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Indonesia’s Green Infrastructure Planning
By: Muhammad Dhafi Iskandar
Green is a color that often used to refer for something natural. In modern days and industrial era, the
term of green is v...
services that are available to all citizens. One of the vital requirements is on how to manage natural
resources responsib...
Government has closed the door to all mineral raw materials sold abroad without going through the
stage of processing. Woo...
Mr. Lukita Dinarsyah Tuwo, Minister Secretary of Coordinating Ministry for
Economic Affairs of Indonesia explained on the ...
4. Delivering green growth for nation (part 4). We need to focus on developing and implementing
green growth to the policy...
Challenges for this are not only in technocratic sides but also in the external factors. In the year of 2050,
the populati...
The solution and planning that they suggest is an integrated upstream downstream forestry business,
including the Investme...
the City Planning Department produced the map and also hired some experts, the Consultants, in which
consume a great deal ...
Mr. David from Adaro Energy said that Coal mining is one of the
potential energy sources, especially for the midterm
plan....
Risks that have taken by public sector must be viable to be guaranteed along with the final binding and
arbitration closur...
For the requirement of the local content, the Ministry of Trade and the Ministry of Industry regulate the
policy for it. H...
data interchange for about 30-40% in estimation. The second one is Shift policies (encourage eco-
friendly transport mode)...
effectivity. There is roadmap of national automotive industry from 2010 until 2025. One of the previous
policies in order ...
For further assistance & consultation, kindly contact:
Muhammad Ikhlas Modjo
E: mim@mimconsulting.co.id
P: +62 815 8200 89...
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Indonesia's green infrastructure planning

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based on the Indonesia Green Infrastructure Summit 2015 for Indonesian future planning of energy and infrastructures

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Indonesia's green infrastructure planning

  1. 1. Indonesia’s Green Infrastructure Planning By: Muhammad Dhafi Iskandar
  2. 2. Green is a color that often used to refer for something natural. In modern days and industrial era, the term of green is very important and become a symbol of environment friendly and better life quality. Many countries, including Indonesia, are also aims to realize their vision on green and healthy future for the next generations. Mr. Suryo Bambang Sulisto, Chairman of Indonesia Chambers of Commerce and Industry said that motivated by reasons which in the future, Indonesian population will be very large, the provision of infrastructure is needed to support the growth of the population. However, in this development, especially on the large scale is often hampered by limited funding from the government, which led the government to also rely on private investment. Indonesia is trapped by its strong dependence on non-renewable resources and foreign investment. Therefore, it is important to unite visions and perspectives of public and private in the scope of national and international. Initiatives towards green economy need to be encouraged, including through planning and collaboration on funding strategies and innovation. Ms. Sri Mulyani Indrawati, Managing Director of World Bank Group informed that the main goal of World Bank is to end extreme poverty. Rapid growth in economy is crucial because it makes people have chances and alternatives in order to improve their life. China has been adopting their green policy and makes a shift to improve their focus on productivity. Conventional economy that has been used in several decades, unfortunetely have negative effect on decreasing of natural resources and destroying the nature. It highly affects the poverty by creating the scarcity and limiting the access to several vital needs. We cannot rely on growth alone and the form on sustainability economy is needed. Infrastructure is the key to help a country achieve and gain its full potential. However, the projects that were funded must be bankable because it requires several conditions to meet. Hopefully, the project will help to improve
  3. 3. services that are available to all citizens. One of the vital requirements is on how to manage natural resources responsibly. A good policy is needed to support it. To have good infrastructures, we need electricity. However, we do face several challenges. In Indonesia, Coal has its percentage of more than 50% of the total energy mix. The use of local natural resources for local necessity could reduce the fiscal risk. For example, Turkey reduces its share of oil in their energy mix and goes to natural gas as their alternative. It reduces not only their energy expenses but also their level of pollution. In Indonesia, the activities of mining and palm plantation are making a huge contribution for economy. The negative side is, it reduce the area of tropical rain forest and create destruction on the environment. These opportunities on economic development are essential and must be taken. However, an act of smart and responsible resources management is needed. On the case of Illegal fishing, around 65% of coral reefs are threatened from these activities. Moratorium of fishing permits has been declared and must be used wisely to reduce and prevent illegal fishing that affect local fisherman. We need to end poverty in sustainable way, with good governance. The lost of material and non- material on illegal logging and revenue from land permit are not balanced, making a higher side on the negative result. Overlapping mandates often happens on land use. We need leadership, to make the shift from ground and exclusive to become inclusive. Nowadays, East Asia countries are the lead on green development programs and researchs. Mr. Jusuf Kalla, Vice President of the Republic of Indonesia stated that the policies of the past often lead to the environmental damage. This happens because Indonesia's economic policy in 1960-1970 was driven by logging and trading of Timber. However, many countries tend to blame states that produce wood raw material, whereas in fact that those countries also buy such product and is also indirectly contribute to this cause. This is a shared responsibility, between Indonesia and the world.
