The Indonesian presidential election contest became even more interesting after the three president and vice president candidates officially registered with the General Election Committee. The three of them carry a vision and agenda that will be implemented in various sectors. The energy sector has always been a strategic issue considering its important role in various aspects of economic activity. The three presidential candidates raise the same strategic issues, as follows: energy security and development of renewable energy in energy transition.
Energy security is a narrative that is often discussed following the global energy crisis and soaring energy prices. Geopolitics and extreme climate change are factors that can disrupt the energy system and have an impact on the energy industry and global financial sector. The current Israel-Hamas war has the potential to escalate geopolitical tensions and is feared to trigger another global energy crisis.
The global energy crisis certainly affects Indonesian economy. As a country that imports crude oil, fuel and LPG, soaring crude oil prices have caused an increase in the burden of subsidies and compensation on the state budget.
A country with strong energy security will have the ability to overcome various disturbances and challenges that affect its energy sector. Energy security is a condition of ensuring the availability of energy and public access to energy at affordable prices in the long term and still paying attention to environmental protection, which is measured using 4 aspects, as follows: guaranteed availability, public acceptance (acceptability), affordability. and guarantee of access (accessibility). The National Energy Council (DEN) stated that Indonesia’s energy security index is currently at 6.61, which means it is in the “safe” category. Indonesia can not in the “very resilient” category because it still imports crude oil, fuel and LPG.
Orchestration of Energy Transition
Whoever is elected as president will be faced with quite complex energy sector challenges. There has long been an imbalance between demand and supply of energy commodities. Fuel consumption is currently in the range of 1.4 million barrels per day even though the oil lifting trend has fallen to 660 thousand barrels per day. The deficit in the supply of oil, fuel and LPG continues to increase, triggering an increase in imports and increasingly burdening the country’s foreign exchange. The primary energy mix for electricity generation in Indonesia is still dominated by coal-fired steam power plants. The realization of NRE primary energy mix throughout 2022 was 14.1%, even though NRE mix target reached 23% in 2025.
Oil and gas still play a complex role in the energy transition. On the one hand, oil and gas is still the main energy source to meet energy needs. On the other hand, oil and gas is also the subject of efforts to reduce carbon emissions and switch to clean and sustainable energy sources. The President is chairman of national energy council which is responsible for national energy policy. This is the role of the president as a skilled conductor in organizing the orchestration of the energy sector, as follows: strengthening synergy between various energy sector stakeholders, transforming the oil and gas sector in decarbonization agenda, and encouraging the strategic role of natural gas to bridge the transition from fossil fuels to renewable energy. The president is also expected to determine the selectivity of a competitive and economically viable NRE portfolio, which is implemented in stages by considering capacity, competitiveness, cost, availability and sustainability.
There are at least three policy priorities as a major agenda for the energy sector that require national leadership commitment, as follows:
First, completion of the revision of the national energy policy and revision of the general national energy plan which is in line with the vision of a Golden Indonesia as outlined in the National Long Term Development Plan 2025-2045 and the net zero emission (NZE) target as well as efforts to balance three strategic factors: energy transition, energy security, and energy diversification. Another priority is completing revision of Oil and Gas Law and draft New Energy and Renewable Energy Law. Revision of Oil and Gas Law is an important step to accommodate changes in the dynamics of oil and gas industry, making regulations more conducive and ensuring effective and sustainable management of energy resources, make regulations more conducive and ensure effective and sustainable management of energy resources. The NRE Law provides certainty and a legal basis for the development of renewable energy and various supporting programs, encourages a conducive investment climate, builds green industry, and encourages national economic growth.
Second, policy innovation that can attract investment and funding in the energy sector. Indonesia’s commitment to achieve NZE target requires relatively large investment and costs, more than US$ 1 trillion by 2060. The Ministry of Energy and Mineral Resources is targeting an energy transition program financed through the Just Energy Transition Partnership (JETP) to be implemented by the end this year 2023. The JETP Partnership is an energy transition funding initiative worth US$ 20 billion or around Rp. 300 trillion agreed between Indonesia and developed countries that are members of the International Partners Group (IPG).
Third, the development of low-carbon industry as an effort to realize the clean energy agenda while building a new and renewable energy industrial ecosystem.
National leadership with a strong commitment to support various agendas to accelerate the energy transition is urgently needed. This includes being able to oversee long-term energy plans into a policy roadmap that is adaptive to global energy dynamics and creates clean energy investment.