Greening the Electric Power-Generating System: A Hypothetical of Sectoral Approach in Indonesia
Abstract
This paper depicts a ‘green’ electric power-generating system for Indonesia that takes reduction of CO2 emissions into account. By developing an optimisation model for a future electric power-generating system, we evaluated the benefits from the sectoral approach based on CO2 emissions intensity data. There were three main findings. First, by applying demand-side management and adopting more advanced steam-coal technology, Indonesia can directly reduce CO2 emissions. However, in order to obtain an effective reduction in emissions intensity, renewable energy needs to be more readily available. Second, by deploying new steam-coal technology, Indonesia can participate actively in the sectoral approach. We found that the sectoral approach could allow a greater emissions reduction in the electricity sector than would the National Action Plan. Indonesia will obtain more carbon credits by selecting less stringent parameters during the early periods of negotiation. Third, advanced technology can help reduce the risk of a rapid increase in fossil-fuel prices, but if Indonesia can implement demand-side management effectively and increase the share of renewable energy in the system, there can be a ‘triple dividend’, such as reductions in generating costs, in carbon emissions, and in carbon intensity. Thus, supply and demand-side policies both need to be implemented together.
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