  4. 4. Government has closed the door to all mineral raw materials sold abroad without going through the stage of processing. Wood and forestry sectors are still needed, yet it requires good planning and organizing to be sustainable in terms of the environment and workers. Supporting the development of good infrastructure require fundamental change in the economy. Energy mix is a mix between various types of energy. Going forward, the government's plan is that Fossil Fuels will no longer be used and the energy from Coal will be limited. Reduction and restrictions programs are supported with alternative energies of LNG (Liquid Natural Gas) and renewable energy such as Hydro and Geothermal. Indonesian renewable energy potential is quite good. Green financing is also needed for the energy project financing program. The cheapest investment is on Diesel power plant, but requires greater operational cost, in terms of raw materials. Coal need greater investment than Diesel, but its operating costs are cheaper. Regarding the pollution levels, there is a new method called as 'Ultra Critical' to mitigate the effects of Coal pollution. Renewable energy investment is four times compared to Diesel energy investment and twice compared with Coal energy investment. The government announced for the supply of 10,000 megawatts through coal energy. In 10 years to come, 52% of energy will be produced by Coal, 24% from Natural Gas, 12% from Gasoline, and 10% comes from Water and Geothermal energy. In the future, the use of renewable energy will be increased to twice, and its long-term target of renewable energy will fulfill the needs of 30,000 megawatts. For Coal, the main plan is to reduce its pollution, as well as the expansion of the Coal mine and prioritize the deployment of power plants near Coal mines. This can reduce the negative effects of the environment and will be more efficient in terms cost. Incentives for alternative energy and disincentives for mining pure raw materials that sold without going through the process in Indonesia are needed. Prototype Project of Smart City The Smart city prototype project is located in Kutai Kartanegara. It could reduce the amount of CO2 pollution by 60% and water consumption by 30%.
