Regulation Provides Legal Certainty, Says Energy Minister about Renewable Energy Bill

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 457.Pers/04/SJI/2021

Date: 14 December 2021

Regulation Provides Legal Certainty, Says Energy Minister about Renewable Energy Bill

To create a more conducive, sustainable, and fair climate for the development of new, renewable energy (NRE), a law is needed as a comprehensive legal basis so that everyone can benefit from the NRE, Head of the Legislation Committee of the House of Representatives of the Republic of Indonesia (DPR RI), Supratman Andi Agtas, has said in a plenary meeting between the Legislation Committee and the Minister of Energy and Mineral Resources (EMR) on Tuesday (14/12).

Supratman said the parliament was very concerned with the development of the NRE because we would enter a period in which the Paris Agreement becomes a global and shared commitment to ensure that by 2050 fossil energy would no longer be used.

"In terms of the NRE bill, the agreement has been taken by our colleagues in the Commission VII of the DPR RI. The bill will contain a transition period of approximately ten years. So, we hope that by 2060, fossil energy will be completely replaced by new and renewable energy," said Supratman.

Supratman added that the bill that would be submitted to the government would also contain a transition period for Solar diesel power plants. Although the volume of diesel fuel use is low, but it has cost the government a huge subsidy.

"We would ask PLN to replace diesel power plants in the outermost and rural areas with NRE power plants, including the possibility of replacing them with gas through collaboration between Pertamina and PLN," Supratman continued.

Meanwhile, Minister of EMR Arifin Tasrif said the NRE bill was expected to provide legal certainty, harmonize relevant laws and regulations, strengthen institutions and governance for NRE development, create a conducive investment climate for NRE investors, and optimize NRE resources to support industrial development and national economy.

Currently, the NRE bill is still at the Legislation Committee. The government will immediately follow it up after the bill is submitted to the President.

"If the DPR RI as the initiator has submitted the NRE bill to the President of the Republic of Indonesia, the government will follow up by compiling an Inventory of Problems (DIM)," said Arifin.

There are strategic issues that should be resolved in preparing the NRE bill. First, whether the scope of the NRE bill covers new energy and renewable energy or only renewable energy.

Second, debottlenecking of regulations that hinder the development of NRE. In addition, a distribution mechanism through a power wheeling scheme is needed to provide a space for collaboration between business entities to provide and utilize NRE.

Third, setting the standards for renewable energy portfolios and carbon trade in the substance of the NRE bill which are in line with the provisions for carbon tax in Law Number 7 of 2021 on Harmonization of Tax Regulations and the provisions for economic value of carbon in Presidential Regulation Number 98 of 2021 on Carbon Economic Value.

Minister Arifin also said that arrangements for the transition of energy from fossil energy sources to new and renewable energy sources were needed to reach the 23% target of new, renewable energy share in the national energy mix by 2025.

"We support the main substance formulated in the NRE bill, such as the arrangements for the Level of Domestic Components (TKDN) which conform to the capacity of the domestic industry and pay attention to the competitiveness of NRE prices, the obligation to purchase NRE electricity, incentives for NRE development, fulfilment of renewable energy portfolio standards and the obligation to purchase renewable energy certificates, NRE prices and subsidies, and public participation," Arifin concluded. (IY)

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