The provided content is a collection of presentations from an energy conference, focusing on the challenges and opportunities in energy investment, transition, and policy within ASEAN, with a particular emphasis on Indonesia and the Philippines. Key themes include geopolitical influences on energy investment, the role of emerging technologies like hydrogen and nuclear power, innovative financing mechanisms, and the evolving landscape of carbon markets.
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uh keynote speech. May I request for the
participant to maybe sit at the front
please? Maybe the tree on the back. If
you can sit a little bit closer to the
front so we can have a more uh cozy uh
environment to receive the uh lecture
and keynote speech from Professor Sophian.
Sophian.
Thank you. Thank you very much. So yeah
um thank you very much. Uh without
further ado, I would like to call his
excellency, Professor Suvian Sufa, Vice
Chancellor of the UKM to provide the
Good morning everyone.
If you have a clicker and maybe I can uh
do a bit more justice, right, I've been
given uh 15 minutes to speak. This is a
very heavy topic uh on investment
and uh first of all I would like to
thank uh the organizers uh ASEAN center
for energy and other uh co-organizers
for inviting me to speak at this uh
important event.
Um I'm going to focus on geopolitical
challenges um in relation to investment
in energy and then we are going to
relate this to priority economic deliverables
deliverables
uh under the ASEAN chairmanship 204 2025
and then how do we go about investment
uh preparing investment in energy
uh energy sector has been uh receiving a
lot of uh focus in in the past few years
and the most important thing is energy
has always been linked with politics. So
when you talk about energy you have to
talk about politics international
security and others
and in the past few years we have been
looking into uh various factors that
have uh an impact on uh the investment
and also development in the energy
sector. One is the international and
regional security for uh global norms.
For example, uh Southeast Asia uh we
have South China Sea and China South
China Sea's um has been one of the main
sources of uh petroleum uh oil and gas
activities. There are so many countries involved.
involved.
Malaysia is one of the early uh pioneer
in the uh energy uh extraction from uh
the middle from South China Sea. And
then uh we have the late comers like
Myama. My has been uh producing gas for
many years and because of the political
challenges in Myama all of a sudden many
uh investors pull out from the region.
So that actually has uh an impact on the
energy supply in not just in Southeast
Asia but also in the world. And then we
have South Sudan who used to be uh one
of the main sources of energy oil and
gas but unfortunately the uh continuous
uh civil war in South Sudan has also
affected investment. For example,
Petronas has to pull out from South
Sudan because of the uh situation and
now Petronas is filing um legal claims
against South Sudan in the international arbitration
arbitration
and of course the Middle East has been
the focus um and the Middle East has
always been subject to a lot of
volatility volatility in the uh economic
and security sector.
Next we have the movement towards
climate and sustainability concerns.
People are looking into energy uh but uh
moving towards renewables
uh now with the net zero policy
um driven by the United Nation. We are
looking into uh more um R&D and
development and focus on renewable
energy. Uh solar uh we have um
hydrogen. Uh people are also looking
into other sources including clean nuclear.
nuclear.
And then another factor which will have
an impact on energy is the trade and
technology war between USA and China. We
cannot run away from this trade. Last
week, China declared that there will no
more um export or there will be export
restrictions on re uh rare earth and
critical minerals from China. This will
have have an impact on technologies
especially we cannot run away from
semiconductor and AI even in the energy
sector. Uh cyber security is becoming a
very important topic in energy sector.
We know energy companies like Tanaga
National, they have specific departments
dealing with cyber security and all this
artificial intelligence and the
technology war will have an impact on
the supply of chips. Uh semiconductor
will have an impact on how do we go
about doing this and the trade war has
also impacted on the way we do things.
For example, uh in Malaysia's uh US
negotiation, we know that uh Petronas uh
had to come in and uh commit to
purchasing about 70 billion worth of gas
from uh from the United States just to
alleviate the tariff war. Same goes with
Indonesia. Indonesia and Malaysia both
are uh among the top gas producers in
the world. Yet to alleviate the impact
of tariff which has nothing to do with
energy, we have no choice but to commit
to purchase of natural gas from the
United States. So all this leads to uh
challenges in the energy business in the
energy sector because every single
energy company and every single energy
activity will have to take into account
various impacts. For example, when that
we have uh international and regional
security, we have higher business risk,
cost of production increase
um and then which will have an impact on
reserve security. Uh Malaysia, for
example, as one of the net exporters of
gas all of a sudden find itself in a
very awkward situation because of this
uh um reserve security. We have to go
very far not just in the in in the
United States but Petronas is now one of
the largest investors in Canada to
produce gas to ensure energy security
and then uh pricing is also um very
volatile. Uh we are looking into no
scarcity in renewable energy price. Uh
the pricing mechanism keeps keeps on
changing. uh now we are looking at uh
pricing mechanism based on supply and
demand no longer being controlled by
authorities and then at the same time
with the uh focus on solar and some
other renewables we have a competition
whether you want to build solar farm or
you want to build a farm to feed human
being whether you want to have renewable
energy or you want to have land for food
so there's a big competition over the
same source of land and uh this has an
impact on on how uh decision making are
being made on on investment and some of
these uh land reserve or being occupied
by solar farms are actually very fertile
land that can actually produce food for
human consumption and we have food
security issues around the world.
So these are the among the issues when
uh we have uh problems uh in this area
countries are not willing to share resources
resources
um leading to higher cost and prices.
Say for example in rare earth rare earth
is important for energy because uh if
you want to produce uh solar cell you
need rare earth. If you want to produce
uh self fuel you need rare earth and all
this contribute to the um to the
unwillingness of some uh countries of
sharing their resources.
So what we are doing uh in the assean
vision 2045 is to look at the asan
centrality and multi-artner consensus uh building
building
we we are doing consensus building. Say
for example we are looking into Assean
GCC. Assean GCC 60% of uh imports from
for ASEAN. Assean imports about 60% of
energy from the GCC countries. So GCC
for ASEAN is an important uh supplier of
energy, gas, oil. But at the same time
we are also looking at GCC countries to
diversify their uh sources. So instead
of just supplying oil and gas but we are
looking at GCC as capital providers for
renewable energy investment and then
under this year's chairmanship we are
looking at ASEAN GCC plus China where uh
how we can actually build there is a
consensus to focus on energy sector
where China ASEAN and GCC will work
together. So here we will work
collectively on the future energy
technologies critical mineral such as
for um for EV for semiconductor for
hydrogens and then we need to increase
assean collective economic security plans.
plans.
So as a result we have pro we have 18
priority economic deliverables for ASEAN
uh chairmanship 2025. Three of three or
four of them are related to energy. One
is the adoption of Azan sustainable
investment guidelines. This is an
important document where we uh foster
responsible and inclusive investment
practice to contribute to the
sustainable and long-term asan economic
environment and society. So if we want
to have investment in energy, the energy
companies will have to take will have to
focus on responsible investment. Meaning
that they not just they will focus on uh
extraction but also on the social
impact, environmental impact like uh the
society and also um we see some evidence
of land encroachment and others.
And then as mentioned by the deputy
minister earlier, we are looking at
endorsement of the ASEAN plan of action
for energy cooperation 2026 2030. This
is a new document uh which will be
launched this year. You will look into
seven uh programs such as the energy
transition, energy security, interconnectivity,
interconnectivity,
clean energy transition, resilience,
integrated energy market,
decarbonization, net zero carbon
neutrality and lowcarbon technologies.
So these are the seven areas which the
ASEAN member states are negotiating to
include in the ASEAN plan of action for
energy cooperation 2026 2030. At the
same time we are looking into the ASEAN
power grid. This is a ma one of the main
uh agendas for 2025
and we are looking into the signing of
MOU to produce uh to ensure the
implementation of the ASEAN power grid.
Here we we need a lot of money to build
say under the under the sea cable. We
need a lot of fund to build um high
pilot system. We need a lot of money to
bring power say from uh
Laos to Malaysia up down to Singapore.
We are looking at the new wind energy
from Vietnam all the way to uh Singapore
and Malaysia. And of course for Sarawa
Bakun being the hydrogen uh being the
hydrop power um producer to transfer the
power to uh Singapore and this part of Malaysia.
Malaysia.
And then we have the development of AEAN
capital market forum which actually
deals with how we gather fund
um and encourage a green transition. So
if we don't have capital market we are
not able to raise uh funding for
investment in energy especially in the
renewable energy area. And then the most
importantly is to catalyze access to
financing for climate resilient and just
transition in Asia where we have we
require a lot of money to build the
infrastructure. So the central bank, Ben
Bankagara Malaysia together with
multilateral uh funding organizations
like the Asian Development Bank and
International Finance uh finance
corporation under the World Bank. They
are working together to build um uh
multilateral funding system to ensure
that we are able to have access to the
um capital market which require a lot of
fund to build the energy investment.
And for Malaysia, we are looking at uh
energy as an important part of uh
national uh investment and national
development agenda under the 13 Malaysia
plan. Uh we are looking at uh creating
value chain. We looking at productivity.
If we look at the national plan, for
example, we want to increase data
center. Data center requires a lot of
more energy. If we are looking at
building semiconductor industry to build
AI chips, this require a lot more energy
than what we expect. So all the
investment plan will have to take into
consideration the high cost of energy
So we need lot of strategy among others
to have the overall reform process. We
have to look into identification of uh
investment attractions in the energy
sector. We have to ensure that when
people want to come and invest they
given uh certain preference. Uh we have
to in reduce the implementation
barriers. Uh a lot of uh this involve uh
interaction between uh various
governments. In Malaysia, we have
federal, state and uh city governments.