  5. 5. Mr. Lukita Dinarsyah Tuwo, Minister Secretary of Coordinating Ministry for Economic Affairs of Indonesia explained on the planning of Indonesia’s development in green economy. As a country with the largest archipelago in the world, sea is very vital, along with its infrastructure as the key of unifier. Conducive environment creates underpinning fundamentals growth. The policies that have been made are for decrease of Oil consumption subsidy and reallocate the spending to infrastructure development. On global point of view, Indonesia’s economic growth and potential are still positive although it begins to slow down. The governments need to prepare a policy reform, at least for the medium term plan (5 years), human development, economic development and environmental development. Target for the economic growth is 8%, with the help of leading sector development. The special economic zone maps, made from the government of Indonesia are consist of Sei Mangkei, Tanjung Api-api, Maloi Batuta, Tanjung Lesung, Palu, Mandalika, Bitung, Morotai, etc. As for the prioritized industrial area, consist of Kuala tanjung, Mangkei, Tanggamus, Landak, Batulicin, Bantaeng, Palu, Teluk Bitung, etc. The infrastructure development plan, consist of roads, airports, ports, railways, harbor and BRT, and continued with broadband, reservoir, communal waste system, etc. There are stages for sustainable development. On the basis, green growth is a must. The current and future challenges are high competition of space for living and lesser natural resources available. There is no medium and long term trade off. We must aware on the short term transition. Indonesia has started on the green economy and need to concept the policy, institutional framework, regulations and fiscal incentives. A national strategy for green growth green development is needed along with its roadmap, ‘Green Growth Roadmap’. It consists of 4 different parts, such as: 1. Indonesia's growth trajectory (part 1); 2. Opportunity in green growth (part 2); 3. Mainstreaming green economy growth in policy, planning and investment along with relationship and partnership (part 3);
  6. 6. 4. Delivering green growth for nation (part 4). We need to focus on developing and implementing green growth to the policy; 5. The additional part (part 5) is to Integrated Green Growth into project development. National strategy is needed and mainstreaming is necessary. The mandatory for Biodiesel is 15% on the content of Diesel fuel and going to 20% in the future. Energy mixture must be developed and increased to minimize the use and potential risk of non renewable energy. To measure the result, indicators are needed to explain on how far we have implemented the green projects. Government is targeting that in 2025 we could apply the green GDP. Sustainable Landscape Management The main problem of landscaping is deforestation. It is good for agriculture except for logging and mining activities. Improvement is needed on the government management for natural resources. On the spatial planning point of view from Ministry of Agrarian, it is set on policy that all development has to follow the spatial plan. The vision is to achieve on national, economic and environmental goals. There will be sanction for those who did not follow the rule. Mr. Putra from the Ministry of Environment said that two third of Indonesian land, can be used as land banks. It is one of our responsibilities to keep the forest. However, we are faced with 2 contradictive roles. One is to provide land for the people to use and second is to maintain the environment. Development must not endanger the surrounding environment. Landscape could be seen as a living theater where people live and thrive. It is important to utilize natural resources and commodity with multiple proposes and needs to make it more efficient and effective at the same time. The key is on the coordination across sectors. Harmonizing all the sectoral plans is needed for implement the development programs. Another step could be done by publishing the map and website with available public data so that everyone will be able to see it and make sure the environmentally assessment has been be carried out.
  7. 7. Challenges for this are not only in technocratic sides but also in the external factors. In the year of 2050, the population of Indonesia will be mostly in urban areas. The changes will be on estimation of 40-60 million people relocating to urban area, which bring the cases of land grabbing, land converted to urban area, etc. Work on detail plans for Indonesia is still on the way. Yet, there are more than 5000 detail plans where local and central government must do. The main challenge is to move to an economy govern form of discretion. Sectoral differences, occurs because they do not have one single identical map. In consequances, we still require to look at the local city maps in order to know the details. This case is the biggest challenge to build the capacity, especially for the Indonesia development plans and spatial plans. Link and match with the investor should be the priority. What needed most are some actions. The Government of DKI Jakarta has the opinion that there must be Incentive and support, provided by the local government. Indonesia have spatial plans law from 2012, while the more detailed law was created in 2014. DKI Jakarta is now moving forward to other law regarding the reclamation of island in north of Jakarta. By the Law number 26, year 2007, they need to provide area for green open space. However, it is difficult because of the complexity of density and society in this capital city of Indonesia. There are only 9.6 % of green open spaces in Jakarta. It needs the size comparison of 12 times of Monas Park if DKI wanted to achieve the minimum area for green open space. This alternative approach can be accomplished by realizing innovative ideas from the example of green roof and natural wall (With plants surrounding the structure of building). The target set in 2030, to expect the increase of road ratio in order to decrease the C02 emission. PT. Riau, a company in plantation and forestry that have already heavily regulated by the government said that Indonesia need private sector to contribute. What it needs is on how to implement and enforce that while improving the reinforcement.
