Road to Net Zero Emission –

Regulatory and Policy Updates

Nadia Soraya – Partner HHP Law Firm | EBTKE Conex 2021
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Energy Transition
Energy Transition

Decarbonize
Supply chain Business operations Product use

Oil Renewables

Natural gas Hydrogen

Carbon Capture,
Coal Utilisation and Storage

Nuclear

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Indonesia - Targets

Renewable Energy Target by

23% 2025

29% GHG Reduction by 2030

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Renewable targets
PLN’s RUPTL 2021 – 2030

Bio / Wind
WtE
Mini 590 MW 597 MW Solar PV
hydro 4,680 MW
1.118 MW

Geothermal
Hydro 3,355 MW
9,272
MW

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Energy Transition – The Buzz!

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The Path to Carbon

Neutral
The path to carbon neutral

Continue fuel switching

Roll out of the use of more efficient and low carbon technology

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The path to carbon neutral

mix of coal and biomass for coal-fired

power plant

use of Circulated Fluidized Beds

(CFB), Pulverized Coal (PC) and
Biomass stocker technology
co-firing
Min. 30% biomass fuel for new coal-
fired power plants to operate after 2025

Adjustment to PPAs for coal-fired

power plants developed by IPPs

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The path to carbon neutral

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The path to carbon neutral

in stages, starting from 2030

Retiring aging
coal-fired power Monetization of the coal-fired power
plants plants

Market appetite?

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Goals and policies
Climate change and GHG reduction
Updated Nationally
Determined Contributions
 Indonesia announced at COP26 that it rehabilitated three million Ha of critical lands
(NDC)
Reduce GHG emissions
target by 2030
 Unconditionally: 29%
 conditionally (with
international support):
41%
Indonesia Commitments COP26 Summit
between 2010-2019 and has started the rehabilitation of mangrove forests – until 2024: to
cover 600 thousand Ha.
 Indonesia will start the first stage of coal-fired power plant retirement and reduce the
utilization of diesel power plants in 2031
 Indonesia will continue to mobilize climate finance and innovative financing such
as hybrid financing, green bonds, and green sukuk.
 Indonesia signs up to the COP26 Coal to Clean Power Transition
Statement, excluding clause 3 -- but as part of its commitment to reach net
zero by 2060, or sooner with international assistance, Indonesia will
consider accelerating coal phase out into the 2040s.
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New Presidential Reg 98/2021 - Carbon
Economic Value (CEV)

Mechanisms:

 Carbon Trading
 Results-Based Payment
 Carbon Levies (pungutan)
 Other mechanism

All trading (including those prior to the Reg) and carbon unit ownership must
be reported and recorded the mitigation actions through the National
Registry System (SRN).

Implementing regulations – deadline: by 29 October 2022.

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Carbon Tax – Taxable Subjects and Objects

Carbon tax imposition:

on carbon emissions that have a negative

impact on the environment

on individuals or corporates purchasing goods

containing carbon or conducting activity
producing carbon emission

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Carbon Tax – Taxable Subjects and Objects

When is Carbon Tax payable?

on the purchase of goods containing carbon

at the end of a certain period of activity that

generates carbon emissions beyond a certain
amount

at such other times as will be further regulated

under a Government Regulation

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Carbon Tax – Implementation

The Implementation of Implementation of carbon tax mechanism

based on emission cap (cap and tax) for the
Carbon Tax power generation sector; initially limited to
The Ministry of Finance stated coal-fired power plant
that carbon tax will be 2022
implemented for coal-fired
power plant, from 1 April 2022.
However, the implementing 2021 2025
regulation has not been
Develop a carbon Fully implemented carbon trading scheme
issued.
trading and extension of the sectors that will be
mechanism subject to carbon tax; phasing based on the
readiness of each sector after considering
economic conditions, readiness of the
respective parties, impact, and/or scale

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3

Financial Resources –
Government Support &
Incentives
Incentives
(Draft New and Renewable Energy Law)

Fiscal and non-fiscal

Central and local Further details will
incentives to business
governments provide the be set out in a Government
entities developing new
incentives Regulation
and renewable energy

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Government Support
(Draft Presidential Regulation)

Fiscal Incentives Non-Fiscal Incentives

(to be determined by Central
and Local Governments)

■ Tax holidays
■ Tax allowance
■ Import Facility

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Renewable Energy Funds
(Draft New and Renewable Energy Law)

Central and local Source of New and

governments must set up Renewable Energy
New and Renewable Funds, among others:
Energy Funds

State budget
Regional budget

Levy on export of
non-renewable Proceeds from
energy renewable energy
certificates

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Renewable Energy Funds
(Draft New and Renewable Energy Law)

Utilization of New and

Renewable Energy Funds
■ financing new and renewable energy infrastructure
projects
■ incentives to new and renewable energy developers
■ payment of compensation to business entities
■ research and development
■ human resources improvement

Further details will be set out in a Government Regulation

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