In uh other countries, the situation is
almost similar. So when you want to
invest, every single layer of government
will have to ensure that they are able
to deliver and improve on their
investment uh facilitation. So I think I
stop there. Thank you very much for
giving me the opportunity to to share my
thoughts about energy investment from
the risk
in the world that we are facing at the
moment to the ASEAN plan and at the same
time down to the national level. Even if
you have a very good plan at the ASEAN
level, it still need to be implemented
down at the member state level. Thank
Thank you very much uh Prof, uh for the
very concise but very insightful
impactful uh presentations. Um I would
like to open uh for a quick Q&A if
that's okay prof because while we are
having you as this opportunity uh may I
check if there is any question from the audience.
audience.
>> Yes please.
>> Thank you. [clears throat]
>> Uh good morning. Thank you professor for
your presentation. Uh my name Redo from
uh Ministry of Energy and Min Sources of
Indonesia. Uh you mentioned about the US
and China trade war and Asan power grid.
Uh from your perspective uh is are there
any possibility that uh US China war
will be influenced or influenced the
Asan power grid uh implementation and
how do you believe the Asan member state
will be reach consensus on this point? I
think that's thank you.
>> Okay. Thank you very much. Um
right there Asan power grid there are
various elements of Asan power grid. One
I think if you look at the transfer of
power from Laos to Thailand to Peninsula
Malaysia down to Singapore and to some
parts of Indonesia. Another angle is we
are looking at the Indonesian side uh in
Borneo transferring power to Malaysia
and otherwise.
Um there are some potential political
impact because of the investment. If we
look at LA PDR, most of the uh investors
producing hydropower in LA PDR are
basically non LA companies including
Korea, uh China and others. So there
could be some element of uh political
game in the implementation one. Number
two, uh if you want to build a power
grid, you need to build the infrastructure.
infrastructure.
uh I don't have to explain everyone here
understands that infrastructure is not
cheap you need pylon you need undersea
cable you need everything and where the
money is coming from so we have um say
for example the Assean infrastructure
investment bank of China they have been
investing a lot on on this infrastructure
infrastructure
but we know in Assean the um although we
are supposed to be centrally assean But
uh each and every member state has its
own preference. We have member states
who would like to work with China and we
have member states who are inclined to
Japan and uh other forms. And like I
mentioned earlier the multilateral uh
funding arrangement with World Bank,
Asian Development Bank or IFC these are
inclines toward the western Japan and
western uh political power and AIB is
inclined towards China. So there could
be some struggle
in the uh investment in infrastructure.
That's the potentially the impact on the
Asan power grid. Okay.
>> Yes.
>> Yeah. Can you
>> Hi. Uh thank you so much professor for
that uh presentation. You mentioned uh
the multilateral development banks
>> and the role that they can play in uh
energy development here. um what is the
current role that for instance the Asian
Development Bank is playing and what
more could they be doing?
when I came back to Asia in 2010, uh my
first job was with ADB but I was based
in Laos uh La PDR then I moved to World
Bank. Um okay, Asian Development Bank
plays an important role for
infrastructure development in uh
not just in ASEAN but also in the whole
of uh Asia. But um ADB has been playing
an important role in the infrastructure
development in energy sector especially
in um promoting the green transition. Uh
we know uh for a fact uh they are also
uh not just providing uh government to
government uh funding but there are also
private uh funding uh based on energy
sustainability re renewable energy
issued by the ADB with to private
investors with the support of the
government. So this is an important
element because we are not just looking
at government being the main driver but
we need to get the private sector to
drive the energy investment and with the
availability of funding uh from ADB for
example or IFC then they are able to
drive uh private government uh
collaboration in the energy sector for I
I know for a fact that IFC invest also
in uh several
re renewable energy projects in the
Philippines and many other parts of of ASEAN.
ASEAN.
>> Thank you. Um, thank you very much. Um,
I think that will be all for the today.
So maybe I invite everyone to give a big
round of applause to Professor Su
Sophian for the very excellent
presentations and Q&A. Thank you very
much, bro.
>> Thank you. Thank you, man.
>> Um, yeah. And maybe a little bit
announcement from the organizer. I think
we are going to have a quick group
photo. uh for all IT participants. So
some of us are already waiting outside.
So maybe if we can move uh before we
test. Okay. Um, yeah, thank you very
much everyone for the uh I think
Professor Sophia needs to leave after
his keynote, but I think uh let's start
with the presentations. Again, apologize
for the delay in the running. Um so I
think I would like to request uh
everyone probably to uh be concise on
the uh presentations. I think we have 15
minutes uh slotted but if we can have
like 10 minutes presentation and 5
minutes Q&A I think that will be great.
So um I would like to invite uh Dr. Kosh
Talani. Yes please. So he will go
present a presentation titled ener bit
energy to bitcoin uh strategy model for
monetizing idle power surplus into
Indonesia national foreign exchange I
think it will be a very interesting
topic so uh please give a round of
applause to uh Dr. Kashalani
>> and the time is yours. I think we are
going to uh put up the slidesh very soon.
soon. >> Okay.
morning everybody. Uh my name is Castalani.
Castalani.
I'm from Indonesia. I work in Patapal
and Pero and I also become a PhD
candidate student in University of
Indonesia. Today I would like to present
my paper with title bit energy to
bitcoin a strategy model for monetizing
idle power surplus into Indonesia
So there is two main problem in
Indonesia especially in palen that we
face today. The first problem is uh over
supply because we we have a lot of power
plant that has not been distributed the
the electricity
because the demand and the supply was
not met. So there's 48 capacity factor
with 52% reserve margin that
approximately the financial loss is $1
million US and then Indonesian target
for electricity growth is 6.9%
and nowadays still 4.8%
that still not met uh the electricity
growth in Indonesia.
So we offer an idea power to X. Power to
X is a method to convert uh kind form of
energy to another kind of energy or
maybe product and then we over to
convert it to bitcoin. Bitcoins is a new
technology that store of value and also
the store of energy because
uh to make a one bitcoin we need uh
energy. So, Bitcoin is not like uh fiat
currency. It needs energy to make one
Bitcoin. So, with the excessive energy
in Indonesia have, we offer to convert
it to Bitcoin.
So, why Bitcoin?
Bitcoin is a decentralized. There is
nobody can control Bitcoin. Bitcoins is
also safe because it is protected by
technology SHA256.
Bitcoin is also transparent. Everybody
can watch every transaction over the
world. And Bitcoin is universal.
Everybody and anybody can transaction
over the world.
Bitcoin is also as a new class asset.
Today the class asset is $1 trillion US
and also Bitcoin is high demand because
the supply and the supply is fixed but
the demand is also growing.
Bitcoin is also a scarcity because the
supply is only 25 billion and the demand
is growing because every country still
printed money
uh very fast. So in the future Bitcoin
will become a scarce asset. Bitcoin is
also high global adaptation because
country like UAE, Singapore, Turkey,
Argentina and others country
uh still make uh early adopation to Bitcoin.
Bitcoin.
One of the country that we want to copy
is El Salvador. El Salvador with a
president Ibukle
in 2021 announced Bitcoin as a legal
tender. So everyone can transaction
Bitcoin has a own state enterprise named
Lagio. It's same like PPLn in El Salvador.
Salvador.
They manage
a renewable energy named Tekkapa with
102 megawatt to mining bitcoin using 300 processor.
processor.
El Salvador has mined 473
Bitcoin with approximately 58 million US
and Bitcoin is become the global
adaptation of reserve asset. For
example, in US there is 200,000
bitcoin and in China, UK, Bhutan and in
El Salvador.
Consider during this situation that
every country will race to collect
Bitcoin. we over Indonesia is also uh
join this race to collect as much as bitcoin.
bitcoin.
So the key competitive advant advantages
in Indonesia we have uh cheap
electricity production to have one bitcoin.
bitcoin.
In Indonesia to make one bitcoin it
needs 25k US.
If we compare to USA is two time about 46K
46K
and maybe if we compare with uh United
Kingdom it maybe take five times larger
than Indonesia that approximately 130k
130k US.
US.
So from these advantages we offer
Indonesia must use the cheap and clean
energy to use this excessive to become
uh something value like bitcoin.
So we offer energy to bitcoin is a
method or a strategy to convert cheap
and clean energy like solar, wind, hydro
and geothermal become a bitcoin.
And this is the scheme and bit is a
subsidiary of peteln which is bettereln become
become
uh part of Indonesia so sovereign weight
fund dantara
and paln is also have a
electricity generation company musantara
power which is we can get cheap
electricity because there is no margin
needed if We uh make uh collaboration
with Ender bit and then every mining
bitcoin become the bitcoin reserve asset
that we send to dantara and then become
Indonesia foreign for foreign uh exchange.
Indonesia potential in renewable and
There is uh hydro, geothermal and other
renewable energy.
Uh the capacity factor of hydro is still
22% the geothermal is 43% and other
renewable energy is 34%. So actually we
have 7 gawatt potential that excessive
energy that we can use to convert it to
become bitcoin.
And with this calculation
this 7 gawatt we can become uh
uh
contribute to
uh worldwide mining bitcoin six 36%. So,
Indonesia contribute 36%
36%
and we can mine about 56,000
Bitcoin which is a valuable
and the effect of electricity growth
it can increase the capacity factor to 75%
75% and
and
increase the annual energy absorbs about
This concept needs uh capital expense
about 3.15 billions that pay once with
the operational expense 3.24
billion per year
with approximately profit 7 billion US
per year or payback period one years
with AIDA 3.8
billion US.
So uh the conclusion and bit has the
potential to become a strategic solution
for Indonesia to address electricity
over supply and diversify its resources
of foreign exchange revenue. And
Indonesia has a unique combination of
lowc cost energy, abundant renewable
energy resource and strong digital
economic potential which could position
the country as an energy to crypto hub
in Asia.
The capacity factor of renewable energy
could increase from 33%
to 75% if optimized for Bitcoin mining utilization.
utilization.
The potential contribution to foreign
exchange could reach 7 billion US per
year and the project has the potential
to add 58 terowatt hour of electricity
sale from clean and low cost energy
dedicated to Bitcoin mining.
and energy. Energit can also support
Indonesia green transition by converting
surplus energy into digital assets,
creating new revenue stream while
maintaining carbon neutrality and grid stability.
stability.
