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Indonesia’s push to reach net zero emissions can help power a new phase in its economic development

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Indonesia has a viable path to reaching its target of net zero emissions by 2060, bringing major benefits to its citizens in the process such as more secure and affordable energy supplies, according to a new IEA report released today. But key policy reforms and international support will be crucial to the success of the clean energy transition in the world’s fourth most populous country as it enters a new phase of its economic development.

The IEA’s Energy Sector Roadmap to Net Zero Emissions in Indonesia – a collaborative project undertaken with the Indonesian Ministry of Energy and Mineral Resources (MEMR) at the request of the Government of Indonesia – was launched today at the G20 Energy Transitions Ministerial Meeting in Bali under Indonesia’s first G20 Presidency. IEA Executive Director Fatih Birol and Indonesia’s Minister of Energy and Mineral Resources Arifin Tasrif also signed a Joint High-Level Statement that sets out a shared vision of Indonesia’s path to net zero, drawing on the Roadmap’s findings.

Indonesia’s economic development over the past half century has been a remarkable success story, lifting millions of people out of poverty and bringing electricity to almost all citizens across the country’s 17 000 islands. Access to affordable supplies of energy from the country’s abundant resources as well as revenues from fossil fuel exports have been important drivers of this success.

Today, the clean energy transition offers huge opportunities for the next chapter of Indonesia’s development as it seeks to become an advanced economy by 2045. According to the IEA Roadmap, many of the ingredients for reaching net zero emissions and advanced economy status are the same: innovation, knowledge, technology, and economic diversification.

For instance, Indonesia’s export revenues from critical minerals, which are needed for many clean energy technologies, are set to be greater in 2030 than its largest ever export revenues from coal. And even bigger opportunities exist if Indonesia can capture more of the clean energy value chain. At the same time, the clean energy transition and economic diversification will have significant impacts on Indonesia’s coal-producing regions, demanding attention from policy makers to ensure a fair and people-centred transition.

The IEA Roadmap shows that by reaching net zero by 2060, Indonesia would reduce total household energy bills as a share of income from today’s level. For the country’s economy as a whole, the pathway to net zero by 2060 would lower oil import bills by one-third in 2030 compared with a business-as-usual scenario. This saving on oil imports would by itself cover the extra cost the transition would require in terms of new investments – meaning that the transition would effectively pay for itself. An even more ambitious transition by Indonesia and other countries around the world, as envisaged in the IEA’s global Net Zero Emissions by 2050 Scenario, would yield even greater savings, the analysis shows.

“Indonesia has the opportunity to show the world that even for a country that relies heavily on fossil fuel exports, a pathway to net zero emissions is not only feasible but also beneficial,” said IEA Executive Director Fatih Birol. “We must be clear-eyed about the challenges, especially in areas that depend on the coal industry, but the economic opportunities more than compensate for the costs.”

“This Roadmap – which reflects the IEA’s status as the global authority and was conducted hand-in-hand with my Ministry – sets out a clear and achievable path forward, based on energy efficiency, renewables and electrification,” said Indonesia’s Minister of Energy and Mineral Resources Arifin Tasrif. “This demonstrates that a transition to net zero in Indonesia can be just, affordable and rich with opportunities.”

The IEA report stresses that the technologies Indonesia needs for the initial steps in its journey to net zero – such as energy efficiency solutions, solar, wind and electric vehicles – are already commercially available today and cost-effective, provided that the right policies are put in place.

Enforcing energy performance standards, especially for air conditioners, and supporting electrification of transport and cooking are essential to lower energy costs and emissions at the same time. Indonesian homes are set to add another 20 million air conditioners by 2030, shifting to the best available technologies could avoid annual electricity demand equivalent to the output of around 10 coal power plants.

Driving rapid expansion of renewables, especially solar, demands an immediate and sustained policy push. Solar projects in Indonesia are currently more than twice as costly as those in similar emerging market countries. But costs can be brought down by introducing transparent and competitive tariffs and a predictable project pipeline. At the same time, by allowing coal plants to operate more flexibly and remunerating them for it, Indonesia can reduce power system costs by more than 5% and help free up the space in the power system that needs to go to renewables.

