This Week's Headlines (22 - 28 Oct 2022)

28 Oct 2022


  Indonesia to ban RON-88, RON-89 fuel sales in New Year 


  Indonesia will ban sales of its two most-polluting grades of gasoline, RON-88 and RON-89,
  starting Jan. 1 next year.  


  The Energy and Mineral Resources Ministry on Oct. 11 finally passed Energy Ministerial Decree
  No. 245/2022, which revised Energy Ministerial Decree No. 62/2022 on the price formula to
  calculate the retail price of gasoline and diesel distributed in gas stations. 


  Saleh Abdurrahman, a member of the Downstream Oil and Gas Regulatory Agency (BPH
  Migas), said that the ban aimed to encourage the use of fuel with higher octane numbers
  and reduce pollution.   


  “It has been confirmed [...] we have finished reviewing [the stipulation] with the technical team,”
  he told The Jakarta Post on Wednesday when asked for confirmation regarding the sales ban
  on gasoline with RON levels below 90 starting early next year. 


  State-owned oil giant Pertamina’s RON-88 Premium and oil and gas company PT Vivo Energy
  Indonesia’s RON-89 Revvo 89 brands, both still available on the market, fall into the category. 


  Jakarta previously planned to ban sales of RON-88 and RON-90 – both of which fall short of
  Euro IV specifications – in 2022 to lower the country's carbon emissions and narrow its fiscal


  However, the government then backtracked from the original plan, announcing that only
  RON-88 and RON-89 would be banned while RON-90 sales would continue indefinitely during
  the transition period. 


  Euro IV-compliant gasoline distributed by Pertamina includes RON-92 Pertamax and RON-98
  Pertamax Turbo, while other oil and gas companies, such as Vivo, British Petroleum (BP) and
  Shell, distribute RON-95 Revvo 95, BP 95 and Shell V Power, respectively. 


  The Environment and Forestry Ministry issued a regulation in 2017 mandating that Indonesia
  move to fuel with an octane level of at least 91, which would rule out the use of both Premium
  and RON-90 Pertalite, due to environmental concerns and to catch up with fuel standards in
  other countries. 

  Source: The Jakarta Post 




  Indonesia pledges more ambitious carbon emission cut 


  Indonesia has revised up its carbon emission reduction targets, pledging more effective land
  use and better energy policy to cut greenhouse gas emissions more than its 2015 Paris
  Agreement commitment, a minister said on Tuesday. 


  Indonesia is one of the world's biggest carbon emitters, with much of its pollution coming from
  forest and peatland clearance. 


  The government has set a new target to cut emission levels by 31.89% on its own or 43.2%
  with international support by 2030. That is more ambitious than its Paris Agreement pledge,
  which was to cut emissions by 29% or 41% with international help, its chief economic
  minister Airlangga Hartarto said. 


  The targets came ahead of next month's annual United Nations Climate Change Conference
  in Egypt, known as COP27, and as Indonesia prepares to host the G20 Leaders’ Summit in
  mid-November on the island of Bali. 


  "Indonesia has a commitment to reach net zero emissions by 2060 or sooner and that target
  must not slip away," Airlangga said in a statement. 


  The Minister did not explain how Indonesia would try to reach the new climate goals, but
  underlined efforts in recent years to develop the electric vehicle industry and set up a
  carbon trading scheme as measures that would help. 


  In a Sept. 23 document presented to the U.N., Indonesia said it would reduce emissions
  among others "through effective land use, spatial planning, the promotion of clean energy
  and sustainable forest management". 


  Some moves to reduce its pollution have included working towards phasing out coal power
  plants, stopping permit issuance for clearing primary forests, and replanting mangroves along
  the archipelago's coastlines. 


  However, it has also faced setbacks. A plan to start levying carbon tax this April has been
  delayed due to high global energy prices. 


  The International Renewable Agency (IRENA) in a report last week said Indonesia needs to
  invest US$332 billion in energy transition technologies and $80 billion in grid infrastructure
  development by 2030 to significantly raise the renewable portion of its energy mix, from just
  14% currently. 



  Source: Reuters 




  Indonesia exports could hit US$300 billion by 2024, spurred
 by resource 'downstreaming'


  Indonesia's exports could hit a record US$280 billion this year, with nickel-based steel
  shipments rising sharply after the country banned nickel ore exports, while shipments of
  other commodities got a boost from high prices, a senior minister said on Monday (Oct 24). 


  Exports could rise further to top $300 billion by 2024 as the government prepares to regulate
  exports of other commodities, such as copper, bauxite, and tin, to encourage investment in
  local downstream industries, Coordinating Minister of Maritime and Investment Affairs, Luhut
  Pandjaitan, said in an interview. 


  Southeast Asia's largest economy has been enjoying an export boom for more than a year due
  to rising commodity prices, which have been exacerbated by the war in Ukraine. 


  Indonesia is the world's biggest exporter of thermal coal, palm oil, and refined tin and a major
  seller of nickel-based steel, copper, rubber, and other resources. The government banned
  exports of nickel ore in 2020 in a move that has attracted investment in processing facilities -
  a strategy officials refer to as "resource downstreaming". 


  Luhut said the government was working on a downstreaming plan to develop an industry that
  would process bauxite, copper, tin, and, later on, palm oil, into higher-value products,
  replicating the success of the nickel export ban. 


  "Our exports last year were $232 billion. This year maybe $280 billion. Maybe by 2024, I think
  we can reach $300 billion or more," Luhut told Reuters. 


  "If this (downstreaming plan) works, by 2024, our economic growth will be exponential," he said,
  adding that Indonesia's gross domestic product could reach $3.5 trillion by 2030, almost tripling
  from the current $1.19 trillion in 2021. 


  Shipments of nickel metals will rise to nearly $30 billion this year, compared with $21 billion in
  2021 and about $1.4 billion in 2015, he said. 


  His rosy outlook has taken into account global uncertainties, including the potential drop in
  prices of some commodities next year, Luhut said, though he added coal and palm oil prices
  are expected to hold up in 2023. 


  He also expected Indonesia to be able to produce electric vehicle batteries by 2024. 


  However, Luhut declined to detail Indonesia's potential policy to regulate other commodity
  shipments, saying authorities were still considering whether to use an outright ban or tax
  instruments to deter exports. 


  President Joko Widodo last week said the government was still making calculations about a
  possible tin export ban and authorities were committed to steering the mining industry towards
  more domestic processing. 


  The European Union has complained to the World Trade Organization about Indonesia's nickel
  ore export ban and a dispute panel is due to announce a report this quarter. The president last
  month said Indonesia would likely lose in the dispute. 


  Source: CNA