Seeing Japan – Indonesia Collaboration in Energy Transition Cooperation
Holding the G7 presidency, Japan is increasingly active in establishing relations with several countries. One of them is Indonesia. The relations that have existed so far between Indonesia and Japan are widely visible on the surface. One of them is in the energy transition sector. Indonesia is in need of a large investment to achieve net zero emissions in 2060. An investment of more than 500 million US dollars is needed to make this happen. This is indicated by the great effort to reduce energy that uses fossil fuels (coal, oil and gas) in people’s lives. Including efforts from Japan to cooperate with Indonesia or vice versa in achieving net zero emissions.
Abundant Natural Resources: A Privilege for Indonesia
The abundance of natural resources owned by Indonesia is an important point for the continuation of cooperation between Japan and Indonesia. Natural resources such as hydrogen, geothermal are important values to be further developed into renewable energy. This is a breath of fresh air for Indonesia, which is trying to achieve net zero emissions by 2060.
Replacing fossil fuels such as coal, oil and gas to renewable energy requires extra effort, Indonesia which is rich in energy resources requires a lot of money in terms of exploration of natural resources. renewable energy resources, such as hydrogen, geothermal. renewable in Indonesia. One of them is through a funding scheme through the Asian Zero Emission Community (AZEC). Through this funding, Japan, which is known to be very generous in helping developing countries in terms of energy, is expected to be able to bring change to the renewable energy transition in a country rich in energy resources, Indonesia. This transition certainly requires a short and gradual process.
State Electricity Company of Indonesia abbreviated as PLN, states that dependence on new coal will decrease in 2030. This is due to the presence of power plants from renewable energies such as geothermal, solar, hydrogen and nuclear and wind (Kompas, 2023).
Japan’s Investment to Indonesia
Indonesia, with all its abundance of energy resources, is considered capable of developing an energy transition. The development of electricity from geothermal, water and biomass are the main sector. This was conveyed by the Government of Japan through Deputy for International Affairs, Ministry of Economy and Industrial Development of Japan Izuru Kobayashi. He stated that his party was ready to assist Indonesia in achieving net zero emissions in 2060 with an environmentally friendly funding and technology assistance scheme.
The above was also supported by another Japanese party, namely from Sumitomo Mitsui Banking Corporation (SMBC). Quoting from IJ Global, SMBC has financial assistance to Asia Pacific countries for clean energy projects through Mitsubishi UFJ Financial Group of US$1.5 billion, Sumitomo Mitsui Financial Group of US$1.2 billion, and Mizuho Financial Group of US$1.2 billion. 1 billion US dollars. In Indonesia alone, as of September 2022, SMBC had invested US$221 million.
Various forms of support by Japan as donors and companions for Indonesia to develop renewable energy should be appreciated. According to the author opinion, this is a challenge for the Government of Indonesia and all of stakeholders inside, to create an investment environment that is safe, good and useful for Indonesia’s future. The use of fossil fuels such as coal for power generation needs to be slowly substituted using renewable energy. The Jokowi administration’s policy of subsidizing electric vehicles for the public can be an entry point for the continuation of Indonesia-Japan collaboration in realizing the energy transition.
Nuclear Energy & Pakistan’s Economic Development
Pakistan is going through a tumultuous time. Its economic condition is deteriorating every day, and there are even concerns about Pakistan going towards default. However, the Pakistani finance minister vehemently denies Pakistan’s possibility of defaulting. However, to keep Pakistan out of economic turmoil and ensure economic security in the long term, a sustainable, cheap, and clean source of energy is required. Nuclear energy is a great source of clean and green energy.
In the book, “The Quest: Energy, Security, and the Remaking of the Modern World,” Daniel Yergin argues that nuclear energy creates an unbreakable link between energy and the economy. It empowers nations to achieve economic security by increasing industrial competitiveness, increasing jobs, and reducing dependence on costly imports. Pakistan can also utilize nuclear energy to ensure long-term economic security.
Nuclear Power Plants (NPPs) are already contributing to Pakistan’s economy. NPPs generated 2350 megawatts of energy from July 2020 to March 2021. There was a significant increase in the capacity of these power plants from July 2021 to March 2022. These plants increased their capacity from 2350 megawatts to 3550. Furthermore, during this period, NPPs produced 12 percent of countries’ electricity needs. Pakistan Atomic energy commission has targeted producing 8000-megawatt electricity by 2030.
