albino, Vito & Ardito, Lorenzo & Dangelico, Rosa Maria & Messeni Petruzzelli, Antonio, 2014. "Understanding the development trends of low-carbon energy technologies: A patent analysis," Applied Energy, Elsevier, vol. 135(C), pages 836-854.
    9. Fujimori, S. & Kainuma, M. & Masui, T. & Hasegawa, T. & Dai, H., 2014. "The effectiveness of energy service demand reduction: A scenario analysis of global climate change mitigation," Energy Policy, Elsevier, vol. 75(C), pages 379-391.
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    Cited by:

    1. repec:gam:jsusta:v:10:y:2018:i:6:p:1722-:d:148856 is not listed on IDEAS
    2. repec:eee:enepol:v:118:y:2018:i:c:p:325-345 is not listed on IDEAS

    More about this item

    Keywords

    Indonesia; low-carbon energy development; Asia-Pacific Integrated Model/Computable General (AIM/CGE) model; greenhouse gas emission reduction; Intended Nationally Determined Contribution (INDC); efficiency measures; renewable energies; mitigation cost; economic development impact;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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