To achieve net zero by 2060, Indonesia will need to almost triple energy investment by 2030 from today’s level. That means an extra USD 8 billion in investment a year by the end of this decade compared with the level in a business-as-usual pathway. Mobilising that additional financing will hinge on policy reforms and international financial support for which Just Energy Transition Partnerships (JET-P), as endorsed by G7 Leaders at their Summit in June, can provide a framework. International cooperation will also be critical to bring technologies such as nuclear power, hydrogen and carbon capture to market in Indonesia and to reduce costs.

“As a long-term and steadfast partner to Indonesia, the IEA is committed to continuing to provide leading analysis and practical solutions to help Indonesia achieve its energy and climate goals,” said Dr Birol. “I call on Indonesia’s international partners to do their part by mobilising clean energy finance through a Just Energy Transition Partnership and ensuring much needed technology transfers. The results will bring major benefits for both Indonesia and the world.”

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Renewable energy jobs rise by 700,000 in a year, to nearly 13 million

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Worldwide employment in the renewable energy sector reached 12.7 million last year, a jump of 700,000 new jobs in just 12 months, despite the lingering effects of COVID-19 and the growing energy crisis, according to a new report published by the International Renewable Energy Agency (IRENA) in collaboration with the UN’s International Labour Organization (ILO).

Renewable Energy and Jobs: Annual Review 2022, identifies domestic market size as a major factor influencing job growth in renewables, along with labour and other costs.

Solar growing fastest

Solar energy was found to be the fastest-growing sector. In 2021 it provided 4.3 million jobs, more than a third of the current global workforce in renewable energy.

With rising concerns about climate change, COVID-19 recovery and supply chain disruption, countries are turning inwards to boost job creation at home, focusing on local supply chains.

The report describes how strong domestic markets are key to anchoring a drive toward clean energy industrialization. Developing renewable technology export capabilities is also dependent on this, it adds.

‘Just transition for all’

ILO Director-General, Guy Ryder, said that “beyond the numbers, there is a growing focus on the quality of jobs and the conditions of work in renewable energies, to ensure decent and productive employment.

“The increasing share of female employment suggests that dedicated policies and training can significantly enhance the participation of women in renewable energy occupations, inclusion and ultimately, achieve a just transition for all.”

Mr. Ryder encouraged governments, organized labour and business groups “to remain firmly committed to a sustainable energy transition, which is indispensable for the future of work.”

Resilient and reliable

IRENA’s Director-General, Francesco La Camera, said that in the face of numerous challenges, “renewable energy jobs remain resilient, and have been proven to be a reliable job creation engine. My advice to governments around the world is to pursue industrial policies that encourage the expansion of decent renewables jobs at home.

“Spurring a domestic value chain will not only create business opportunities and new jobs for people and local communities. It also bolsters supply chain reliability and contributes to more energy security overall.”

Joining the renewable revolution

The report shows that an increasing number of countries are creating jobs in the renewables sector – almost two-thirds of them in Asia.

China alone accounts for 42 per cent of the global total, according to the report, followed by the EU and Brazil with 10 per cent each, and the US and India with seven per cent each.

Regional trends

Southeast Asian countries are becoming major solar photovoltaic (PV) manufacturing hubs and biofuel producers, while China is the pre-eminent manufacturer and installer of solar PV panels and is creating a growing number of jobs in offshore wind.

India added more than 10 Gigawatts of solar PV, generating many installation jobs, but remains heavily dependent on imported panels, the report notes.

Europe now accounts for about 40 per cent of the world’s wind manufacturing output and is the most important exporter of wind power equipment; it is trying to reconstitute its solar PV manufacturing industry.

Africa’s role is still limited, but the report points out that there are growing job opportunities in decentralized renewables, while in the Americas, Mexico is the leading supplier of wind turbine blades.

Brazil remains the leading employer in biofuels but is also adding many jobs in wind and solar PV installations. The US is beginning to build a domestic industrial base for the budding offshore wind sector.