According to the International Atomic Energy Commission, electricity through NPPs has shown positive results in Pakistan’s economy. Pakistan lacks money and energy, which hampers economic growth.
According to Bloomberg, factories in Pakistan were warned that they might be unable to sustain production due to high energy costs. It became impossible for 40000 factories in Karachi to keep working due to a power shortage. Poor energy supply worsens the firm’s productivity and profitability.
According to the study published in Energy Strategy Review, poor energy significantly impacts profitability and productivity. This study analyzed the impact of energy on the profitability and productivity of 424 non-financial listed companies in Pakistan from 2001-2017. Seven measures, in which four measures of electricity shortfall (i.e., neutral period (NP), increasing shortfall (IS), worst shortfall (WS), decreasing shortfall (DS), energy consumption (EC), energy price (EP), and access to electricity (ATE)) were used to examine the impact of energy on the profitability of these companies. During increasing shortfall, worst shortfall, and decreasing shortfall, companies’ profitability was reduced by 39 %, 36 %, and 33 %. Furthermore, this study also showed an increase in companies’ profit by 33 percent during the stable energy supply period.
This study highlights that a stable energy supply is important for economic security. Lack of energy leads to economic insecurity because when firms are not profitable, they will not fire people and incline to shut down their businesses. It will create unemployment as well as people’s purchasing power will decline. Furthermore, when domestic production declines, Pakistan will import the products to meet the need. It creates a balance of payment issue.
Furthermore, the energy shortage also reduces foreign direct investment in Pakistan. In 2019, according to the World Bank Ease of Doing Business Index, Pakistan was ranked 108th out of 190 countries due to the energy crisis. When foreign direct investment is not coming due to the energy crisis, domestic factories’ profitability declines due to the energy crisis, and factories are also shifting their problems for Pakistan’s economy, which is already facing many challenges. This year, Pakistan also decided to close malls and businesses at 8: 30 pm because Pakistan wanted to save 60 billion rupees in terms of the cost of importing fuel to run electricity plants.
Therefore, Pakistan must start incorporating nuclear energy in its energy planning. The government has introduced different energy policies in the past, for instance, the power generation policy 2015 and the Alternative Renewable energy policy. Both of these energy policies talk about affordable and sustainable sources of energy. Nuclear energy is the cleanest source of energy as well as the most affordable form of energy after hydro. However, unlike hydro, whose production depends on the water and seasons, nuclear power is a stable energy source.
According to the achieve net zero targets, 100 billion dollars should be invested annually. Pakistan’s energy policy also wants to achieve sustainability. Therefore, Pakistan must invest in nuclear power plants to ensure economic security. Furthermore, according to the World Nuclear Association, the cost of building nuclear power is less competitive as compared to other forms of electricity generation. In addition, small modular nuclear reactors will completely transform the landscape of nuclear energy. Hence, Pakistan must invest in nuclear energy to ensure economic security. It will reduce the cost of electricity, make businesses competitive and ensure economic security.
African Countries Embarking on Nuclear Technologies Must Adopt the IAEA Approach Framework
With energy for both domestic and industrial use still in deep deficit, a number of African countries are looking to install nuclear plants as part of the energy mix. But the two principal setbacks encountered are (i) getting through the pre-installation technical stages or processes, (ii) identifying sources of finance for the construction and (iii) dealing with nuclear waste and employment of well-trained staff.
The International Atomic Energy Agency (IAEA) sets the principles and conditions for the facilities of a major nuclear power programme and for the choice of construction sites to att the technical aspects aimed at ensuring nuclear safety.
It sets requirements for controlling dangerous release of radioactive materials, in case of an unexpected catastrophic incident or crisis, for instance an attack of any kind from or against the plant, targeting the reactors, risky fuel storage and any other critical sabotage on the infrastructure.
The Chernobyl disaster in Ukraine and Fukushima in Japan, remind the world of the human and environmental costs of nuclear power accidents. Millions of people are still suffering from radiation and radiation related diseases till today.
Records show many African countries opting for building nuclear plants in order to find long-shelf solutions to chronic power shortages. Several agreements with Russia has not materialised primarily due to lack of funds. With training our research shows that since 2010 hundreds of students from Algeria, Ghana, Egypt, Zambia, Kenya, Nigeria, Tanzania, Uganda, Ethiopia and South Africa have received nuclear and related education at leading Russian educational institutions.