Thank you for your attention. Uh
yeah, thank you. Thank you very much uh
Dr. Kashalani. So 10 minutes. Thank you
very much for giving that uh time. So
maybe we have a questions from the
>> um thank you so much sir for the
presentation on Bitcoin. I have a
question. uh you mentioned that
Indonesia's electricity is still over
supply and uh you also mentioned that
Indonesia has a competitive advantage in
Bitcoin mining because uh the
electricity is still really cheap in
Indonesia and I believe it is still
dominated by coal fired power plant. So
my question is that what is the urgency
of mining bitcoin using renewable energy
when we are still over on over supply
site in electricity in Indonesia? Thank you.
you.
>> Okay. Uh thank you for the question. Uh
actually the price of electricity
Indonesia is uh a lot of kind of sources
like from coal and from hydro and there
is a lot of price different price in
different uh gener generation power
plant. For example, in Saguling, in
Palta Saguling, the cheap uh the price
to generate electricity is about 40 uh 450
450
C uh rupia per kilowatt. So we think it
is cheap electricity to generate
electricity and the capacity factor of
saguling is almost
about 60%.
So we think that with the cheap
electricity it is so
uh it's so if we cannot optimize it
it become a cost because uh the
capacitive factor and load factor the
more the more capacitive factor the more
uh the less cost. So I think uh maybe we
we prefer the clean energy first and
then if maybe there another coal power
plant that still cheap we can use it to
mining bitcoin also but we prefer uh
clean energy because uh there is no
excess carbon if we use to mining bitcoin.
bitcoin.
I'm sorry if if
>> Thank you. Um, any other questions, please.
>> Thank you very much. Uh, just a quick
question about the legal um framework in
Indonesia for Bitcoin mining. Is it
allowed right now to do it? And PLN in
favor of doing it or what are the
discussions right now also with the
mining companies right the private
sector who would actually set up the
mining so I'd be interested to hear
about this thank you
>> yeah uh thank you for the question uh as
I know uh the regulation of
cryptocurrency especially is now as uh
as a legal legal asset to transaction
with bitcoin and for mining bitcoin
There is a lot of uh company that
registrate in Indonesia
uh that have a main concern in Bitcoin
mining. So it is become legal uh in
private sector.
However, uh PPL still not nowadays still
not in in this uh sector. But maybe with
this idea and we will discuss more to
maybe in this business as soon as possible.
possible.
Thank you.
>> Is that okay? Uh maybe one last questions.
>> Okay. Thank you. Just a quick question.
Is it possible that uh Bitcoin mining
from the cheap renewable energy to be
cross subsidize for the uh cost of
renewable energy that's still high like
a solar panel in Indonesia. Is it
possible to like cross subsidize? So uh
the private sector can reach the PPA
threshold for solar uh price in
Indonesia. Thank you.
>> Yeah. Uh thank you for the question.
uh I think is achievable because
uh pipel is actually under the dantara
which is sovereign wealth fund in
Indonesia that focus in finding
uh profit so maybe different condition
with under the bn is the first so uh
maybe petal will focus find another
business another kind because another
kind of uh prospect business that PLN
can afford to uh optimize and utilize
every asset because Indones
have two 2 billion uh 2 billion rupia
2,000 billion rupia asset. So paln has uh
uh
uh responsibility to maximize maximize
the asset by
uh optimize every asset to become a
profit. So legally
uh under the Dantara Palen have an
opportunity in this business and
privately I think uh it will become uh
interesting business for private company
because Indonesia have uh cheap
electricity. Now maybe another
international company will come to
Indonesia to mining Bitcoin.
>> Okay. Thank you very much. A big round
of applause uh for Dr. Castalani for his
presentation on energy to Bitcoin. Thank
you very much.
>> Thank you.
>> Um and I would like to go to the next
presentations. Dr. Icha Wulansari. Yes.
Uh I think she will present uh with us
the political economy of Indonesia's
energy transition. So please a big round
of applause for uh Dr. Icha, please.
>> Thank you. >> Okay.
>> Okay.
>> So maybe 10 minutes presentation and
five minute Q&A.
>> Good morning. Asamato.
Uh my name is Jawan Sari. I am an
assistant professor in international
relations studies in Paramina
University, Jakarta, Indonesia. Then I
would like to present the political
economy of Indonesia's energy
transition. Okay.
Okay. Okay, the energy transition is uh
the global structural uh is based on the
international relation studies that this
is uh force us especially in Asian uh
people to make the structural stiff uh
toward low carbon energy and Indonesia
has increasingly positioned in energy
transition but uh we have uh to deal
with this uh developmental issues uh in
terms of the chip energy that uh this is
in line with the previous uh presenters
before Indonesia's renewable energy
targets uh Indonesia has strengthened uh
multilateral and bilateral regions but
today uh Chinese investor is the
dominant actors uh that uh they are uh
mostly um dominated in the uh investment
in energy transition and despite
Indonesia's uh assertion uh regarding it
pursuit to energy transition coal is
designed ated as a new energy source uh
because of uh Indonesian people uh need
the affordable energy and unfortunately
we still using the uh dirty energy uh
the coal uh because the electricity um
needed and the challenge of this energy
transition is the how Indonesia position
as peral country. uh this is uh give us
the potential vulnerabilities both
economic, social and environmental and I
would like to present uh this thank you
I would like to present uh this uh
analysis uh through the capitalian
theory. Uh first of all uh today uh the
anthroposian become the strong word uh
to give us the
uh the situation that we have to deal
with the crisis especially in the
climate change but the anthroposine is
not enough to uh to deal with the
situation is not enough to uh give us
the awareness as uh especially for
developing countries to be aware that uh
we have to uh understand that the situation
situation
uh the geographical context and then the
geopolitics based on the professor
previously previously uh present uh
presented the geopolitics in um south um
yeah south uh global community we face
with the vulnerabilities especially for
the energy transition and uh I prefer
the capital theories come from the Jason
Wmore uh the more uh said that uh we
have to understand the word ecology that
this is necessary how capitalism and I
think uh this is the in line with this
uh with the presenter presenter before
that how bitcoin uh this is the uh
practical of the capitalism that uh this
is the system of power in terms of the
politics and uh economical politics that
construct a web of life connects to
human relationship with joy but this is
uh this is related to the uh to the
economy, politic uh that uh in line with
the situation of today the uh planetary
crisis that how uh the presenter before
just in line and um he mentioned many um
many words with the cheap energy and
this is for uh based on the James Moore
theory that the cheap nature the cheap
nature it means that not only nature
cheap labor
and then cheap raw materials uh and
that's all cheap it makes uh the
condition getting vulnerable
and the perspective of political
economic geography um I would like to
stress this this is the critical uh
political economy for analysis in terms
of uh energy transition that's uh this
is the process of accumulation
innovation competition and social mobilization
mobilization
And the practice of just transition is a
political economic context uh that
enlighten who become the winners and the
losers at the same times and how the
distribution of energy and side effects
of energy transition and this is uh uh
this analysis uh give us uh give me I'm
sorry give me uh the under the deepen
understanding how the energy trans
extraction how the industrial energy
extraction becomes so vulnerable
especially for the people who depend on
their living on the natural resources as
their livelihood and this transition
requires legitimacy various regulation
uh and the regulation uh is not standing
uh alone because uh this is related to
the global structures and then including
trade investment labor industrial
policies and environmental policies and
uh Peter Neville
uh he is a sociologist uh from uh the UK
Okay. Uh give uh me uh an insight in
terms of the energy transition of green
new deal framework. Green new deal is
the global uh structure uh that uh this
structure uh introduced in the US and
today uh introduced to the uh European
Union just uh to tackle the economic
crisis in the western uh countries. But
unfortunately at the same times uh and
developing countries face the vulnerable
issue uh due to the green deal issues
and the methodology of this paper is uh
I prefer the petal uh understanding in
terms of the energy transition. uh how
the international political economy give
the understanding the role and the
function of political and economics in
global energy transition and this is uh
the the reality in fact that the state
pursue their national interest but
sometimes uh the state usually prefer
the terms of nationalism but the
nationalism is just for uh yeah just for
the power for the sake of power of the
global power but sometimes there's a
collide with the um with the people's
need uh and this is uh and this uh Peter
Neville's analysis and the capitalisian
uh enlighten this uh issue
first Indonesia's uh depend on the
Chinese uh investors right now in the
energy transition and Indonesia be part
of the just energy transition
partnership beside Vietnam
and China uh belt road initiative as the
global pathway for China to implement
their foreign policy. And Indonesia is
the one of the country that uh China
implemented this foreign uh policy. And
based on this theory uh the capitalism
theory that the social and ecological
risk in Indonesia, this risk uh
concentrated in several development
clusters uh especially for the nickel
industrial side. For some people, nickel
um as the material for the energy for
the battery of the electric vehicle for
the what we call it for the green uh
transportation but at the same times how
uh this uh industry is not sustainable
at all. Uh I would say that in Indonesia
two small island especially in the
Almahara pool uh Obi Island and then the
uh southwest Sulawasi in Kandari
two uh sites that have uh the uh
negative impacts of this uh industrial
uh nickel from China and the challenges
of Indonesia's just energy governance
based on the is um report uh Melinda
Martino said that contains the energy
transition funding jetp inadequate and I
yeah I should say that the professor
before just mentioned where's the money
come from this is the the reality that
we need to build the infrastructure but
uh the reality the money come from is uh
is just uh serious issue and the
challenges of Indonesia's energy
transition include the need for
substantial funding uh for sustainable
energy and slope pace of Indonesia's
coal. Um the neoliberal energy
transition uh with the global periphery
the capital give uh give me the
understanding how the position as uh
developing countries become uh very
fairy and core. This is uh quite um
critical uh economy politic and then how
the neoliberal energy transition forced
us uh to build uh the nationalism issues
in term of the energy transition and the
historical uh the historical uh findings
that this issue is uh started by our
president uh president Yudono that
invited uh to China uh 2011 and this is
continued by uh the the previous
president and the effort of Indonesia to
attract foreign investment to open
market the sustainable energy and then
um clean energy investment with low
business risk. I think this is uh quite
uh serious issue and uh I would like to
conclude uh this uh paper. Yeah. Uh the
industry consists of state actors uh
that the energy transition in Indonesia
just uh dominated by industry uh uh
dominated by the governments who have uh
coalition with the uh business actors. I
think that's all. Thank you very much.