  8. 8. The solution and planning that they suggest is an integrated upstream downstream forestry business, including the Investment in the environment and the people, along with introduction of wood legality system to every business related to it. As for the restoration of the ecosystem project, as one of the CSR, should be given incentives instead of tax. Representative from The Ministry of Agrarian stated that not all of the local governments have the capability to make the map. They must rely on other local government or even the central government, especially for the detail plans. The Central Government, along with the Ministry, must support the Local Government by giving and delivering the expertise in order to train their local staff to have the required skills. Reference for the map is usually gained from the Geospatial Information Agency / Badan Informasi Geospasial (BIG). Unfortunately, there are only small percentage who have the ability to make the map. All forest maps must be based from the basic map produces by BIG. Again, the old problem of sectoral ego is still quite strong and must be eliminated because it creates problems such as different maps in each sector. The problem of using the map is that various institutions are utilizing different scale on it. The primary solution is to use only one map for the standardization. It would be wise if every ministry put the contribution together for the same goal and in the same steps. Another thing that should be done is to resolve conflicts between investment plans and land use plans. In order to move to the next step, it need better mechanism for conflict resolution through better reform in management. There are around 60% of land dispute in all of the land permit data, which is quite large. What can really be done is to synchronize between land registries and investment plans. Spatial planning shall be based on the strategic environmental assessment. The question is, do we have it yet? If we already have, the conflicts between company, community and government could be easily prevented. Because of that much portion on the land conflicts, the easiest way to build a toll road is through the sea. One of the good steps to do is to having a dialogue instead of going to the court when trying to resolve the dispute. It took a very long process for spatial plans along with the details because
  9. 9. the City Planning Department produced the map and also hired some experts, the Consultants, in which consume a great deal of cost and time. Spatial plan is not about space for environment but also for economy and sustainability for generations as one of the key issues. ‘Green’ is already adopted in the policy. What is need is to do some actions. There is the Presidential decree No 38 which needs to be optimized. Landscape management is very important and it could be use to eliminated the deforestation supply chain. We need one to one commitment, where every hectare planted, they must conserve one hectare. It is hoped that in the future, 95% of the company’s energy consumptions will be from Biomass. Technology offers the solution to make it more efficient and effective. For example, toll road problems that passed the natural forest could be solved with technology (elevated toll road). Most of the spatial plans are finised and ready to be used. It is advised to follow the rules and the plans created in order to prevent the sanction. It needs more active approach in the formulation of the spatial plans with contribution from the private sectors, to catch the need of companies along with the help of Chamber of Commerce. How Can We Make 35.000 Megawatt ‘Green’? Electricity with the amount of 10.000 megawatt will be delivering by PLN. Its main purpose is to provide green electricity in Indonesia called as the ‘Green Line’. Mr. Taufik from ConocoPhillips Indonesia stated that there is a global trend in power generation. Natural gas and renewable source of energy are projected to have the greatest percentage growth in energy source for global electricity. Natural gas is one of the fittest options for land uses in Indonesia. It uses less water and produce less C02 emission. The company focuses in upstream timeline and process: from discovery to delivery. However, there is a vital problem for the licensing processes of gas permit, exploration and production in Indonesia, mainly in the government side (bureucracy) that takes up to 15 years to complete all the processes.
