This Week’s Headlines (12 - 18 August 2023)

18 Aug 2023

2024 Elections
Energy Transition

Indonesia's Jokowi calls on successor to continue commodity downstreaming


President Joko Widodo called on Wednesday for Indonesia's next leader to continue his policy to prioritize processing natural commodities onshore, aiming to turn Southeast Asia's largest economy into a global powerhouse by 2045. 


Jokowi, as the president is popularly known, made the remarks in his annual speech in parliament ahead of Indonesia's Independence Day on Aug. 17. 


A presidential election is due on Feb. 14 and the elected candidate will be sworn into office in October next year. Jokowi is not eligible to contest. 


"I have reiterated that future leadership will set a path forward for Indonesia's future," he said. 


"This is not about who the (next) president is ... The question is whether or not the future leaders are ready to work in line with what we have started today, or whether or not they are brave or consistent enough," he said. 


Jokowi said the so-called "commodity downstreaming" policy was the foundation of Indonesia's aspiration to become one of the world's biggest economies by 2045, at which point the country's income per capita should reach $25,000. 


Indonesia's gross national income per capita was $4,580 in 2022, according to the World Bank's data. 


The president touted the success of his ban of nickel ore exports, which he said had grown the nickel smelting industry significantly and translated into better welfare for the people. 


The policy has been replicated on other mineral ores. Jakarta banned exports of bauxite in June and it will ban shipments of copper ore in May 2024. 


Jokowi reiterated that the policy has to be expanded to non-mineral commodities like palm oil and seaweed. 


Defence Minister Prabowo Subianto is currently leading in opinion polls for the next presidency, ahead of Central Java Governor Ganjar Pranowo and former Jakarta Governor Anies Baswedan. 


Source: Reuters 


 A plan for how Indonesia will spend $20 billion to transition to cleaner energy has been submitted 


A plan for how Indonesia will spend $20 billion to transition to cleaner energy was submitted Wednesday to the government and its financing partners, the planners said. 


Indonesia’s Just Energy Transition Partnership deal was announced last year and aims to use the funds over the next three to five years to accelerate retirement of the nation’s coal plants and development of renewable energy. 


Details were not made public. The investment plan will be reviewed and revised further by Indonesia and its JETP partners before being made available for public review and comment, according to a statement from Indonesia’s JETP Secretariat. 


“The Indonesian public will have the opportunity to review the full draft text of the (plan) and submit comments and feedback,” Dadan Kusdiana, Indonesia’s Secretary General of the Ministry of Energy and Mineral Resources, said in a statement. 


A person with direct knowledge of the talks who was not authorized to comment on the deal told The Associated Press that new information regarding the country’s captive coal and mineral processing infrastructure and difficulties matching the financing with potential transition projects were some of the crucial reasons why the details were still being negotiated. 


“We welcome the submission of the (plan) to the Indonesian government. We understand that this is a global effort to address a very complex problem in Indonesia. We will review and ensure that it is aligned with Indonesia’s priorities in energy transition,” Rachmat Kaimuddin, Indonesia’s deputy coordinating minister for maritime affairs and investment, wrote in a statement. 


The investment and policy plan comes after Indonesia’s JETP was announced at the Group of 20 summit in November 2022. The deal also shifted Indonesia’s renewable energy policy, which will need to account for some one-third of the country’s power production by 2030. 


Experts have warned that Indonesia’s JETP deal and energy transition face significant challenges including retiring a relatively new network of coal plants, securing enough financing for the transition and ensuring it’s equitable for those who are likely to be impacted by the transition, such as the some 250,000 people employed by the country’s coal industry. 


The Indonesian government also plans to build new coal-fired power plants to power strategic infrastructure projects such as smelters, raising concern amongst stakeholders and environmental activists alike. 


“The International Partner’s Group failure to discourage the development of captive coal power plants would stifle any progress made from the JETP’s early retirement of coal power plants, and compromise the gains from rolling out renewable energy,” said Binbin Mariana, an Asia energy finance campaigner at Market Forces, a nongovernmental organization that monitors investments. 


Local stakeholders have also expressed concern over how the JETP funds will be provided via a mix of grants, concessional loans, market-rate loans, guarantees, and private investments. Indonesia’s JETP deal is anticipated to be comprised of some $10 billion in public sector pledges and another $10 billion from private lenders, coordinated by the Glasgow Financial Alliance for Net Zero, which includes Bank of America, Citi, Standard Chartered and other major banks. 


“We definitely would like to see more grants or concessional loans as the bigger part of the funding,” said Anissa Suharsono, an associate with International Institute for Sustainable Development. 


While some $20 billion is pledged through the JETP, the International Renewable Energy Agency estimates Indonesia would need $163.5 billion for its renewable energy technology, grid expansion and storage needs through 2030. 


The emissions targets could also still be part of the plan’s negotiations, said Deon Arinaldo, a program manager at the Institute for Essential Services Reform. 


According to research published last year by IESR and the University of Maryland, a more ambitious target than specified in the JETP and Indonesia’s current regulation must be implemented in order to be compatible with the 1.5 °C target goal of the Paris Agreement, which calls for countries to take concerted climate action to reduce greenhouse gas emissions in order to limit global warming. 


Source: Associated Press 


EU starts probe on Indonesian biodiesel avoiding import duties


The European Union said on Thursday it had launched an investigation into whether biodiesel from Indonesia was circumventing EU duties by going through China and Britain.  


The EU is Indonesia's third-largest destination for palm oil products and an important market for its biodiesel, which is made from palm oil. Indonesia is the world's biggest palm oil producer.  


The EU's probe followed an initial request from the European Biodiesel Board, an association of European producers.  


"The request contains sufficient evidence that the existing countervailing measures on imports of the product concerned are being circumvented by imports of the product under investigation," the European Commission said in the EU's official journal.  


"A change in the pattern of trade involving exports from Indonesia and the People's Republic of China and the United Kingdom to the Union has taken place following the imposition of the existing countervailing measures," it added.  


Indonesia's trade ministry did not immediately respond to a request for comment.  


Earlier this week, Indonesia requested World Trade Organization (WTO) dispute consultations with the EU over the EU's imposition of duties on biodiesel imports from Indonesia.  


Asked about this situation, a European Commission spokesperson told reporters that the EU was confident its duties on Indonesia were in full compliance with WTO rules and that the EU was ready to discuss the matter with Indonesia.  


Trade relations between the EU and Indonesia have been strained by the bloc's move to limit imports of commodities linked to deforestation, which is expected to curb EU imports of palm oil from top suppliers Indonesia and Malaysia.  


As well as biodiesel, palm oil is used widely in food and cosmetics.  


Welcoming the European Commission's investigation, the European Biodiesel Board said it estimated that imports circumventing duties may have cost the EU around 221 million euros ($240.34 million) last year.  


The association was also working with EU authorities to address allegations of fraudulent biodiesel imports from China, it added in a statement.  


Germany earlier this year asked the European Commission to investigate shipments from China amid industry concerns that imported biodiesel declared as based on recycled feedstock may contain cheaper oils. 
Source: The Jakarta Post