E4 Country Profile: Energy Efficiency Indonesia
Energy Efficiency in Emerging Economies (E4) programme findings and work
Indonesia remains the largest energy producer and consumer in Southeast Asia, making up over 36% of the region’s energy demand. While Indonesia has made significant progress in access to electricity and clean cooking since the turn of the century, by 2018, about 1.7% of the population, nearly all in still do not have access to electricity, and 32% of the population lack access to clean cooking technology. With electricity demand potentially doubling by 2040, and a rapid urban expansion, the role of energy efficiency and urban planning in cities remains critical.
Energy efficiency improvements in Indonesia since 2010 prevented 8% of additional energy use in 2018. Economic activity has been moving from energy-intensive industrial sectors to less-intensive manufacturing and service sectors, representing an additional avoidance of energy use, especially in the 2014 – 2018 period. However, these were partially offset, especially between 2010 and 2014, by increased energy use due to higher levels of appliance ownership and expanding building floor area, as well as a shift towards less efficient modes of transport.
These efficiency gains were achieved mostly in the industrial and service sectors, contributing almost 90% of the total energy efficiency savings achieved between 2010 and 2018.
Around 18% of Indonesia’s total energy use in 2018 was subject to mandatory energy efficiency policies. Industrial energy efficiency policy in Indonesia centres on government regulation 70/2009, which is responsible for the high coverage observed in 2018. The regulation requires all companies with an annual energy consumption exceeding 6 000 tonnes of oil equivalent (toe) to appoint an energy manager, develop an energy conservation plan, perform an energy audit and report energy consumption to government.
Percentage of energy use covered by mandatory energy efficiency policies in Indonesia, 2010-2018Open
Building codes in Indonesia only cover large commercial buildings. The lack of similar measures in residential buildings and in combination with lower appliance ownership limits the coverage in buildings to 5%.
Transport has the lowest policy coverage, due to the continued absence of fuel efficiency standards for passenger cars and trucks. Developing fuel economy standards or increasing electric vehicle uptake can help address the relatively low levels of policy coverage.
By 2040, under the NPS, the country would see a 75% increase in energy demand compared to today. The Efficient World Scenario could limit this growth to just 50% reducing energy consumption by 2 EJ with savings mainly coming from the buildings (38%) and industrial (35%) sectors, followed by the transport sector.
Energy savings by sector in Indonesia in the Efficient World Scenario vs the New Policies Scenario, 2012-2040Open
The cost effective measures incorporated in the EWS would also reduce CO2 emissions by 120 Mt CO2-eq by 2040 compared to expected trends and save households USD 7 billion due to reduced energy bills, as well as provide 26 million more families with access to clean cooking.
Avoided CO2 emissions in Indonesia in the Efficient World Scenario vs the New Policies Scenario, 2012-2040Open
The opportunities to increase energy efficiency based on the Efficient World Scenario are:
- In buildings, where most of the savings are available, Indonesia could further strengthen the MEPS and increase their coverage. In late 2018, Indonesia introduced a new MEPS and labelling system for residential air conditioning, with progressive increase to 2.92 EER (W/W) after July 2020. Coverage of fans and improvement of building envelope are additional opportunities especially for the future demand by cooling.
- In industry, existing regulations are intended to encourage large energy users to adopt more efficient practices. However, they do not cover less energy intensive sectors, where the largest opportunities in EWS exist and where electric motor-driven systems are common. The absence of MEPS for electric motors means there is a huge opportunity for improvement. If Indonesia were to introduce MEPS at the IE2 level, the same as in China, it could avoid nearly 8 PJ of industrial electricity use by 2030.
- In transport, developing fuel economy and infrastructure for electric vehicles would be key to obtaining the energy savings from the EWS. It is also key to ensuring energy security given Indonesia’s shift to being a net oil importer in 2004.
The E4 Programme supports several cross-sectoral initiatives such as capacity building through energy efficiency training weeks, a new Bahasa Indonesia version of the online energy efficiency indicators course, and a country-wide feature in the Energy Efficiency 2017 Market Report.
In buildings and appliances, the E4 programme piloted innovative data collection studies to support Indonesia’s policymaking for air conditioners and refrigerators. These data collection mechanisms also enable monitoring and verification of the country’s standards and labelling programme.
In industry, the E4 Programme is working with Indonesia in reviewing industrial energy efficiency regulations, including the revision of the Regulation 70:2009. The Programme has supported the development of the industrial energy consumption database and has also facilitated technical dialogues with IEA members to share best practices. Such activities contribute to the development of a basis for strengthening industrial energy efficiency policies.
Finally, in transport, E4 is supporting the development of a land-based transport roadmap, which includes facilitating workshops on EV strategy with other E4 countries, such as India, and initiating various data collection measures to support the development of Indonesia’s transport database.