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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Hungary’s transition to clean energy can enable it to achieve greater energy security and independence as it navigates the supply challenges that Russia’s invasion of Ukraine has created for countries across Europe, according to a new in-depth policy review by the International Energy Agency.
Hungary has a strong starting point for its energy transition thanks to rapid growth of solar PV and a solid base of nuclear power. But it still has considerable work ahead to achieve its objectives for emissions reductions and energy sovereignty.
Since the IEA’s last in-depth energy policy review in 2017, Hungary has increased its climate ambitions. In 2020, it became one of the first countries in Central Europe to put a carbon neutrality goal for 2050 into law and presented a long-term National Clean Development Strategy the following year. Hungary is aiming for 90% of its electricity generation to come from low-carbon sources by 2030.
However, Russia’s invasion of Ukraine has created a new set of energy security challenges in Europe. In response to the current global energy crisis, Hungary declared a state of energy emergency in July 2022 that allowed the government to increase domestic gas and coal production, secure additional gas imports from Russia and increase the output of the Mátra coal power plant. The government is also considering extending the lifetime of the four reactors at the country’s Paks nuclear power plant, which guarantees almost 50% of Hungary’s electricity supply.
“Prioritising energy efficiency and renewables is a pragmatic approach that aligns with Hungary’s energy and climate goals in the short term and the long term. It can avoid increases in both fossil fuel imports and emissions,” said IEA Executive Director Fatih Birol as the IEA released the report today.
Attila Steiner, Hungary’s State Secretary for Energy and Climate Policy, said: “Hungary has a strong commitment to renewables. As the next step, the government’s priority is to upgrade the national grid to be capable of integrating the rapidly growing electric capacity generated by weather-dependent energy sources. However, to guarantee supply security and reach our ambitions climate goals, it is imperative to maintain or even increase our reliable and emission-free nuclear capacity as well.”
As a landlocked country, Hungary is today heavily reliant on Russia for natural gas, oil and nuclear fuel imports and new nuclear investment. The IEA review calls on Hungary to reduce fossil fuel consumption and diversify its energy sources towards a broader portfolio of renewables by drawing on the considerable potential of its wind and geothermal energy resources as well as extending the lifetime of existing reactors, where safety permits.
At the same time, Hungary should make the best use possible of its energy market interconnections, which it has significantly increased in recent years, to get energy supplies from diverse routes, sources and suppliers. The IEA report highlights that Hungary has a critical role to play in the major task of improving Central and Eastern European countries’ links to regional gas storage sites and new LNG terminals elsewhere in the European Union.
The IEA report recommends that the Hungarian government adopt additional targets and policies to lower fossil fuel consumption, increase energy efficiency and promote investment in clean energy technologies, skills and jobs. Paying close attention to ensuring a fair transition, including providing adequate support for people and communities associated with the Mátra coal plant, will be crucial to secure a smooth phase-out of coal.
“A stronger focus on investment in clean energy technologies is critical,” Dr Birol said. “Hungary has a huge opportunity to develop hydrogen for industrial sectors. Continued investment in developing its solar PV, geothermal and wind resources will allow Hungary to reduce its reliance on natural gas and coal in both heating and power generation. Hungary possesses the technologies it needs to advance its transition toward a clean and more secure energy system, which in turn will improve regional energy security.”
Global employment in the energy sector has risen above its pre-pandemic levels, led by increased hiring in clean energy, according to a new IEA report that offers the first worldwide benchmark for employment across energy industries.
The inaugural edition of the World Energy Employment Report, which will be published annually, maps energy sector employment by technology and value chain segment. The report provides a data-rich foundation for policy makers and industry decision makers to understand the labour-related impacts of clean energy transitions and shifts in energy supply chains following Russia’s invasion of Ukraine.
The amount of energy jobs worldwide has recovered from disruptions due to Covid-19, increasing above its pre-pandemic level of over 65 million people, or around 2% of the total labour force. The growth has been driven by hiring in clean energy sectors. The oil and gas sector, meanwhile, saw some of the largest declines in employment at the start of the pandemic and has yet to fully recover.
With the recent rebound, clean energy surpassed the 50% mark for its share of total energy employment, with nearly two-thirds of workers involved in building new projects and manufacturing clean energy technologies. At the same time, the oil and gas sector is also experiencing an upswing in employment, with new projects under development, notably new liquefied natural gas (LNG) infrastructure.
The energy sector is set to see its fastest employment growth in recent years in 2022, however high input costs and inflationary pressures are adding to hiring and supply chain challenges already present in some regions and subsectors, such as solar, wind, oil, and gas. Policy responses to the pandemic and Russia’s invasion of Ukraine, including the US Inflation Reduction Act, will continue to add to new hiring demand and to shifting the status-quo of global energy supply chains.
Energy jobs counted in this report span the value chain, with around a third of workers in energy fuel supply (coal, oil, gas and bioenergy), a third in the power sector (generation, transmission, distribution and storage), and a third in key energy end uses (vehicle manufacturing and energy efficiency). More than half of energy employment is in the Asia-Pacific region. This reflects rapidly expanding energy infrastructure in the region and access to lower-cost labour that has enabled the emergence of manufacturing hubs that serve both local and export markets, notably for solar, electric vehicles and batteries. China alone accounts for 30% of the global energy workforce.