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Guterres: ‘Global addiction to fossil fuels’ must end and a ‘renewables revolution’ jumpstarted

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Achieving a just and equitable energy transition is “one of the biggest challenges facing our world,” UN Secretary-General António Guterres told the Global Compact Board meeting on Sunday.

Climate disasters and skyrocketing fuel prices have made the need to “end our global addiction to fossil fuels” crystal clear, he said, underscoring the importance of investing in renewables, building resilience, and scaling up adaptation.

“Had we invested massively in renewable energy in the past, we would not be in the middle of a climate emergency now”.

Renewals: ‘Only credible path’

Renewables are “the only credible path” to real energy security, stable power prices and sustainable employment opportunities, said the UN chief.

He also maintained that the share of renewables in global electricity generation must increase from nearly 30 per cent today to over 60 per cent in 2030 and 90 per cent in 2050. 

“Leaders in business as well as government must stop thinking about renewables as a distant project of the future”, underscored the top UN official.

“Without renewables, there can be no future”.

Key energy priorities

The Secretary-General went on to outline his Five-Point Energy Plan to shift to renewables, beginning with treating the technologies as freely available “global public goods”.

“Identifying patents that can be made freely available – especially those relating to battery and storage capacity – are crucial for a rapid and fair energy transition,” he said.

Next, he highlighted the need to secure, increase, and diversify supply chains for renewable energy technologies, pointing out that supply chains for components and raw materials are “still concentrated in a handful of countries”.

Third, was to level the playing field for renewables.

“We have the technology, capacity, and funds,” said the UN chief, “but we urgently need to put policies and frameworks in place to incentivize investments and eliminate bottlenecks caused by red tape, permits and grid connections”.

Shift subsidies from fossil fuels to renewable energy was his fourth point, as he noted that each year, governments spend around half a trillion dollars to artificially lower the price of fossil fuels – “more than triple what renewables receive”.

“If we channel these resources and subsidies to renewables, we not only cut emissions; we also create more decent and green jobs,” he argued.

Financing the future

Mr. Guterres’ fifth and final point focused on the importance of tripling public and private investments in renewables to at least $4 trillion dollars a year.

“Upfront costs for solar and wind power account for 80 per cent of lifetime costs – meaning big investments today will reap even bigger rewards tomorrow,” he said.

However, this requires: financing to flow to those who need it most; adjusted risk frameworks and more flexibility to scale up renewable finance; and lowering financing costs for developing countries.

“The cost of capital for renewable energy projects in the developing world can be seven times higher than in the developed world,” flagged the UN chief, flagging that Africa attracts a mere two per cent of clean energy investments despite its vast renewable energy potential.

Walking the talk

According to Mr. Guterres, a just transition to a renewable energy future is everybody’s business, including the private sector to advance science-based targets and Just Transition plans, in partnership with labour organizations and civil society.

Lip service won’t do. We need credible actions and accountability,” he underscored.

Every business and investor; every city and country must “walk the talk” on their net-zero promises to realize the Paris Agreement and rescue the Sustainable Development Goals, added the UN chief.

“The UN Global Compact is poised to help in this vital effort,” he spelled out, urging everyone to accelerate action across industries and regions “to jumpstart the renewables revolution”.

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The Future of Energy Prices and How You Can Prepare Yourself

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Even in the best of circumstances, it is difficult to forecast energy costs, and the current level of market instability makes it impossible to state whether energy prices will decrease this year. Despite the fact that prices have fluctuated throughout the year, the general trend has been upward.

Energy researchers and research firm Cornwall Insight have predicted that prices may continue to rise well into 2024.

The prices you face won’t change for the rest of the year and into 2023, though, thanks to the revelation that the energy price guarantee has capped prices for both households and businesses.

Should you fix your energy rates till 2023?

The only approach to maintain bill stability in a volatile market and guard off future price increases is to fix your energy prices.

Although it’s impossible to forecast if prices will go up further, they have increased dramatically over the past year, and anyone who had a fixed plan in September 2021 would have saved a lot of money on their energy costs.

It’s doubtful that you’ll have to switch until at least April of next year due to the implementation of the energy price guarantee in October. This is due to the fact that most firms’ energy costs will be limited till then.