  10. 10. Mr. David from Adaro Energy said that Coal mining is one of the potential energy sources, especially for the midterm plan. Resilient business model is needed to create sustainable value, which consist and linked to many things such as mining asset, mining service, logistic, infrastructure, power, etc. Strategy is centered on improving control and efficiency of the supply chain. In the example of another country, such as China, they use coal as one of the most viable sources of energy for electricity. The new innovation of Coal that has been developed is called as the ‘Envirocoal’. It has the lowest ash content among all the Coal mined in the in the whole world, which happens to be located in Indonesia. Another clean Coal technology that has been developed is located in Isogo, Japan. Ms. Chyntia from Indonesia Infrastructure Guarantee Funds (IIGF) mentions that her company supports the electricity plants of Indonesia. The drive is still on National Electrical Company (PLN) where they have most influenced decision for the operational aspect. It also has concern on vital issues such as environment and social. As the name suggest, the company main purpose is to guarantee the infrastructure projects. It aims to enhance the contribution to environmental sustainability with the final goal is to be able to provide 35.000 megawatt, both by Coal and non-Coal energy sources. IIGF based its criteria on following documents and information establishment, ownership, legal basis, and mandate. Capital is not an issue, because the government provide the aid for it. Guarantee Structure The structure for guaranting a project is by: 1. Improving credit worthiness of Public Private Partnership (PPP) projects, by managing the provision of government guarantee to improve credit worthiness of infrastructure PPP projects; 2. Risk advisory to government, by providing advice to the government on risk allocation and mitigation in infrastructure PPP projects; 3. Capacity building by the IIGF institute is by contribution to support the betterment of Indonesia’s infrastructure sector through workshops, capacity buildings and research.
  11. 11. Risks that have taken by public sector must be viable to be guaranteed along with the final binding and arbitration closure. It concern on environment issue and perspective, which leads to the green infrastructure. The company incorporates environmental risk mitigation in the heart of its operation. Mr. Fumio from Toshiba remark the overview of Indonesia’s electricity. To catch up the vigorous growth of demand, development of power supply resource is an urgent issue. What is required now is to increase the electric capacity to 35 Gig watts. Coal power plant is expected to exceed half of the total demand for following reasons: Rich Coal resources in Indonesia, Oil that exported to another countries, etc. In the term of Coal efficiency, Japan has the highest rate while India has the lowest. As for the recent technological trend in Indonesia, sub-critical power plants have been dominant. Sub-Critical needs 6,747 calories while Ultra Super Critical needs 5,783 calories and Advance Ultra Super Critical needs 5,280 calories. The recent Indonesia’s energy trend is to shift its main source of energy from Oil to Coal and accelerating the utilization of renewable energy. Toshiba energy solution line ups are Hydro, Geothermal, Wind, C02 capture, Mega Solar, Smart Grid, T&D, Thermal and Nuclear. Government stated the importance and obligation to follow the environmental law (Amdal) to support the green economy. Everyone in each company needs to fulfill and comply the government environmental guidelines. Risk regulation perspective must come to the framework and to be put in place for the system of monitoring. There are clean Coal technologies nowadays and one of the most optimum environments friendly is the Ultra Super Critical technology. The forecasting of energy in 2025 is mainly on Coal and Gas. Economy growth makes energy demanding higher and if we try to minimize the initial cost, there will be the disaster, because of the quality will not be high enough. One of the vital aspects is the affordability. The main purpose of guarantee is to support the project, that not only in technology, but also in other aspect of planning. It must and need to be a good competition that require well structure and well documented project. The Indonesia’s Transportation Society questioning on why the green technology is still expensive. The answer is because most of the resources come from imports. They put us as consumer and it is very important to know on how the government supports our technological research.