Adopting nuclear energy is a long process. Here is an example from Ghana. Under Nana Addo Dankwa Akufo-Addo’s administration, the roadmap of the nuclear power programme was planned to commence construction by 2023 and inject nuclear energy into the grip by 2030. Last May, Ghana completed phase two of nuclear power infrastructure development. As part of efforts to become a climate-resilient and zero-carbon energy country, Ghana has completed Phase II of the Nuclear Power Project, which includes the approval of a site for a nuclear power facility.
Deputy Energy Minister, Andrew Kofi Egyapa Mercer, announced this during a symposium on nuclear power infrastructure development. “We have currently received approval for the acquisition of our preferred and backup nuclear to host Ghana’s first nuclear power plant. And meeting our energy demand is necessary to sustain our industrial and economic growth, which is required for a middle-income economy,” he stated.
Mercer noted that the world is shifting to greener energy sources, and nuclear power is expected to be a significant source of energy. As a result, Ghana cannot afford to be left out of the global drive for energy security. “The world is migrating to cleaner sources of energy and nuclear is envisaged to be a critical source of energy. Ghana can therefore not be left out in this global search for energy security,” he added.
In 2022, President Akufo-Addo integrated nuclear technology into the country’s power generation mix. The president explained that this was consistent with the global collective commitment to the long-term availability of power and the peaceful use of nuclear energy for the benefit of society, to accelerate industrialization, and to push economic progress.
The Director of the Nuclear Power Institute, Professor Seth Kofi Debrah, says developing an attitude of consistency will aid in the nuclear plant process to become successful. The long term plan was evident when Ghana began its nuclear energy journey in the 1960’s until it was truncated. Ghana is anticipated to completely switch to nuclear energy by the year 2070, however, this will cost $581 billion.
Ghana’s nuclear programme has justified the need for alternate baseload power for industrialisation, limited hydro sources, postulated decline of gas, tariff reduction for industries, desalination, employment creation and climate change commitments.
Prof. Debrah said four candidate sites were initially selected for the construction of the nuclear power plant and after further studies by Ghanaian researchers, the team ranked the sites to settle on the first and the second being a backup. “We need approval report from the regulator by the end of Phase II. We also want to have a site evaluation report for construction permit at the end of Phase II. Construction will start at the end of Phase II,” he said.
Prof. Debrah said the team was working on a report on the preferred vendors and was hopeful that the report would be completed and submitted for consideration by Cabinet. It was necessary for the country to add nuclear energy to its energy portfolio to become a baseload energy source to support massive industrialisation in the wake of the dwindling traditional energy sources.
As of 2021, hydro accounted for 38 percent of the country’s energy generation portfolio whiles thermal accounted for 60 per cent (making it the baseload). Solar and biomass contributed 1 per cent each to the energy mix. Experts have raised concerns about the cost of power from thermal sources and there are fears that electricity prices may continue to go up if the country did not adopt cheaper energy sources. It is estimated that 40 per cent of the production cost of industries goes into electricity tariffs.
South Africa could not pursue its nuclear power simply because of the opacity in the deals signed by the former President Jacob Zuma with Russia. There is only one nuclear power plant on the entire African continent, namely, Koeberg nuclear power station in South Africa. Commissioned in 1984, Koeberg provides nearly 2,000 megawatts, which is about 5% of installed electricity generation in South Africa.
The South Africa $76 billion deal with the Russians to build a nuclear power plant collapsed along with the Government of Jacob Zuma that negotiated the deal in secrecy, in fact when such corporate projects have to be discussed by the parliament and necessarily have to pass through international tendering process. Russia and South Africa concluded an intergovernmental agreement on strategic partnership in the nuclear sphere in 2014. The agreement provided in particular for construction of up to eight NPP power units.
Rwanda’s annual budget stands at US$3 billion while the construction of the nuclear power plant would cost not less than US$9 billion which is equivalent to Rwanda’s entire gross domestic product. Talks are underway on the construction of a nuclear power plant in Burundi, Ethiopia, Ghana, Mozambique, Nigeria, Tanzania and Zambia.
Shadreck Luwita, Zambian Ambassador to the Russian Federation, informed that the processes of design, feasibility study and approvals regarding the project have almost been concluded. The site of the project is yet to be designated as it is equally a process and it is envisaged that construction should commence, in earnest, not later than the second half of 2018.
In addition, he affirmed that the Russians envisaged technology transfer in the development of this massive project by way of manpower development capacity. For now, there are only a few Zambian nationals, who are studying nuclear science in one of the Russian universities in Moscow.
The Zambian Government hopes that upon commissioning of this project, excess power generated from this plant could be made available for export to neighbouring countries under the Southern African Development Community Power Pool framework arrangement.