>> Thank you. Thank you very much uh Dr.
Icha. So again I would like to invite uh
questions from the audience.
Hello. Uh thank you very much for the
nice presentation. Uh just a quick
question that you mentioned that uh
China belt road initiatives um have
several ecological and social impact in
several clusters in Indonesia and I'm
just wondering like based on that
finding what kind of um safeguarding
maybe maybe like you think that needs to
be put in place uh to in order to ensure
that these kind of initiatives do not
cause a lot of ecological and social
impact. Thank you.
>> Okay. Thank you. Uh first of all uh I
think the our government uh just uh
ignore uh about the the potential risk
uh in terms of the the displacement
people in terms of the um livelihood uh
the loss of livelihood of the local
people. But uh with our new uh
government they just put the economic
growth as the main priorities for the uh
more than 8%. I think uh this uh the
single narrative is uh give us the examp
uh yeah for me uh give me um the
yeah it's not good. It's not good at all
because we have to deal with this
ecological issues and then the social
issues. Um and based on this uh theory
this uh make it clear that how uh the
Indonesia position as the very fairy
countries just only uh absorb the the
money without uh the the standard the
procedural standard of the uh
sustainability and I I think uh the the
risk for the future is about the how in
Indonesia face uh with the investor the
responsible investor who wants to uh who
wants to implement their ESG. I think
that's Thank you.
>> Thank you. Any other questions?
>> Okay. If not, thank you very much Dr. I.
I apologize that uh we have to move to
the next session. Thank you very much.
Um I would like to call next uh Miss
Yuanita Budan who will present the
comparative analysis of green sukok
utilization for renewable energy
financing in Indonesia and Malaysia.
um 10 minutes presentation please and
then we are going to have like 5 minutes Q&A.
Q&A.
>> Is it okay if I take it out?
Okay. Oops. Uh thank you. Asalam alaikum
and good morning everyone. Uh before we
start uh let me tell you a story. So
earlier this year I attended a
discussion on Islamic philanthropy. So
how Islamic philanthropy is contributing
towards climate actions. I was
pleasantly surprised to see how these
grassroots initiatives are growing and
actually making real impact in energy
transition. As someone working in the
renewable energy sector, I was curious
to see how a broader Islamic finance has
contributed towards energy transition
especially renewable energy development
in Southeast Asia. So I started to look
for more information and that's where I
noticed a gap. So while Islamic finance
is growing quite significantly in the
past years, there is still limited
studies on how far it has contributed to
renewable energy development and linking
it directly to renewable energy
installed capacity for example in Asan
especially. So that's uh curiosity led
me to conduct a research on comparative
analysis of one of Islamic finance
instrument which is green suk which is
widely known as Islamic bonds um in
renewable energy financing especially in
two pioneers country Indonesia and
Malaysia. Uh so I'm Yuna Budiman, a
renewable energy consultant from
Indonesia and in the next few minutes we
will explore more about green sukok and
how its role in supporting renewable
energy development in Indonesia and Malaysia
Malaysia sorry
so under Asan plan for actions of energy
uh cooperation or APA as targets uh 23%
of renewable energy in uh primary energy supply and 35% of renewable energy in uh
supply and 35% of renewable energy in uh installed capacity by 2025 and according
installed capacity by 2025 and according to
to sorry
yeah and according to IEA it requires about approximately 190 billion US per
about approximately 190 billion US per year of investment and although
year of investment and although investment in Southeast Asia has uh
investment in Southeast Asia has uh significantly uh shifted toward cleaner
significantly uh shifted toward cleaner energy over the past years uh there is
energy over the past years uh there is still far below the target of 190
still far below the target of 190 billion US dollar per year and depinates
billion US dollar per year and depinates capital flows in this region. So it
capital flows in this region. So it highlights for the needs to boost energy
highlights for the needs to boost energy investment and also diversify its
investment and also diversify its financial instrument
financial instrument sorry
sorry for the noises. Okay. And uh on the
for the noises. Okay. And uh on the other hand, green sukok has emerged as
other hand, green sukok has emerged as uh an alternative financial instrument
uh an alternative financial instrument in the region and is growing quite
in the region and is growing quite significantly over time and Indonesia
significantly over time and Indonesia and Malaysia are the pioneers country of
and Malaysia are the pioneers country of green suk in the world. So it is an
green suk in the world. So it is an interesting uh thing to be explored
interesting uh thing to be explored especially in Asan region. So this study
especially in Asan region. So this study would like to examine how green suku
would like to examine how green suku contribute to renewable energy financing
contribute to renewable energy financing in Indonesia and Malaysia especially in
in Indonesia and Malaysia especially in these three aspects. So first allocation
these three aspects. So first allocation of proceeds in renewable energy sector.
of proceeds in renewable energy sector. Second effectiveness in delivering
Second effectiveness in delivering measurable renewable energy outcomes and
measurable renewable energy outcomes and the third is institutional factors that
the third is institutional factors that influence the effectiveness.
influence the effectiveness. In this study we use comparative mix
In this study we use comparative mix methods analysis combining quantitative
methods analysis combining quantitative allocation data and institutional
allocation data and institutional assessment. So first we gather and
assessment. So first we gather and calculate issuance volumes based on
calculate issuance volumes based on official green sukok impact reports and
official green sukok impact reports and uh it subsequent sectoral allocation and
uh it subsequent sectoral allocation and installed renewable energy capacity. And
installed renewable energy capacity. And secondly we use adapted a storm
secondly we use adapted a storm principles to design seven indicators
principles to design seven indicators that will be used in the institutional
that will be used in the institutional scoring and at the end we do a
scoring and at the end we do a comparative analysis by comparing uh the
comparative analysis by comparing uh the green sukok implementation in both
green sukok implementation in both countries.
countries. Uh so we have some interesting findings.
Uh so we have some interesting findings. The first one is on the allocation fac
The first one is on the allocation fac uh pattern. We see that Indonesia and
uh pattern. We see that Indonesia and Malaysia's green sukok has contrasting
Malaysia's green sukok has contrasting uh models and also contrasting
uh models and also contrasting allocation patterns.
allocation patterns. Indonesia green sukuk is dominated by
Indonesia green sukuk is dominated by sovereign let green sukuk in which um
sovereign let green sukuk in which um the funding allocations uh align closely
the funding allocations uh align closely with the budget the national budget
with the budget the national budget priorities such as uh waste and water
priorities such as uh waste and water climate resilience and sustainable
climate resilience and sustainable transport.
transport. In consequence, only 4% of green sukok
In consequence, only 4% of green sukok proceeds in Indonesia went to renewable
proceeds in Indonesia went to renewable energy sector and mostly it is for
energy sector and mostly it is for off-grid electrification and smallcale
off-grid electrification and smallcale renewable energy in rural areas. So it's
renewable energy in rural areas. So it's amounted to over 21 megawatt uh of
amounted to over 21 megawatt uh of installed re capacity and distribution
installed re capacity and distribution of over two billion liters of biodeiesel
of over two billion liters of biodeiesel throughout the countries.
On the other hand, Malaysia green sukuk model are dominated by corporate less
model are dominated by corporate less sukokuk in which utility scale renewable
sukokuk in which utility scale renewable energy is gaining traction. So more than
energy is gaining traction. So more than 36% of green suk proceeds in Malaysia
36% of green suk proceeds in Malaysia went to large scale renewable energy
went to large scale renewable energy projects uh between 50 to 150 megawatt
projects uh between 50 to 150 megawatt per project and totaling to about 745
per project and totaling to about 745 megawatt uh of installed renewable
megawatt uh of installed renewable energy capacity and some are still under
energy capacity and some are still under development. So we can expect more from
development. So we can expect more from this.
this. So why does this happen and how?
So why does this happen and how? Based on our analysis, we see that clear
Based on our analysis, we see that clear eligibility criteria is really
eligibility criteria is really important. So, uh when eligibility
important. So, uh when eligibility criteria is defined really clearly and
criteria is defined really clearly and narrowly focused, it becomes
narrowly focused, it becomes significantly easier to channel
significantly easier to channel substantial funding to a specific sector
substantial funding to a specific sector in this case renewable energy sector
in this case renewable energy sector and also alignment with national
and also alignment with national renewable energy goals is really
renewable energy goals is really important. uh as we can see in Malaysia,
important. uh as we can see in Malaysia, most of the proceeds went directly to
most of the proceeds went directly to utility scale renewable energy projects
utility scale renewable energy projects under LSS and corporate PPS national
under LSS and corporate PPS national program in Malaysia.
program in Malaysia. [clears throat]
[clears throat] And uh lastly is the consistent third
And uh lastly is the consistent third party verification and transparent
party verification and transparent reporting to enhance the green
reporting to enhance the green credibility and investors trust.
credibility and investors trust. Although it might not directly link to
Although it might not directly link to allocation to renewable energy sector
allocation to renewable energy sector for example, we see that it is important
for example, we see that it is important to enhance the credibility and uh to
to enhance the credibility and uh to improve investors trust on the long run.
