Future of National Energy (Indonesia)

In Jakarta Post today (30/4/09), there is this interesting article with a title "future of national energy". What's the future of Indonesia's energy sector? is it oil? is it coal? What is it? My expectation when first looking at the title were a near realistic model of future (I'd say in the next 25 years) energy mix and logical explanation on why Indonesia should go for it. But it seems the article did not answer my expectation. First, there is no time frame mentioned in the article to indicate how far is "future". Is it in 50 years? is it in 20 years? or is it in 5 years from now? There is one line stating "within the next five to 10 years" but that statement is not clearly defining "future". It is just indicating a waiting time if government is doing something. Second, there is no model and the third there is little explanation (and it is only targeted to government only) on why we should change and go for a certain energy usage pattern.

The writer discussed lightly about fuel subsidy that hampers the development of alternative energy. One example given was the slow development of geothermal. Fuel subsidy was blamed for that slow development. I found this a bit absurd. Fuel subsidy is given for oil based fuel that is mainly used for transport and domestic needs. Industry and power generation do not pay the subsidized price. Geothermal energy is so far only useful for electric power. Geothermal competes head to head with coal (that is certainly not subsidized) or hydro. Gas power plants or oil fired power plants are using non subsidized fuel. Geothermal does not compete with fuel for cars or for cooking stove. It is true that if the subsidy lifted and the money goes to the development of alternative fuel, then alternative energy will get a boost, but blaming it all to the fuel subsidy is not 100% true.

To compete with domestic fossil based fuel, bio energy or other alternative energy should be developed more. The use of hydrogen (brown energy) has been tried by many automotive enthusiasts. It is proved to be fuel saving. The use of this technology is surely reducing fossil based fuel consumption. The government should move quicker and set standard for this technology especially concerning safety. With strong standard enforcement, the product will be safe and in good quality.

Bio fuel is also a big issue. How to compete with food? How to regulate the market? Government still learning and they are learning very slow. The bio fuel association has made many complaints about incomplete government regulations. Standard is there, but market regulation is not completely available. The strong willingness to change habit by creating a strong policy is not there with the government. For example the bio fuels of pertamina only contain max 5% bio component (either Ethanol or CPO, check this link) and this type of fuel is not available in any fuel station. This means the largest customer of bio fuel (Pertamina) is not obliged strongly to provide more bio fuel to all areas. If pertamina is obliged, I believe the boost of bio fuel industry is coming.

Anyway, lifting the subsidy I agree 100%. I am convinced that lifting subsidy should push people to be more efficient in using fuel and further boost better public transport system. Money for the subsidy can go to better public transport system and development of alternative energy (research or improvement of investment climate).

I believe bio fuel and hydrogen is the future Energy of Indonesia. This is considering potentially high domestic fuel demand especially in rural areas where canned gas cannot reach the places. Solar can also play role if the price can go down and lifestyle to be green is booming. Do not forget nuclear. Electric power should leave coal untouched and leave the forest be green and biodiversity develops. Nuclear for electric power is for sure in the future. At the end fossil fuel era will end. People have to change and government should start the change. Make proper policy and regulation. Support the appropriate side of the market mechanism and think clearer. Leave alone energy sector and do not mix it with politics.