In the case of Egypt, the agreement was signed in 2015, and it was only in 2022 that Russia granted a load of $25 billion for the four plants. The total cost of construction is fixed at $30 billion. El-Dabaa is the first nuclear power plant in Egypt and the first major project of Rosatom in Africa. After several years of delay, however, Rosatom began laying the concretes for the El Dabaa units. According to the project estimates by Rosatom, construction of all four NPP units is planned for completion by 2028-2029.
Many other African countries are already working on joining the atomic club in one form or another, whether it be the construction of a Nuclear Power Plant or a research reactor or the development of nuclear infrastructure or the training of professional personnel. Russia has agreements with Algeria (2014), Ghana (2015), Egypt (2015), Ethiopia (2019), Republic of Congo (2019), Nigeria (2012, 2016), Rwanda (2018), South Africa (2004), Sudan (2017), Tunisia (2016), Uganda (2019) and Zambia (2016). Memoranda of Understanding (MOUs) were signed with Kenya in 2016 and Morocco in 2017.
A nuclear power program is a complex undertaking that requires meticulous planning, preparation, and investment in time, institutions, and human resources. The development of such a program does not happen overnight and can take several years to implement. All countries, which embark on the path towards the peaceful use of nuclear technologies, do so by adopting the IAEA Milestone Approach framework.
In conclusion, African countries considering adding nuclear power to the energy mix to enhance economic development and provide a stable and affordable supply of electricity for the people must have the necessary funds and be ready to pass through step-by-step technical procedures. Alternatively, the renewable energy potential is enormous in Africa. Grand Inga are the world’s largest proposed hydropower scheme.
It is a grand vision to develop a continent-wide power system. Grand Inga 3, expected to have an electricity-generating capacity of about 40,000 megawatts – which is nearly twice as much as the 20 largest nuclear power stations. Another great resources is the Grand Ethiopian Renaissance Dam on the Blue Nile River in Ethiopia under construction since 2011. Researchers and Experts strongly believe and further estimate that the cost of building nuclear power does not make any sense, when compared to the cost of building renewables or other sources of energy, by pulling all those financial resources together in the continent, to solve energy shortages across Africa.
Strategic Partnership Opportunities among ASEAN countries towards Renewable Energy
Quoting from Singapore’s Prime Minister, Lee Hsien Loong, during his plenary speech at the 42nd ASEAN Summit in Labuan Bajo (Wednesday, May 10, 2023), which promotes other ASEAN countries to have a joint power grid (based on an article published by Channel News Asia). This statement is highlighted after the success made by the Lao PDR-Thailand-Malaysia-Singapore project in supplying renewable energy. In recent years, the importance of renewable energy has become increasingly apparent as countries worldwide seek to reduce their carbon footprint and address the impacts of climate change. The ASEAN region, comprising ten Southeast Asian countries, is no exception towards the movement. As a region with a rapidly growing energy demand, ASEAN countries are looking to renewable energy as a critical solution to address their energy needs while mitigating climate change by shifting towards renewable energy. In this context, strategic partnership opportunities among ASEAN countries can be crucial in accelerating the Sustainable Energy Transitions Initiative.
Renewable Energy Opportunities in the ASEAN Region
The ASEAN region has diverse renewable energy resources, including solar, wind, hydro, geothermal, and biomass. According to the International Renewable Energy Agency (IRENA) in 2018, wind energy is potentially growing in the Philippines, Indonesia and Vietnam because the wind speeds are between six to seven metres per second. On the other hand, IRENA and ACE (2016) highlighted geothermal potential in Indonesia and the Philippines. Besides, Indonesia, the Philippines and Singapore also have opportunities to explore ocean energy since the geography position is an archipelago (ASEAN RESP, 2016).
However, despite the potential of these resources, the region still relies heavily on fossil fuels, particularly coal, to meet its energy needs. According to the study “The ASEAN Climate and Energy Paradox” by I.Overland, H. F. Sagbakken, H. Chan, M. Merdekawati, B.Suryadi, N. A. Utama & R. Vakulchuk, the energy demand from fossil fuels between 2000 to 2018 resulted to 85% while the share of renewable energy in the energy mix remained. This reliance on fossil fuels contributes to climate change and exposes the region to energy security risks and price volatility. As a result, there is a growing recognition among ASEAN countries that renewable energy can play a critical role in reducing dependence on fossil fuels and achieving sustainable energy systems.