In conclusion, uh we see that Indonesia and Malaysia's green suk models reflect
and Malaysia's green suk models reflect uh threats of between broader climate
uh threats of between broader climate finance as we see in Indonesia green
finance as we see in Indonesia green sukok model uh versus targeted focused
sukok model uh versus targeted focused renewable energy investment in Malaysia.
renewable energy investment in Malaysia. Uh from the findings that we have
Uh from the findings that we have presented earlier, we can see that each
presented earlier, we can see that each model has strength and weaknesses. So
model has strength and weaknesses. So what if we learn from each other and
what if we learn from each other and shape gruk model and governance uh that
shape gruk model and governance uh that has uh more impacts in energy transition
has uh more impacts in energy transition especially in renewable energy
especially in renewable energy development. So here we offer three
development. So here we offer three actions to enhance green sukok impacts
actions to enhance green sukok impacts on renewable energy development. First
on renewable energy development. First is to set clear credible rules and
is to set clear credible rules and eligibility criteria to improve the
eligibility criteria to improve the clarity for investors but also to reduce
clarity for investors but also to reduce uh greenwashing and second to ensure uh
uh greenwashing and second to ensure uh sukok's proceed directly advance
sukok's proceed directly advance renewable energy goals we need to align
renewable energy goals we need to align closely with the national renewable
closely with the national renewable energy goals and targets and programs
energy goals and targets and programs and the third is to build long-term
and the third is to build long-term trust to verification and um regular
trust to verification and um regular transparent reporting and we believe
transparent reporting and we believe future research Arch should explore more
future research Arch should explore more uh about the green suk implementation in
uh about the green suk implementation in much greater detail via interviews and
much greater detail via interviews and FGDs and uh finally this is an ongoing
FGDs and uh finally this is an ongoing research so we are really open for any
research so we are really open for any feedback any questions and comments and
feedback any questions and comments and also potential to collaborate. Thank
also potential to collaborate. Thank you. [applause]
>> Um thank you thank you very much uh Miss Yuanita for the very nice presentations.
Yuanita for the very nice presentations. Um I would like to open the Q&A uh for
Um I would like to open the Q&A uh for the audience
the audience please.
Yeah. Uh just curious about the renewable energy project that you
renewable energy project that you studied in just in Indonesia. Uh is that
studied in just in Indonesia. Uh is that all renewable energy projects that's
all renewable energy projects that's been funded by the green sukok or uh how
been funded by the green sukok or uh how much parts of this
much parts of this renewable energy project for example in
renewable energy project for example in the building sector for example for
the building sector for example for building integrated photoolics and
building integrated photoolics and >> uh yeah uh any others just curious about
>> uh yeah uh any others just curious about that percentage or proportional.
that percentage or proportional. >> Yeah. Okay. So I think we can open my uh
>> Yeah. Okay. So I think we can open my uh annex slide my backup slides as I show
annex slide my backup slides as I show like a table with more details on the
like a table with more details on the sectoral allocation. Um
sectoral allocation. Um so yeah in this study we focus more on
so yeah in this study we focus more on renewable energy projects which is
renewable energy projects which is mostly on uh renewable energy power
mostly on uh renewable energy power plant and also um uh yeah so basically
plant and also um uh yeah so basically bio gas solar PV hydro power plant but
bio gas solar PV hydro power plant but mostly in Indonesia we use uh they the
mostly in Indonesia we use uh they the the proceed of green suks went to small
the proceed of green suks went to small scale and offgrid electrification in
scale and offgrid electrification in rural areas. So maybe
rural areas. So maybe we can open the backup.
we can open the backup. >> Do we have the backup slides? If we move
>> Do we have the backup slides? If we move forward
forward >> that has table. I think the last backup
>> that has table. I think the last backup slides that I have. Um the last one that
slides that I have. Um the last one that has table with numbers.
has table with numbers. Yeah, this one. So this is the sectoral
Yeah, this one. So this is the sectoral allocation of green suk in Indonesia and
allocation of green suk in Indonesia and Malaysia over years. Uh if we want to
Malaysia over years. Uh if we want to see the sectoral allocation, we can see
see the sectoral allocation, we can see on the first table uh here renewable
on the first table uh here renewable energy and then we also have green
energy and then we also have green building. So I suppose the the green
building. So I suppose the the green building um
on that but if if it is rooftop solar PV it will be under the renewable energy uh
it will be under the renewable energy uh sector still.
sector still. >> Yeah the energy efficiency.
>> Yeah the energy efficiency. >> Yeah energy efficiency mainly on energy
>> Yeah energy efficiency mainly on energy efficiency uh of uh industries uh that
efficiency uh of uh industries uh that they have here.
they have here. >> Yeah. So this is taken from the official
>> Yeah. So this is taken from the official green sukok impact reports that is
green sukok impact reports that is publicly available. So we can we can
publicly available. So we can we can check uh line by line what are the
check uh line by line what are the projects that they are funded and the
projects that they are funded and the description and when comparing the two
description and when comparing the two grins models Indonesia and Malaysia when
grins models Indonesia and Malaysia when comparing the both reports uh I can see
comparing the both reports uh I can see that Indonesia's reports are quite
that Indonesia's reports are quite detailed but then uh it's not um uh they
detailed but then uh it's not um uh they did not they did not really disclose in
did not they did not really disclose in detail of how much capacity per project
detail of how much capacity per project because some projects are bundled up
because some projects are bundled up into one whereas in Malaysia's corporate
into one whereas in Malaysia's corporate green souk uh impact reports are
green souk uh impact reports are sometimes really clear because usually
sometimes really clear because usually one issuance only to to fund one uh
one issuance only to to fund one uh project one big scale project. One
project one big scale project. One simple question if I may.
simple question if I may. >> Uh do you know why for example green
>> Uh do you know why for example green building and revenue energy is
building and revenue energy is >> uh quite small compared to others and do
>> uh quite small compared to others and do you have any idea how to accelerate I
you have any idea how to accelerate I mean yeah
mean yeah >> in the future for example. Thank you.
>> in the future for example. Thank you. >> Yeah uh thank you so much for the
>> Yeah uh thank you so much for the question. Yeah as I mentioned in the
question. Yeah as I mentioned in the presentations that Indonesia's green suk
presentations that Indonesia's green suk are all sovereign luk. So the suk that
are all sovereign luk. So the suk that is issued by the government. Uh so it
is issued by the government. Uh so it went through climate budget tagging. So
went through climate budget tagging. So it really uh aligned with the national
it really uh aligned with the national priorities at that time. uh so when we
priorities at that time. uh so when we can see here we can see clearly that
can see here we can see clearly that waste and water climate resilience and
waste and water climate resilience and sustainable transport is uh the top
sustainable transport is uh the top three focus of the current government.
three focus of the current government. Uh however if the priorities change in
Uh however if the priorities change in the future it might also change the
the future it might also change the composition. Yeah
composition. Yeah >> thank you. Thank you.
>> thank you. Thank you. >> I I also want to ask the energy
>> I I also want to ask the energy efficiency but maybe quick question. So
efficiency but maybe quick question. So who managed the green sukok in
who managed the green sukok in Indonesia?
Indonesia? >> Uh gruk in Indonesia is managed by the
>> Uh gruk in Indonesia is managed by the ministry of finance uh with
ministry of finance uh with collaboration with other ministries as
collaboration with other ministries as well.
well. >> So the discretion of allocation in
>> So the discretion of allocation in ministry of finance.
ministry of finance. >> Yeah. But they all lies with the
>> Yeah. But they all lies with the sectoral ministries for example ministry
sectoral ministries for example ministry of energy and also ministry of
of energy and also ministry of environment on uh allocating the the
environment on uh allocating the the resources and the proceeds.
resources and the proceeds. >> Okay. Thank you. Thank you very much. uh
>> Okay. Thank you. Thank you very much. uh apologize that due to the time
apologize that due to the time limitation I would like to move to the
limitation I would like to move to the next presentations.
next presentations. Thank you very much uh Miss Yuanita and
Thank you very much uh Miss Yuanita and I would like to call Mr. Rifki Hakim
I would like to call Mr. Rifki Hakim Dewanto who will share with us the
Dewanto who will share with us the fragmentations conflicts or cooperations
fragmentations conflicts or cooperations lessons from Indonesian evolving role in
lessons from Indonesian evolving role in global carbon markets. Please the time
global carbon markets. Please the time is yours.
>> Yeah, thank you very much. Um good morning everyone. Uh my name is Rifki.
morning everyone. Uh my name is Rifki. I'm from Wakan University and research
I'm from Wakan University and research and maybe we've been talking about
and maybe we've been talking about numbers, investments and my
numbers, investments and my presentations will be a little bit
presentations will be a little bit different. It will be a little bit
different. It will be a little bit conceptual and I'll be talking about how
conceptual and I'll be talking about how carbon market evolves in Indonesia. Can
carbon market evolves in Indonesia. Can I use this here?
I use this here? Yeah. So, I would like to open my
Yeah. So, I would like to open my presentation with a question uh how do
presentation with a question uh how do we deal with climate change? As we know
we deal with climate change? As we know we have to decarbonize, we have to
we have to decarbonize, we have to reduce emissions. So one thing that we
reduce emissions. So one thing that we can do is to make emitting emissions
can do is to make emitting emissions more expensive right um so we put price
more expensive right um so we put price on emitting emissions and the next is we
on emitting emissions and the next is we can sell emission allowance for example
can sell emission allowance for example that's what we know as emission
that's what we know as emission shredding system and the next is to we
shredding system and the next is to we can pay other entity to do emission
can pay other entity to do emission reductions on our behalf or what we know
reductions on our behalf or what we know as baseline and offset um mechanisms and
as baseline and offset um mechanisms and this three uh combination is what we
this three uh combination is what we know as carbon market and this carbon
know as carbon market and this carbon market is one of the most popular policy
market is one of the most popular policy instrument market that we have been
instrument market that we have been using for the last uh three decades or
using for the last uh three decades or 30 years um in dealing with climate
30 years um in dealing with climate change. We use it to drive climate
change. We use it to drive climate ambitions. We use it to drive climate
ambitions. We use it to drive climate mitigation actions. We use it to drive
mitigation actions. We use it to drive renewable energy investments in
renewable energy investments in Indonesia and it has been growing quite
Indonesia and it has been growing quite a lot in the last 30 years. So much so
a lot in the last 30 years. So much so that right now uh carbon market in the
that right now uh carbon market in the global sense is very fragmented
global sense is very fragmented actually. For example, um in the Kyoto
actually. For example, um in the Kyoto protocol era, we have the clean
protocol era, we have the clean development mechanisms. Outside the
development mechanisms. Outside the Kyoto protocol, we have the VCM or the
Kyoto protocol, we have the VCM or the voluntary carbon market. And then we
voluntary carbon market. And then we have in each country, we have some kind
have in each country, we have some kind of uh another carbon market framework.
of uh another carbon market framework. We have the EU ETS. We have China ETS.