When in doubt, think about performing a Business Energy Comparison of rates from various trusted energy providers in the UK.

What would happen if you were unable to pay your business’s electricity bills?

It’s crucial to contact your provider right away to work out a payment plan if you are struggling to pay your company’s energy costs. In under 30 days of your missing payment, if you don’t resolve the issue with your supplier, they may take steps to cut off your energy supply.

Will the increases in energy prices ever stop?

The chief executive of Centrica, the holding firm of British Gas, has said there is “no reason” to anticipate gas prices to decline sometime soon, despite the fact that it is challenging to foresee exactly what will transpire in such a volatile energy market. He even predicted that there would be high petrol costs over the following 1.5–2 years.

The government seems to be dealing with tension by intervening and assisting customers by reducing the VAT or other fees that are not clearly connected to the wholesale energy prices.

Trade organizations have urged the government to provide financial assistance to company owners in the form of reduced energy-related VAT, a commercial energy price cap, as well as a Government Emergency Energy Grant for SMEs – basically, Covid-style aid for this most recent crisis.

Now that a price limitation on commercial energy has been established, there are few specifics available. Beginning on October 1, the price cap will be in effect for six months.

After three months, there’ll be a review to determine if the cap should be increased for particularly fragile sectors, such as the hotel industry.

How can you reduce energy costs for your company?

Businesses must lock in current prices as quickly as possible if they want to protect themselves against out-of-contract charges and any likely new price increases.

It might be beneficial to consider how and when you use gas and electricity if you wish to reduce the cost of your company’s energy bills. Think about the following, then:

•             Examine the times you heat your building.

•             Turn off appliances,

•             monitor the weather,

•              and get a smart meter to cut costs

•             Be aware of the price of water.

•             When they’re not in use, turn off the lights, or install light sensors.

•             Encourage your team to be energy conscious.

•             Ensure your structure is airtight.

•             Avoid using paper as much as possible.

•             Obtain an energy audit.

But you must also maintain reality. If your energy prices increase, you could still notice it on your income statement even if you implement all practical energy-saving strategies and drastically reduce your consumption since you still need to consume a minimum amount of energy to keep your business operating.

Considerations before selecting an energy agreement

There are different business energy tariffs available; if you select the incorrect one, your company will spend too much on energy supply.

Additionally, because you are bound to the terms of the contract when you sign a business energy agreement, you may be overpaying for up to 5 years.

Here’s why it absolutely is worthwhile to compare business gas and business electricity packages, even if you might be thinking if it’s really worth the effort.

If you haven’t yet changed your business energy supplier, your existing supplier will put you on an exorbitant “out of contract rates” arrangement. These prices may be up to double the cost of contracted rates and even more so in the present market.

When switching, you should be aware that the prices you receive will depend on a variety of factors, including how much energy you use, where your business is located, and whether or not your company is financially stable.

If your company has a low credit score, you may wind up paying higher prices since your company is seen to be riskier.

Additionally, it’s important to be aware that corporate energy providers do not provide dual fuel contracts, although if you subscribe to a gas and electricity arrangement from the same provider, those will still be two different energy contracts.

What if your firm is moving to a new location?

One of the two situations listed below will occur to your energy contract if your company relocates:

•             It will be moved to your new place of business.

•             It will be canceled, and you’ll have to establish a new agreement at your new location.

It’s uncommon to be given the option to cancel a commercial energy contract early after signing one.

This is so that your supplier won’t lose money if you terminate the contract before the predetermined end date since it will purchase the appropriate amount of energy to last you the whole period of the contract.

Moving your company is a rare opportunity to terminate your existing business energy contract slightly earlier and transfer to a better price, but you must carefully consider your alternatives before making the transition.

Your provider will handle the transfer of your current energy contract to your new location, ensuring no problems arise and that you are only charged for the period beginning on the day you relocate into the new location.

If you decide to transition to a new agreement with a different provider, you will need to make arrangements for the settlement of your last commercial energy bill or for any refunds you may be owed if your account has been positive.

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