  12. 12. For the requirement of the local content, the Ministry of Trade and the Ministry of Industry regulate the policy for it. However, we need to see the reality if we have the capacity for it or not. The criteria of green and Low carbon should be followed by the trajectory development. The most important subject is the government as the process owner. Indonesia still has potential to many additional gas exploration and production. We can search for benchmark and copy on other country for the exploration and production, as well as accelerate the time needed for the processes. The pricing aspect is still need the support from the government with the market price of gas and incentives for the exploration. The future era will be the energy based on LNG and government should take active roles to build the infrastructures. Green Solution in ICT and Transport For this topic, we need to have our perspective in the climate change issue. Danang Parikesit, Chairman of Indonesian Transport Society said that for the emission reduction agenda, we need to focus on transport policy. The forecast of transportation is that private modes will dominate passenger travel while the Freight transport will heavily dominated by trucks. It is well known that land transport dominates the C02 emission in Indonesia. For the developing country with good economic growth, there is a theory in which the higher their income, the more the people will travel (for leisure or for business). Trucks travel less than busses and most of the time they travel empty. Approximately 10% of trucks are going on and out with containers everyday in Tanjung Priok Port. Improving mobility consists of three basic policies. The first one is avoid policies (reduce unnecessary transport volume). Reducing un-necessary travel requires substitute and behavioral change which is from physical mobility to virtual mobility. It leads to advancement in telecommunication, bandwidth and
  13. 13. data interchange for about 30-40% in estimation. The second one is Shift policies (encourage eco- friendly transport mode). Shifting to more energy efficient travel leads to changes in industry standard and incentives which have impacts for better fuel, better engine and better end-of-pipe emission capture for about 20-30% in estimation. The third one is Improve policies (eco-friendly technology introduction). Improving the infrastructure and mobility assistance leads to incentive for innovation that makes better infrastructure, operation system and better traffic management for up to 20%. Higher improvement possibility in urban area shows that Indonesian cities authorities implement the ‘wrong’ policy. Mr. Rudiantara as the Minister of Communication stated about the challenges that we need to face. One of its solutions is to change our mindset. The current global trend for telecommunication is broadband with the nature of using battery for its source of power. However, it has an issue with carbon emission on device since we need to charge the battery on conventional power sources. The more power consumption, the more emission will be produced. Fortunately, 4G technology makes the carbon emission become less than the previous technology. However, if there are many applications on your phone, more battery consumption will be needed. The plan for the 4G LTE Roadmap in Indonesia is divided by several steps. The first step was in December 2014 and followed by another steps up until 2019. By the end of this year, Indonesia will be fully covered by 4G. How can ICT - broadband help emissions reduction in other sectors, could be proven by several things such as: 1. Power (Demand Management, Time-of-day Pricing, Virtual Power Plant); 2. Transportation (Video Conferencing, Telework, Intelligent Traffic Management); 3. Agriculture and Land Use (Smart Water, Smart Farming, Livestock Management); 4. Buildings (Building Management System, Voltage Optimization); 5. Manufacturing (Optimization of Variable-Speed, Motor System, Automation of Industrial Processes); 6. Service and Consumer (Telemetering, e-Commerce, Online Media, Public Safety / Disaster Management). The Ministry of Industry explained about the green transportation and ICT industries development in Indonesia. Green industry is placed as one of the national goal with the priority of efficiency and
  14. 14. effectivity. There is roadmap of national automotive industry from 2010 until 2025. One of the previous policies in order to support the green economy, even though it is quite controversial is the Low Cost and Green Car (LCGC). Based on the point of view from the Ministry of Industry, the LCGC could help the boost of Indonesia’s economy in industrial sector, while some of the production could be used as export products. One of the main concerns is that import of ICT is much higher than export. Mr. Handry Satriago from General Electric informed that during the new era, in a new industrial world, we own lots of big data required and the abilities to solve problems in green items. The advancing of technologies nowadays is helping us to fulfill many needs. One of it is to reduce the amount of physical activities needed and it also includes the reduction of transportation because all of the information could be shared instantly and directly via internet, telephone, etc. It changes our mindset so much that it needs to transform and modify the government policy and the future planning.
  15. 15. For further assistance & consultation, kindly contact: Muhammad Ikhlas Modjo E: mim@mimconsulting.co.id P: +62 815 8200 890 Doddy Oktavianus Iskandar E: doddy.oktavianus@mimconsulting.co.id P: +62 813 1835 9197 Dian Oktaviani E: dian.okta@mimconsulting.co.id P: +62 816 184 7683 Disclaimer : this content is for general information purposes only, and should not be used as a substitute for consultation with profesional advisors www.mimconsulting.co.id Wisma Kodel - 11th floor Jl. HR Rasuna Said Kav. B-4 Jakarta Selatan 12920 T: +62 21 5290 2028 F : +62 21 5290 2027

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