We have the EU ETS. We have China ETS. Indonesia has also just launched our new
Indonesia has also just launched our new carbon market framework in 2021. So
carbon market framework in 2021. So interactions becomes really tricky. What
interactions becomes really tricky. What what is the right carbon price? What is
what is the right carbon price? What is the right MRV system? how do we deal
the right MRV system? how do we deal with cross system transactions and etc.
with cross system transactions and etc. So based on this introductions uh and
So based on this introductions uh and this background um I'm I'm very curious
this background um I'm I'm very curious because I've been seeing a lot of
because I've been seeing a lot of developments of Indonesia's new carbon
developments of Indonesia's new carbon market since 2021. So be because there
market since 2021. So be because there are a lot of like interactions with the
are a lot of like interactions with the voluntary carbon market and uh so the
voluntary carbon market and uh so the the million-dollar question I would say
the million-dollar question I would say is how would the increasingly fragmented
is how would the increasingly fragmented carbon markets interact with each other
carbon markets interact with each other right and are they going to sync with
right and are they going to sync with each other or are they going to be
each other or are they going to be conflict with each other but there are
conflict with each other but there are two caveats that I I think I need to
two caveats that I I think I need to address here uh that carbon market
address here uh that carbon market design is a political choice and it's
design is a political choice and it's also does not develop in a vacuum but
also does not develop in a vacuum but actually depend and respond to the
actually depend and respond to the interest of actors.
interest of actors. So in that sense I go to Indonesia not
So in that sense I go to Indonesia not just because I'm Indonesian but uh
just because I'm Indonesian but uh because I think it's a really
because I think it's a really interesting case uh of carbon market
interesting case uh of carbon market development. So Indonesia is a nonx1
development. So Indonesia is a nonx1 country. What this means is that
country. What this means is that Indonesia in the past during the cur
Indonesia in the past during the cur protocol era we have been implementing a
protocol era we have been implementing a CDM as a host country uh as because we
CDM as a host country uh as because we are nonX1 and then we have also have a
are nonX1 and then we have also have a lot of VCM projects since
lot of VCM projects since 15 or 2017 and uh as I said before in
15 or 2017 and uh as I said before in 2021 we just knew uh launched a new
2021 we just knew uh launched a new national carbon market framework.
national carbon market framework. So this is just research question. So
So this is just research question. So what I will see is that this the first
what I will see is that this the first thing the approach is that I will see
thing the approach is that I will see carbon market as an institution. Um so
carbon market as an institution. Um so what I I want to see is that how the
what I I want to see is that how the regulations have changed of us over
regulations have changed of us over time. How have the key actors that
time. How have the key actors that involve in carbon markets Indonesia have
involve in carbon markets Indonesia have changed over time. Have the relationship
changed over time. Have the relationship changed and have the norms and principle
changed and have the norms and principle that drive the carbon market
that drive the carbon market implementation in Indonesia also
implementation in Indonesia also changed. So I try to trace the
changed. So I try to trace the development of carbon market for the
development of carbon market for the last three decades in Indonesia.
last three decades in Indonesia. So this is just a little bit about the
So this is just a little bit about the methology. I interviewed a lot of people
methology. I interviewed a lot of people a lot of from from the government,
a lot of from from the government, academia, NOS, CSOS and many more.
academia, NOS, CSOS and many more. So I would like to bring you a little
So I would like to bring you a little bit about the theoretical background of
bit about the theoretical background of this uh research. So as I said before,
this uh research. So as I said before, I'm looking carbon market as an
I'm looking carbon market as an institution. So when I talk about CDM, I
institution. So when I talk about CDM, I see that as a separate institution. When
see that as a separate institution. When I talk about VCM, I see that as a
I talk about VCM, I see that as a separate institution. And uh for the new
separate institution. And uh for the new Indonesian carbon market that's also
Indonesian carbon market that's also another separate institutions. The
another separate institutions. The reason being is that because each of
reason being is that because each of these institutions are supported by
these institutions are supported by different regulations. They're supported
different regulations. They're supported by different actors and they're also
by different actors and they're also supported by different ideas and norms
supported by different ideas and norms and principles in how this uh cover
and principles in how this uh cover market uh operationalized. And by
market uh operationalized. And by looking at uh as an instit in
looking at uh as an instit in institutions we can see the embedding
institutions we can see the embedding process which means that we can see how
process which means that we can see how cover market is being affected by the
cover market is being affected by the socopolitical context and the other
socopolitical context and the other thing is that when we see carbon market
thing is that when we see carbon market as an institution we can see how they
as an institution we can see how they interact with each other how the CDM
interact with each other how the CDM interact with the VCM uh and how does
interact with the VCM uh and how does VCM interact with the new Indonesia's uh
VCM interact with the new Indonesia's uh carbon market. So we can see whether
carbon market. So we can see whether they are synergistic,
they are synergistic, whether they are cooperative or or are
whether they are cooperative or or are they conflictive. So are they in sync
they conflictive. So are they in sync with each other or are they um just run
with each other or are they um just run in parallel basically or are they
in parallel basically or are they basically canceling each other out. So
basically canceling each other out. So that's not what we want.
that's not what we want. So
So my finding is that in the beginning uh
my finding is that in the beginning uh CDM start the shape of the global carbon
CDM start the shape of the global carbon market. We we know that uh the the main
market. We we know that uh the the main regulatory pillar of the CDM is the CUDA
regulatory pillar of the CDM is the CUDA protocol and there are several several
protocol and there are several several ideas that support the existence of
ideas that support the existence of global carbon market is the first is of
global carbon market is the first is of course the social value of
course the social value of decarbonizations
decarbonizations between the country states because we
between the country states because we understand that it's really important to
understand that it's really important to decarbonize and to deal with climate
decarbonize and to deal with climate change and there's also the spirit of um
change and there's also the spirit of um achieving sustainable development
achieving sustainable development because we believe that economic growth
because we believe that economic growth can be sustained also So at the same
can be sustained also So at the same time with the uh environmental
time with the uh environmental protections and the third and this is
protections and the third and this is one of the most important characteristic
one of the most important characteristic of the CDM is the common but
of the CDM is the common but differentiated responsibility is that we
differentiated responsibility is that we believe that because state each state
believe that because state each state has different capacity for example for
has different capacity for example for NX1 countries basically the rich
NX1 countries basically the rich countries they have more resources and
countries they have more resources and they need to help the non-NX1 countries
they need to help the non-NX1 countries so that's why the NX1 countries they
so that's why the NX1 countries they become the the investors so to say to
become the the investors so to say to the non-NX1 countries to implement CDM
the non-NX1 countries to implement CDM projects such as Indonesia.
projects such as Indonesia. And this um finally the the very um
And this um finally the the very um basic um norms or ideas that support the
basic um norms or ideas that support the the existence of global carbon market is
the existence of global carbon market is that we believe that by using
that we believe that by using marketbased instrument we can have
marketbased instrument we can have economic rationality in dealing with
economic rationality in dealing with climate change. We believe it will lead
climate change. We believe it will lead to economic growth lead to energy
to economic growth lead to energy investments and we believe it will be
investments and we believe it will be the most economic efficient ones. So
the most economic efficient ones. So based on this um situation um a set of
based on this um situation um a set of relationship occur. For example,
relationship occur. For example, Indonesia, we become a recipient
Indonesia, we become a recipient basically as uh for the donors or the
basically as uh for the donors or the the investors from the NX1 countries
the investors from the NX1 countries and at the same time uh the CDM uh also
and at the same time uh the CDM uh also gave rise to the voluntary cover market
gave rise to the voluntary cover market because CDM is connected to the Kod
because CDM is connected to the Kod protocol whereas the VCM is more
protocol whereas the VCM is more supported by the corporate actors and
supported by the corporate actors and they work basically cooperatively
they work basically cooperatively because in the beginning uh they just
because in the beginning uh they just basically exist um in parallel with each
basically exist um in parallel with each other And actually the VCM work more
other And actually the VCM work more sort of like a sandbox as a as a as a
sort of like a sandbox as a as a as a piloting task for the CDM and etc. So
piloting task for the CDM and etc. So they they they this
they they they this support each other but also not so much
support each other but also not so much uh working together.
