"Challenges and best practices in financing to accelerate industry decarbonisation", OECD Series of Webinars on low carbon hydrogen and industry decarbonisation, 14 June 2023
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Green Industry Policy Advances Net Zero Goals
1. GREEN INDUSTRY POLICY IN SUPPORT OF
NET ZERO EMISSION ACHIEVEMENTS
Jakarta, June 14, 2023
Green Industry Center
2. 6 SDGs related to the manufacturing
sector
Presiden Jokowi Remarks on Climate Change and Green Economy
2
• SDGs: Sustainable Development Goals
Nationally Determined Contribution (NDC) Indonesia
THE FIRST NDC IND (2016) - 29% & 41%
ENHANCE NDC IND (2022) - 31,89% & 43,20%
NET ZERO EMISSION (2060)
President Jokowi: Indonesia Wants G20 to Set
Example in Handling Climate Change
Climate change is a major threat to global prosperity and
development.
• Solidarity, partnership, cooperation, global collaboration are key.
• A carbon economy ecosystem that is transparent and has
integrity, inclusive, and fair must be created
“We need to ensure that transition to new and renewable energy is
carried out in line with the principle of energy security, accessibility,
and affordability,” President Jokowi said.
3. WHY DOES GREEN INDUSTRY
STRATEGY TO DECARBONIZATION
ACHIEVEMENT IS IMPORTANT AND
URGENT FOR INDONESIA?
1. Market demand for green products continues to increase, such as green
product Procurement and consumer awareness
2. Export destination country regulations that require sustainable practices
(such as: Carbon Tax, Ecolabel, and CBAM)
3. Contribution to country commitments on international conventions (Paris
Agreement, Stockholm Convention, etc.)
4. There is vulnerability to climate and disasters that disrupt the supply of
industrial raw materials.
Aquaculture
Agriculture Food Crops
Climate Vulnerability
Clean Water
Crop Failures or Food
Resilience
3
Land Use
Change
GHG Emission
Natural Resources
Exploration and Explotation
Waste/ Tailing
Biodiversity
Water
Conservation
GREEN INDUSTRY
Decarbonization and
Carbon Pricing
Material, Water and Energy
Efficiency
Green Product and Green
Technology
Green Energy and Green
Utility
Waste Management
Circular Economy
Remanufacturing and
Recycle Industry
4. Low Carbon Technology
Clean or
Renewable
Energy
Material, Energy and
Utility Efficiency
Waste
Management
and CE
↑ Cost Saving &
↓ Cost of Production
Product
Competitiveness
Utilization
Tax/Devisa
Environmental
Sustainability and
People Health
↑ Green Product
Sales
↑ Sustainable
Investment – Capital
Gain
↑ Revenue form
Carbon Trade
GREEN INDUSTRY IMPACT ON CORPORATE/FIRM LEVEL
4
Green
Industry
Quadruple Effect of Economy
from Green Industry Implementation
Energy Bill of heavy industries
accounts 9 – 30% of Total
Production Cost (TPC)
Material Bill accounts
9 – 66% of TPC
Carbon Tax (Potential)
exceed Rp. 30.000 per ton
CO2eq
Environmental Cost
2 – 8% of TPC
5. Acceleration & Tracking Progress on GHG Emission Reduction
in Industrial Sector to achieve De-carbonization
Setting the baseline and Calculating the Mitigation
Projection
▪ NDC 2030 → Roadmap 2020 -- 2030
▪ ENDC 2030 → Target and roadmap on progress
Publish guidance/guideline related to
inventory, MRV (Monitoring,
Reporting and Verification) and
mitigation action for the industry
1 2
Develop Online GHG reporting
platform for the industries →
integrated with SIINaS (National
Industrial Information System)
3
Conduct data verification regularly, inhouse training,
expert assignment, and others facilitation for the
industries
4
Establish Green Industry Standard (SIH) and Green
Industry Award (GHG emission intensity or CO2
equivalent per ton product is one of the criteria)
5
5
6. SUSTAINABILITY MANUFACTURING PRACTICES : ESG
Corporate ESG Green Industry
Standards in
appropriate with the
corporate ESG
requirements
Govt Key Initiatives and Project
1. Green Industry Standard and Certification
2. Green Industry Award
3. Green SMEs and Green Industrial Parks
4. Green Product → Carbon Footprint, Green Supply Chain,
and Green Public Procurement
5. Retrofit and Low Carbon Technology → Refuse-derived fuel
(RDF), (Waste Heat Recovery (WHR), Carbon Capture
(CCS/CCUS, etc
7. GHG EMISSION REDUCTION INVESTMENT ESTIMATION IN THE INDUSTRIAL SECTOR
7
Restructuring and revitalization of the
green industry in production and utility
equipments
Assistances and funding in the
construction of physical infrastructure for
industrial enterprises
Ease of market access and financing of
financial services as well as the
application of green taxonomy
Industry sector Average Abatement Cost
Cement USD 16,8/t CO2e
Fertilizer USD 77,4/t CO2e
Iron and Steel USD 44/t CO2e
Chemical USD 8,4/t CO2e
Pulp and Paper USD 0,83/t CO2e
Glass and Ceramic USD 136,4/t CO2e
Textiles USD 18,6/t CO2e
Food and beverages USD 4,0/t CO2e
Averages USD 38,3 /t CO2e
8. 8
1. Many parties assume that the industrial sector is only responsible for GHG mitigation in one
category, namely IPPU, whereas the manufacturing industry contributes to 3 GHG mitigation
sectors, namely the IPPU, energy and waste sectors. This has an impact on the APBN
allocation and access to national and international climate change funding.
