Search

4.161. The 2014 KEN and the 2017 RUEN set a target of at least 23% renewable energy of the primary energy mix by 2025 (and 31% by 2050); an energy-efficiency target of reducing primary energy intensity by 1% per year until 2025 is set in the RUEN. In the 2018 RUPTL, the target for renewable energy deployment in the fuel mix was revised, and was estimated to increase from 12.5% in 2018 to 20.4% by 2027, which is to be mainly supported by geothermal energy (9.8%) and hydropower (9.3%). The 2018 biofuels programme remains a key component of the KEN for meeting the NRE targets; it has taken on national importance as a means to reduce imports, to improve the balance of payments, become energy self-sufficient, and support the palm oil sector. The 2017 Low Carbon Development Plan focuses on using the agriculture, forestry, waste, transport and marine sectors to reduce GHG emissions. (...)

4.162. During the review period, the regulatory framework in this area was updated with new or amended general or NRE-specific regulations (Section 4.2.2.3). Law No.30 of 2007 sets the priority of supplying and utilizing NRE, including biofuels. GR No. 79/2014 on the KEN requires that the development of renewable energy resources consider economic viability; however, the potential renewable energy resources are based on a technical assessment by the MoEMR only, and do not necessarily consider the financial/economic viability of individual projects. Regulations regarding solar power systems include MoEMR Regulation No. 49 of 2018 on the Utilization of Roof Top Solar PV by PT Perusahaan Listrik Negara (PLN) Consumer, and MoI Regulation No. 5/M IND/PER/2/2017 setting the level of domestic components for solar modules at at least 50% by 2018 and 60% by 2019 compared to the previous 30% for solar home system modules and 26% for communal solar system modules.

4.163. (...) Central and/or local government support may take the form of: fiscal incentives; licensing and non-licensing relief; electricity tariffs for NRE sources (see below); the establishment of a separate business entity to generate energy from NRE sources for sale to the PLN; and specific incentives for NREs. Hydro, geothermal and wind power projects, including transmission lines, can be developed in Natural Reserve Areas and Natural Conservation Areas, in accordance with prevailing laws and regulations.

4.164. (...) Tax allowances involve corporate income tax incentives as follows: a reduction in taxable income of up to 30% of qualifying expenditure on fixed assets (including land); an extended tax loss carry forward period of up to 10 years; accelerated depreciation and amortization rates; and a maximum dividend withholding tax rate of 10% for IPPs involved in renewable energy. Furthermore, customs duty and VAT exemption benefit imports of goods used in geothermal business activities (MoF Regulations No. 177/2007, and No. 142/2015); imports by IPPs involved in renewable energy are exempt from withholding tax (MoF Regulation No. 21/2010).

4.165. Action was taken to address issues relating to the regulatory framework on tariffs and pricing, one of the most sensitive issues in renewable energy investment and development. MoEMR Regulation No. 50/2017 on Renewable Energy Utilization for Electricity Supply to Create a Better Investment Climate by Promoting Fairness, Efficiency and Affordable Electricity Price (revoking MoEMR Regulation No. 12/2017, as amended by MoEMR Regulation No. 43/2017) established a new mechanism to determine tariffs, based on electricity generated by renewable energy PPs and purchased by the PLN from IPPs. (...) R No. 35/2018 provides a separate price for electricity from waste-to-energy PPs, that is higher than that in MoEMR Regulation No. 50/2017. In March 2018, the PLN's Board of Directors issued a new policy, based on Decree No. 0022P/DIR/2018, regarding power purchases from renewables as an implementing regulation of MoEMR Regulation No. 50/2017; (...)

4.166. Indonesia considers biodiesel as an efficient way to develop more environmentally friendly solutions to fulfil current energy demand; increase energy security and reliability; reduce the consumption and import of fossil fuel; increase economic added value by downstream biofuel industry; and support the domestic agriculture-based economy. During the review period, the 2008 Biodiesel Mandatory Program, aiming for a mixture of diesel oil with fatty acid methyl ester (FAME) from palm oil, a chief deforestation driver (Section 4.1.7), intensified. (...) The B30 Mandatory Program, with 18 biodiesel producers committed to it, became effective nationwide on 1 January 2020. (...) B30 is expected to further increase energy security and independence through renewable sources; stabilize CPO prices; support the downstream palm oil industry; meet renewable energy targets; reduce diesel consumption by up to 9.59 million kL per year; lead to foreign exchange savings of up to USD 4.4 billion; and reduce GHG emissions by up to 14.34 million tonnes of CO2. On 16 December 2019, Indonesia requested WTO dispute consultations with the European Union, regarding measures adopted by the European Union and its member States in the renewable energy sector relating to biofuels (Section 2.3.1 and Table 2.4). As at June 2020, Indonesia was preparing for the implementation of the B50 Mandatory Program by the end of same year; several challenges, such as proper technology, technical specifications, financial requirements, and feedstock sustainability, still remain to be addressed. Additional support was provided by luxury goods sales tax holidays for vehicles with biofuel engines

4.170. (...) Moreover, they plan to enhance domestic production of inputs, revamp industrial zones under a single nationwide industry-zoning roadmap, embrace green growth opportunities, and build more coherent policies/regulations through cross-ministry collaborations.

4.185. Automotive activities remain eligible for all general tax and non-tax incentives (Sections 2.4.4, 3.3.1.1.1.1 and 4.3.4). Since 2019, to reduce petrol consumption and GHG, support has been provided through luxury goods sales tax (LGST) holidays for alternative-fuel vehicles (Section 3.3.1.1.1.3). In addition, other support includes: special credit for electric vehicles with an interest rate of 3.8% per year and a tenor of six years by the state-owned bank PT BRI Persero (Table 3.26); and providing a 100% discount for the electricity upgrade for owners of electric cars, and a 75% discount for owners of electric motorcycles, by the state-owned PT PLN Persero (Section 4.2.2.2).

4.186. During the review period, action was taken to promote the electric vehicle (EV) industry; the target is for the EV industry to begin domestic production by 2021 or 2022, and export 200,000 electric cars (20% of the overall 1 million car export target) by 2025. PR No. 55/2019, encouraging local content requirements (see below) and fiscal and non-fiscal incentives to promote the EV industry, came into force on 12 August 2019. (...)

4.187. Under PR No. 55/2019, the possible fiscal and non-fiscal incentives for the EV industry include: import duty incentives for importing KBL battery-based completely knocked down EVs, KBL battery-based incompletely knocked down EVs, or major components for the number and for certain period of time; (...) financial support for electric battery-charging station infrastructure development; (...) professional competency certification for the human resource development related to battery-based EVs; and product certification and/or technical standards for the battery-based EV industrial company and the related component industry.