In all IEA scenarios, clean energy employment is set to grow, outweighing declines in fossil fuels jobs. In the Net Zero Emissions by 2050 Scenario, 14 million new clean energy jobs are created by 2030, while another 16 million workers switch to new roles related to clean energy. New energy jobs may not always be in the same location nor require the same skills as the jobs they replace, requiring policy makers to focus on job training and capacity building to ensure that energy transitions benefit as many people as possible.
“Countries around the world are responding to the current crisis by seeking to accelerate the growth of homegrown clean energy industries. The regions that make this move will see huge growth in jobs,” said IEA Executive Director Fatih Birol. “Seizing this opportunity requires skilled workers. Governments, companies, labour representatives and educators must come together to develop the programmes and accreditations needed to cultivate this workforce and ensure the jobs created are quality jobs that can attract a diverse workforce.”
Around 45% of the world’s energy workers are in high-skilled occupations, compared with about 25% for the wider economy. Some fossil fuel companies are retraining workers internally for positions in low-carbon areas to retain talent or to maintain flexibility as needs arise. However, this is not an option everywhere, and ensuring a people-centred and just transition for affected workers must remain a focus for policy makers, especially in the coal sector where employment has been declining consistently for several years.
Cities are central to the battle against global warming – they consume two-thirds of global energy and account for more than 70% of the world’s greenhouse-gas emissions.
About three of every four people in Europe live in urban areas. One of the challenges is how to supply them with reliable and affordable climate-friendly energy – especially if it comes from intermittent sources like wind or solar.
Utrecht in the Netherlands is spearheading an EU-funded project that is testing a range of clean-energy possibilities, together with Nice in France and Gothenburg in Sweden.
Utrecht itself is trialling using electric cars to help make the switch to renewable energy.
‘Charging points that are able both to store solar electricity in the car battery and to feed it back into the energy system were installed in the city,’ said Roel Massink, who works for the City of Utrecht. He is also coordinator of the EU project, called IRIS Smart Cities.
While the Dutch city is not the first to use such ‘bi-directional’ charging points, it is the first to test them on a district-level scale.
Such points enable electric vehicles to be charged during the day with energy generated from nearby solar panels, and to act as battery storage for that power.
When the cars are parked and plugged in, surplus power from the battery can be fed back into the national grid. This is especially useful in the evenings, when home energy consumption peaks.
‘It has a double function – balancing the energy system and providing clean-emissions transport,’ said Massink.
Utrecht has about 500 charging points of this kind already – and all future ones will be bi-directional. The next step is to combine car batteries with stationary storage batteries to form a ‘virtual power plant’.
‘If you could combine about 100 cars and 10 stationary batteries, you would have quite a big capacity of electricity that you can feed into the electricity grid when it is needed,’ said Massink. And then ‘you can really earn money on the energy markets.’
The city is working with a car-sharing initiative – We Drive Solar – rather than with private vehicles. The aim is to encourage people to opt out of private car ownership where possible and switch to using shared cars or other forms of transport.
IRIS is not the only EU project to work on lowering cities’ carbon footprint on a large scale.
Austria’s capital Vienna, Munich in Germany and Lyon, France, made clean-energy gains under a project called Smarter Together, which ended last year.
Between early 2016 and mid-2021, the three cities refurbished nearly 170 000 square metres of buildings, halving the energy consumption and carbon dioxide emissions of those structures. They also installed nearly 28 megawatts of renewables production.
‘It was a way to test new solutions and then to implement them faster,’ said Etienne Vignali, co-coordinator of the project.
Speeding up Europe’s green transition has become a bigger priority since Russia’s invasion of Ukraine in February. The war has disrupted supplies of oil, natural gas and coal to the EU, prompting the bloc to step up efforts to expand renewables and conserve energy.
In Lyon, Smarter Together accelerated work that was already taking place, said Vignali, who is also project manager at SPL Lyon Confluence, a company set up by city authorities to renew a run-down district.
Lyon has been transforming this deprived area for more than 20 years, replacing former industrial centres with new structures and public spaces, introducing renewables and retrofitting buildings.
While there was already significant solar output in the neighborhood, ‘thanks to Smarter Together we managed to double that production within a few years,’ said Vignali.
Another success was the construction of a district heating system that runs on biomass, a fuel made from organic material including plants.
The faster results came not only from having partners in various sectors – including industry, academia and local government – but also from bringing together cities to test similar energy options in different ways and contexts, said Vignali.
The project also collected detailed data on energy use, helping cities improve the effectiveness of building retrofits.
For example, analysis of one apartment block in Lyon found that more energy was lost through poorly insulated hot-water pipes than was consumed in the entire building.
Energy assessments usually just measure the average energy use of buildings rather than study where the consumption comes from, said Vignali.
Collecting such detailed information is hard, especially because many building contractors lack the training to install data meters and sensors.
‘If the meters are not properly plugged in, you get no data or wrong data and it’s completely useless,’ said Vignali. ‘The time and effort needed to ensure quality of data were much more than we thought they would be at the beginning of the project.’
Cities in the IRIS project have also been testing building retrofits and other ways to move to renewables and curb energy use.
‘We try to demonstrate new solutions for energy transition at district scale – what is needed to create sustainable, healthy urban districts which people are happy to live in,’ said project coordinator Massink.
‘But you can’t implement solutions single-handedly – you must integrate across sectors,’ he added.
The project’s cities are working closely with building owners, technology suppliers, governments, research institutes and – not least – residents.
For Massink, the involvement of city dwellers is indispensable for Europe’s green-energy transition.
The research in this article was funded by the EU and it was originally published in Horizon, the EU Research and Innovation Magazine. .
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