2. Funding support is needed in the form of an industrial restructuring program with low-
carbon machinery and technology. The Ministry of Industry will prepare a technology audit
and an energy audit to prepare technology recommendations as part of the manufacturing
sector GHG mitigation.
3. The Indonesian government will encourage green public procurement, where products that
have been certified according to the green industry standard will receive priority in the
government procurement.
4. In an effort to provide certainty for investment and decarbonization development, green
finance rules are needed that regulate the relationship between creditors and debtors and
make it easier for business actors to access financing in the form of soft loans (low interest)
CHALLENGES AND SUPPORT NEEDED IN INDUTRIAL DECARBONIZATION
9. Area of Investment and Collaboration
Green Textille, Green Packaging,
etc
Innovation in Green Material
and Product
Charging station, battery, many
type of EV and its components
Electric Vehicle
Solar PV and Its Components
Renewable Energy such as
Solar Energy and Bioenergy
Co-gen, CHP (Combined Heat and
Power), WHR, Waste to Energy,
CCUS, etc.
Low Carbon Technology
11. 2015/2016 2019 2030 2045 ≤ 2060
Paris
Agreement
Low Carbon
Development
Indonesia
NDC Indonesia
(Nationally
Determined
Contributions)
Net Zero
Emission
Indonesia
a century
after
Indonesia's
independence
From Paris Agreement Towards Carbon Neutral Indonesia 2060 or Sooner
11
2022
Main Contribution of
Industrial Sector
ENDC
2022
13. 13
A. REDUCTION OF GREEN HOUSE GAS EMISSION IN
INDUSTRY SECTORS
1. Establish Green House Gas MRV System
(Monitoring, Reporting and Verification) through
SIINAS – Industrial National Information System
2. Establish modeling, roadmap and guideline for
energy efficiency & conservation, and renewable
energy for Industry
3. Implementation of Energy Management System
(EnMS) and Energy Optimisation in Industry
(include: NRE, Waste Heat Recovery, Waste to Energy, etc)
B. FACILITATION/INCENTIVES FOR GREEN INDUSTRY
1. Incentives for Green Industry
2. Green Industry Award and Certification
3. Human Resources Development of Green Industry
NDC 29% ->
31%
(enhance)
Energy Mix
NRE 31 %
Target
EE 17 %
Law No. 16/2016 - Paris
Agreement Ratification
The Economic value of Carbon
(Presidential Regulation No.
98/2021)
National Energy Plan and
National Energy Policy
Government Regulation
No.70/2009 - Energy Conservation
Implementation of Sustainable
Development Goals Achievement
(Presidential Regulation No.
111/2022)
Law No. 3/2014 - Industry
Policy Background
15. GLASS AND
CERAMIC
1. Installation of Roof Top PV Cells
2. Use of Alumina Ball Mill Linings &
Media
3. Use of Heat Recovery to Dryer, Pre-
heated Combustion Air, Heat
Recovery to Spray Dryer
Spinning :
1. Installation of Variable Frequency Drives (VFD)
on Autoconer machines
2. Installation of a variable frequency drive (VFD)
for a washing pump motor in a humidification
plant
3. Replacement of existing aluminum alloy fan
impeller with FRP or plastic reinforced fiberglass
impeller
Weaving :
1. Use of back-current for the washing process
2. Use of steam coils instead of direct steam
heating in dyeing machines (winch and jigger)
3. Conversion of the thermic fluid heating system
to direct gas combustion system to stenter and
dryer
1. Use of Feedwater Economizers for
Waste Heat Recovery
2. Applying reduced compressor working
pressure
3. Industries that use compressed air for
various processes, use various types of
dryers including refrigerated dryers,
both cycling and noncycling
4. Heat recovery from recycled water
before condenser
5. Steam recovery during sterilization
1. Steam trap monitoring online
2. Use of Electro Static Precipitator (ESP)
Boiler and Absorption chiller
TEXTILES
FOOD &
BEVERAGES
CHEMICAL
Sumber : Profil Emisi Gas Rumah Kaca di Sektor
Industri, Kemenperin – UNDP (2018)
Efficiency Energy Mitigation Mapping in Industry
15
16. CEMENT
INDUSTRY
1. RDF Alternative Fuel Use,
2. Use of High Momentum Burner
3. Perform Calciner Improvement
4. Use of Waste Heat Recovery Power
Generator
5. Inverter Power Saving
1. Substitution of heat source from
high pressure steam (HPS) to
medium pressure steam (MPS) in
Molecular Sieve Dryer
2. Changing exhaust processing
technology from Cryogenic method
to Permeable Membrane
3. Optimization of exhaust gas (tail gas)
as fuel
4. Improve insulation reformer
5. Lowering the Steam to Carbon ratio
1. Utilization of Waste Water
Biogas
2. Use of Biomass Boiler
3. Energy Efficiency in Boilers,
Waste Heat Recovery, Steam
Systems, Electric Motors,
Thermal and Electricity
1. Heat recovery in sinter plant
2. Warm-up program in coke making
3. Process improvement by replacing
smelter technology and using scrap
PETROCHEMICAL
INDUSTRY PULP AND
PAPER
IRON AND
STEEL
Sumber : Profil Emisi Gas Rumah Kaca di Sektor
Industri, Kemenperin – UNDP (2018)
Efficiency Energy Mitigation Mapping in Industry
16