uh working together. And how does it mean in Indonesia? Um so
And how does it mean in Indonesia? Um so Indonesia actually ratified the Juro
Indonesia actually ratified the Juro protocol seven years after the the the
protocol seven years after the the the protocol started. So Indonesia just
protocol started. So Indonesia just ratified it in 2004 because Indonesia
ratified it in 2004 because Indonesia was just um recovering from the SS
was just um recovering from the SS economic crisis from the um from the
economic crisis from the um from the reformations and there are a lot of
reformations and there are a lot of interest to capture international
interest to capture international investment to support Indonesia
investment to support Indonesia sustainable economic growth. So that's
sustainable economic growth. So that's the reason why Indonesia established a
the reason why Indonesia established a carbon market in the first place and
carbon market in the first place and what triggered there are two important
what triggered there are two important there there another important policy
there there another important policy milestone that triggered the development
milestone that triggered the development of carbon market Indonesia is the reed
of carbon market Indonesia is the reed instit institutionalization and this
instit institutionalization and this because there are a lot of uh interest
because there are a lot of uh interest in capturing the incentives of um
in capturing the incentives of um preserving forest Indonesia
preserving forest Indonesia and hence Indonesia become number one
and hence Indonesia become number one supplier of carbon credits in VCM. So in
supplier of carbon credits in VCM. So in this era until 2015 I would say carbon
this era until 2015 I would say carbon market Indonesia actually cooperate very
market Indonesia actually cooperate very cooperatively between CDM and VCM
cooperatively between CDM and VCM because uh in the end what the carbon
because uh in the end what the carbon market is for Indonesia is to made for
market is for Indonesia is to made for and cater to international actors and
and cater to international actors and this is to capture uh investments and
this is to capture uh investments and incentives but things start to change
incentives but things start to change when we shift to the Paris agreement. So
when we shift to the Paris agreement. So now uh all the countries in the world
now uh all the countries in the world needs to have the NDC right the
needs to have the NDC right the nationally determined contributions. So
nationally determined contributions. So the current market Indonesia cannot
the current market Indonesia cannot function as a tool to only capture uh
function as a tool to only capture uh international international investment
international international investment but it is also a tool to achieve NDC's
but it is also a tool to achieve NDC's target Indonesia. So in that sense under
target Indonesia. So in that sense under that under that um under that context
that under that um under that context Indonesia government actually prohibited
Indonesia government actually prohibited a lot of creation of uh uh carbon
a lot of creation of uh uh carbon projects in 2017 and they're also
projects in 2017 and they're also developing the new carbon market
developing the new carbon market framework. So uh as we can see here
framework. So uh as we can see here after the NDC is established we are um
after the NDC is established we are um making nuts and bolts of the the new
making nuts and bolts of the the new Indonesian carbon market framework
Indonesian carbon market framework and by 2020 at 2021 Indonesia launched
and by 2020 at 2021 Indonesia launched the new cover market. uh we're basically
the new cover market. uh we're basically breaking off from the CDM and the VCM
breaking off from the CDM and the VCM and we are now establishing our new
and we are now establishing our new carbon market framework and onwards from
carbon market framework and onwards from 2021 all carbon projects needs to be
2021 all carbon projects needs to be accounted towards NDC and utilize the
accounted towards NDC and utilize the new carbon market framework and this
new carbon market framework and this causes a lot of conflicts with the VCM
causes a lot of conflicts with the VCM because uh in the beginning um
because uh in the beginning um Indonesian cover market is for
Indonesian cover market is for international actors but after the NBC
international actors but after the NBC what we we are focusing in is for the
what we we are focusing in is for the domestic actors but the thing is um at
domestic actors but the thing is um at least until this research was written uh
least until this research was written uh there were there were no um mutual
there were there were no um mutual recognition between VCM standards such
recognition between VCM standards such as but right now we have mutual recog
as but right now we have mutual recog standards such as with Farah and etc.
standards such as with Farah and etc. But before there were no mutual
But before there were no mutual recognition. So uh it was basically
recognition. So uh it was basically canceling each other out. So they are
canceling each other out. So they are conflicting with each other.
conflicting with each other. And there are a lot of um domestic
And there are a lot of um domestic unreadiness in the new uh new carbon
unreadiness in the new uh new carbon market framework because uh at least
market framework because uh at least until this research is written only 20%
until this research is written only 20% of the issued carbon credits is retired.
of the issued carbon credits is retired. So it means there are not a lot of
So it means there are not a lot of domestic demands of the issued carbon
domestic demands of the issued carbon credits which is which makes sense which
credits which is which makes sense which makes sense because uh the demand for
makes sense because uh the demand for carbon market is not natural. It is
carbon market is not natural. It is created by regulations and if there are
created by regulations and if there are no clear regulations yet to to to
no clear regulations yet to to to attract or to trigger the demand. Of
attract or to trigger the demand. Of course uh there will not be like a very
course uh there will not be like a very liquid market in Indonesia for carbon
liquid market in Indonesia for carbon market. And the most interesting uh
market. And the most interesting uh thing uh interesting things also is that
thing uh interesting things also is that uh so far um the only cabba projects
uh so far um the only cabba projects that is in Indonesian cab market is uh
that is in Indonesian cab market is uh energy or technology based and they're
energy or technology based and they're not yet forestry projects because the
not yet forestry projects because the regulation has not been launched whereas
regulation has not been launched whereas actually forests is the most popular
actually forests is the most popular ones before. So what we see here is that
ones before. So what we see here is that there's a pruning of the global carbon
there's a pruning of the global carbon market framework. So what we think
market framework. So what we think carbon market should uh push the
carbon market should uh push the carbonizations actually in Indonesia um
carbonizations actually in Indonesia um um the idea is more pronounced is about
um the idea is more pronounced is about attracting in incentives international
attracting in incentives international investments um and there are a lot of
investments um and there are a lot of like uh internationally powered actors
like uh internationally powered actors um that we borrow the power to establish
um that we borrow the power to establish the carbon market Indonesia.
the carbon market Indonesia. So I will skip this a little bit. So
So I will skip this a little bit. So what what does it mean for the future of
what what does it mean for the future of global carbon market? So there are three
global carbon market? So there are three things I think it is important. The
things I think it is important. The first is that we need to streamline the
first is that we need to streamline the government involvement in carbon market
government involvement in carbon market oper operationalizations. Yes of course
oper operationalizations. Yes of course uh centralization is important but we
uh centralization is important but we need to also let the market run its
need to also let the market run its course. And the second is we need to
course. And the second is we need to solve complication in linkages of
solve complication in linkages of various carbon markets. So mutual
various carbon markets. So mutual recognitions more synchronized between
recognitions more synchronized between the carbon market frameworks such as the
the carbon market frameworks such as the Asan common carbon framework. is one of
Asan common carbon framework. is one of a good examples and we need to ensure
a good examples and we need to ensure the synergy in the fragmented global
the synergy in the fragmented global cover market. So
cover market. So in conclusion, uh the global carbon
in conclusion, uh the global carbon markets in Indonesia triggered the
markets in Indonesia triggered the development of Indonesia's new own
development of Indonesia's new own carbon market. Although the
carbon market. Although the international dominated scene limits the
international dominated scene limits the ability of domestic actors and the
ability of domestic actors and the conflicts with other carbon market
conflicts with other carbon market institutions such as the VCM actually
institutions such as the VCM actually reflects deeper issue and there is an
reflects deeper issue and there is an uneasy mix of market rationality and
uneasy mix of market rationality and climate justice and I think that's all
climate justice and I think that's all from me and thank you.
from me and thank you. >> Thank you. Thank you very much uh Mr.
>> Thank you. Thank you very much uh Mr. key. So I would like to open the
key. So I would like to open the question from audience please
question from audience please due to time limitation maybe quick ones
due to time limitation maybe quick ones >> one question in your methodology uh I'm
>> one question in your methodology uh I'm not sure what I'm sorry uh about your
not sure what I'm sorry uh about your objective or your study but in your
objective or your study but in your methodology I think you in my opinion
methodology I think you in my opinion you miss some one of the important
you miss some one of the important institution to be interviewed ministry
institution to be interviewed ministry of uh public works since the
of uh public works since the infrastructure infrastructure is
infrastructure infrastructure is contribute uh almost onethird of the
contribute uh almost onethird of the carbon emission and that's why this is
carbon emission and that's why this is also huge uh potentials for the I think
also huge uh potentials for the I think if you interviewed interview the
if you interviewed interview the minister of rebu so the conclusion might
minister of rebu so the conclusion might be a bit different so as you know that
be a bit different so as you know that next to me uh I dana so she is vice
next to me uh I dana so she is vice minister of the public works
minister of the public works IU mandri so uh you can interview
IU mandri so uh you can interview >> [laughter]
>> [laughter] >> I would love to.
>> I would love to. >> Yeah. And uh she will present uh in the
>> Yeah. And uh she will present uh in the next session in the 305. So if you are
next session in the 305. So if you are available please uh I think she will
available please uh I think she will present very interesting about the
present very interesting about the energy efficient program in Indonesia. I
energy efficient program in Indonesia. I think you Thank you. Just a small
think you Thank you. Just a small question. Thank you.
question. Thank you. >> Thank you very much. Uh yes. Yeah. Um uh
>> Thank you very much. Uh yes. Yeah. Um uh yes, of course. I would love to
yes, of course. I would love to interview like more sexual ministries,
interview like more sexual ministries, but uh it was more like a time limit. I
but uh it was more like a time limit. I would say like instead of uh instead of
would say like instead of uh instead of negligence like I don't want to
negligence like I don't want to interview the ministry of public works.
interview the ministry of public works. It's more like a time constraints of
It's more like a time constraints of issues. But I would really be happy to
issues. But I would really be happy to listen to Buddha's presentations uh next
listen to Buddha's presentations uh next door, right? I think and after lunch if
door, right? I think and after lunch if I'm not mistaken. Yeah. Thank you.
I'm not mistaken. Yeah. Thank you. >> Thank you very much. and second
>> Thank you very much. and second questions please.