Countries Strategic Partnership
ASEAN countries can accelerate the deployment of renewable energy technologies and overcome common challenges. Some countries have already made significant progress in developing their renewable energy sectors, while others are still in the early stages of deployment. By working together, countries can learn from each other’s experiences and leverage their strengths to achieve renewable energy goals.
The unprecedented COVID-19 pandemic has highlighted the importance of resilience and sustainability in the energy sector. The pandemic has disrupted energy supply chains, and more demand for renewable energy will rise in 2020. The key players in the energy sector should form more strategic partnerships to encourage energy trading in response to the high demand for electricity across the region in the future.
As a result, strategic partnerships among ASEAN countries can help accelerate the transition to renewable energy and create a more resilient energy system that can withstand future shocks. In February 2023, the Electricity Generating Authority of Thailand (EGAT) and Tenaga Nasional Berhad (TNB) entered into a Memorandum of Understanding (MoU) to conduct a feasibility study to enhance the interconnection of the power grid between Peninsular Malaysia and Thailand.
Benefits of Building Strategic Alliance
The development of regional energy infrastructure can significantly impact regional energy infrastructure development. Establishing interconnectors and cross-border electricity trading can enable ASEAN countries to share renewable energy resources and optimise their use. This can address the issue of intermittency, which is a common challenge for renewable energy sources. Through diversification of renewable energy sources and sharing resources, ASEAN countries can create a more stable and resilient energy system by diversifying renewable energy sources and sharing resources.
In addition to sharing knowledge and infrastructure, strategic partnerships create opportunities for joint investments in renewable energy projects. By pooling their resources and expertise, ASEAN countries can undertake more significant and complex projects which require more work executions and upskill their employees through tacit knowledge. Most of the electricity firms in the ASEAN region are state-owned companies and require endless government support. For instance, governments can collaborate to develop large-scale renewable energy projects, requiring substantial capital investment and technical expertise. Joint assets can attract private sector investment and reduce the financial risks associated with renewable energy projects.
A strategic partnership can promote the adoption of policies and regulations that support the growth of renewable energy. ASEAN countries can develop common standards and rules for deploying renewable energy technologies, such as feed-in tariffs and tax credits. ASEAN countries can create a more predictable and stable policy environment for renewable energy investment.
Future of Renewable Energy
Other than the potential benefits of strategic partnerships, ASEAN countries may need to construct more institutional mechanisms to facilitate regional cooperation on renewable energy. There are existing platforms for cooperation among ASEAN countries, such as the ASEAN Centre for Energy and the ASEAN Power Grid. These platforms are more targeted initiatives. ASEAN countries shall also focus on renewable energy and facilitate collaboration among relevant stakeholders, including government agencies, industry players, and civil society organisations.
One notable initiative is the recent launch of the ASEAN Catalytic Green Finance Facility (ACGF), which aims to mobilise private sector investment for green infrastructure projects in the ASEAN region. The ACGF, which the Asian Development Bank (ADB) supports, will provide loans and technical assistance to project developers and financial institutions to support the development of renewable energy and energy efficiency projects. This initiative is an example of how strategic partnerships between governments and international organisations can help to catalyse private sector investment in renewable energy. According to ADB’s website, realising the shortfall of green infrastructure at $100 billion per year, private capital should consider grasping the opportunities to fill the gap to accelerate renewable energy growth.
The development of offshore wind projects requires significant technical and financial resources. Countries can address these challenges through strategic partnerships by pooling resources and expertise to develop large-scale offshore wind projects. For instance, several countries, such as Vietnam, Thailand, and the Philippines, are exploring offshore wind’s potential as a key renewable energy source. Based on the article published by Nikkei Asia entitled “Vietnam Offshore Wind Power Sparks Influx of Foreign Investment”, during the COP26 United Nations Climate Summit 2021 in Glasgow, the Vietnamese Prime Minister, Pham Minh Chinh mentioned the government’s commitment to shifting to renewable energy through the wind power in which accounts for about 5% of energy on a power generation capacity at the moment and the government plan to raise till 30% by 2025 despite the challenges faced.
In conclusion, strategic partnerships among ASEAN countries towards renewable energy have the potential to accelerate the transition to a low-carbon energy future, promote regional energy security, and support sustainable economic development. However, realising this potential requires more institutional coordination, financial resources and inclusive stakeholders’ involvement to address the future landscape of renewable energy. By working together and leveraging their strengths, ASEAN countries can create a more sustainable energy future that benefits people and the planet.
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