>> Um thank you so much for interesting presentations. Um um I just jump quick
presentations. Um um I just jump quick straight to the uh questions because um
straight to the uh questions because um I'm also interested in carbon market and
I'm also interested in carbon market and uh I learned that with with regard to
uh I learned that with with regard to car market there's two side of debate
car market there's two side of debate right one side is a market based
right one side is a market based mechanisms and it will be a very big
mechanisms and it will be a very big opportunity for a country for
opportunity for a country for decarbonization but on the other side I
decarbonization but on the other side I think I think a lot of Saudi Asia I come
think I think a lot of Saudi Asia I come from my in Thailand so I've worked with
from my in Thailand so I've worked with the community a lot and there's
the community a lot and there's discussions about how from the civil
discussions about how from the civil society
society discussions about social justice and
discussions about social justice and what how much benefit is going to the um
what how much benefit is going to the um community right so there has been a lot
community right so there has been a lot of criticism for the cover market so I
of criticism for the cover market so I want to understand what do you think in
want to understand what do you think in your study institution I think you study
your study institution I think you study institutional norms right so how does
institutional norms right so how does these um community and civil society
these um community and civil society voices about the social justice shaped
voices about the social justice shaped these uh common market as an
these uh common market as an institutions and how have they been um
institutions and how have they been um how have they shaped this uh the
how have they shaped this uh the progress their journey towards this uh
progress their journey towards this uh global market. Thank you.
global market. Thank you. >> Yeah, thank you very much. I think it's
>> Yeah, thank you very much. I think it's a very um important question about the
a very um important question about the social justice in carbon market. So c
social justice in carbon market. So c what is the role of cso or NGO if I may
what is the role of cso or NGO if I may extend the question a little bit. So for
extend the question a little bit. So for example um WWF
example um WWF uh back in 2007. So after the CDM was
uh back in 2007. So after the CDM was launched uh we have the voluntary cover
launched uh we have the voluntary cover market and voluntary cover market
market and voluntary cover market requires standards and registries right
requires standards and registries right we have the farah for example we have
we have the farah for example we have the gold standards with plan vivo and uh
the gold standards with plan vivo and uh back in 2007 WWF actually collaborates
back in 2007 WWF actually collaborates with other actors to create a new
with other actors to create a new standards that we now know as gold
standards that we now know as gold standards. So in that sense uh how NGO
standards. So in that sense uh how NGO can contribute is the co-creations of
can contribute is the co-creations of those kind of methodologies and
those kind of methodologies and safeguarding principles and um uh people
safeguarding principles and um uh people on the ground actually to to to control
on the ground actually to to to control and monitor about the social impacts and
and monitor about the social impacts and the the the benefit sharing of the
the the the benefit sharing of the carbon projects. So that's one one
carbon projects. So that's one one example that I think um in the future
example that I think um in the future it's really important that this NOS's
it's really important that this NOS's and CSOS are um more aware because there
and CSOS are um more aware because there are a lot of interest of carbon market I
are a lot of interest of carbon market I think uh in all over the world including
think uh in all over the world including in Indonesia. Um but to also see uh to
in Indonesia. Um but to also see uh to be like a watchdog I would say to these
be like a watchdog I would say to these carbon projects on the ground whether uh
carbon projects on the ground whether uh uh the social aspects of these carbon
uh the social aspects of these carbon projects are being respected and and
projects are being respected and and benefited the society as a whole. I
benefited the society as a whole. I think that would be my answer.
think that would be my answer. >> Thank you very much. Big round of
>> Thank you very much. Big round of applause to Mr. Rifki. Thank you very
applause to Mr. Rifki. Thank you very much. So, um I would like to call the
much. So, um I would like to call the next presentation. I think we'll change
next presentation. I think we'll change a bit. So, I would like to call Miss
a bit. So, I would like to call Miss Irasanti.
Irasanti. Yeah. Which will share with us a
Yeah. Which will share with us a conceptual tax credit innovation from
conceptual tax credit innovation from Indonesia to green Asian's financial
Indonesia to green Asian's financial landscape.
landscape. So, the Yeah, screens is yours.
Uh my name is Era. So here I'm corker with Dr. Erin Suryadi, Kenet Gawan and
with Dr. Erin Suryadi, Kenet Gawan and Kavin Gunawan. So today's I would like
Kavin Gunawan. So today's I would like to present about the conceptual tax
to present about the conceptual tax credit innovation from Indonesian to
credit innovation from Indonesian to green Asian landscape. So the basic
green Asian landscape. So the basic concept actually is from policy ambition
concept actually is from policy ambition versus financing barriers. If you see
versus financing barriers. If you see the red light in here, we see that
the red light in here, we see that actually Asian have a net zero pledge.
actually Asian have a net zero pledge. But if you see in the red light
But if you see in the red light indicators
indicators there are financing barriers and also
there are financing barriers and also project bankability. project bank
project bankability. project bank capability. One of uh the indicator is
capability. One of uh the indicator is WACC which is Indonesia and uh Asian
WACC which is Indonesia and uh Asian still facing the high project bank
still facing the high project bank capability which is it make renewable
capability which is it make renewable energy less attractive than the uh
energy less attractive than the uh non-renewable energy like a coal. So if
non-renewable energy like a coal. So if you see max is still 11.5%.
you see max is still 11.5%. So therefore we are proposing an
So therefore we are proposing an innovative in financial instrument to
innovative in financial instrument to shift the investment because as you see
shift the investment because as you see why we still invest to non-renewable
why we still invest to non-renewable we will see in here. So for Indonesia,
we will see in here. So for Indonesia, why Indonesia still depend on a coal?
why Indonesia still depend on a coal? You can see the we actually have an
You can see the we actually have an energy mix target but only 17 province
energy mix target but only 17 province if I'm not mistaken that already met the
if I'm not mistaken that already met the target but if you see in Java it's still
target but if you see in Java it's still below the target and if you see the cost
below the target and if you see the cost why people like to invest more on the
why people like to invest more on the coal the cost of the coal is only 700
coal the cost of the coal is only 700 and if you see the solar panel it's
and if you see the solar panel it's about seven times almost seven times is
about seven times almost seven times is 4,700
4,700 rupees. So we need something that to
rupees. So we need something that to shift like private funding. We need
shift like private funding. We need private and we need also government uh
private and we need also government uh method funding to shift from uh
method funding to shift from uh nonrenewable to more renewable energy.
nonrenewable to more renewable energy. So in here is my financing model with uh
So in here is my financing model with uh other coorders. We use the weighted
other coorders. We use the weighted average capital cost. This is uh
average capital cost. This is uh actually to measure about the project
actually to measure about the project bankability.
bankability. Uh so in using a tax credit we expect
Uh so in using a tax credit we expect that it will lower the cost of dep
that it will lower the cost of dep because tax credit is being used as
because tax credit is being used as collateral and then the capital
collateral and then the capital structure will be lower as well as well
structure will be lower as well as well as the cost of equity. So we expect by
as the cost of equity. So we expect by imposing the tax credit as collateral
imposing the tax credit as collateral the WACC will be reduced from 8.9% to
the WACC will be reduced from 8.9% to become 79%. This is assumption in the
become 79%. This is assumption in the US. We'll go with letter. So this is uh
US. We'll go with letter. So this is uh actually the scheme uh tax credit is
actually the scheme uh tax credit is well known an incentive actually. Yes,
well known an incentive actually. Yes, it's not yet in Indonesia but it's
it's not yet in Indonesia but it's possibility to be applied in Indonesia.
possibility to be applied in Indonesia. So basically this is a tax incentive to
So basically this is a tax incentive to reduce tax liability for business or for
reduce tax liability for business or for individual as well. So if we integrate
individual as well. So if we integrate the tax credit like uh US project uh it
the tax credit like uh US project uh it could be production tax credit and
could be production tax credit and investment tax credit. What's the
investment tax credit. What's the different? So production the more you
different? So production the more you produce the more you get tax credit
produce the more you get tax credit while for the investment the more you
while for the investment the more you invest the more you get the tax credit.
invest the more you get the tax credit. So if you want to use this as a
So if you want to use this as a collateral, it will higher uh coll your
collateral, it will higher uh coll your collateral uh your equity and then this
collateral uh your equity and then this will help you to lower risk perception
will help you to lower risk perception actually. So the banks see this as
actually. So the banks see this as another collateral. So we expect them to
another collateral. So we expect them to lowering the uh interest rate for the
lowering the uh interest rate for the loan at first and then for the indirect.
loan at first and then for the indirect. So the investors see okay this is less
So the investors see okay this is less risk. So the lower interest rate so it's
risk. So the lower interest rate so it's becoming more project bankability
becoming more project bankability because the reduced WACC improve the
because the reduced WACC improve the bankability.
bankability. So this tax credit as collateral has
So this tax credit as collateral has been implied under inflation reduction
been implied under inflation reduction act IRA like my name. [laughter]
act IRA like my name. [laughter] So this has been uh applied for the
So this has been uh applied for the north fork solar with bank of America
north fork solar with bank of America transaction like 100 million uh dollars
transaction like 100 million uh dollars that using the tax credit as a
that using the tax credit as a collateral if you see this this what I
collateral if you see this this what I using the assumption this assumption
using the assumption this assumption uh based on our simulation it's reducing
uh based on our simulation it's reducing the WACC from 8.9 to 7.8 8 uh if you see
the WACC from 8.9 to 7.8 8 uh if you see in here before the IRA 75% tax equity is
in here before the IRA 75% tax equity is just a structures it's just a static
just a structures it's just a static relief while after the IRA we see that
relief while after the IRA we see that 90% of the tax credit is transferable so
90% of the tax credit is transferable so it's a great using of something that
it's a great using of something that just static to become financial uh
just static to become financial uh instrument to the market
instrument to the market so next if we are uh great there is no
so next if we are uh great there is no mascalani in here because he really
mascalani in here because he really [laughter] know better about the low
[laughter] know better about the low cost of electricity actually. So if you
cost of electricity actually. So if you see in here the WACC if you are using
see in here the WACC if you are using this basic assumption in Indonesia so
this basic assumption in Indonesia so corporate tax in Indonesia is 20 22%
corporate tax in Indonesia is 20 22% while the US is 21%.
while the US is 21%. We expect the model scenario the WACC
We expect the model scenario the WACC could reduce the WACC from 11.2 2 to
could reduce the WACC from 11.2 2 to become to become 7.5 by inducing the tax
become to become 7.5 by inducing the tax uh credit as collateral.
uh credit as collateral. So impacting to the cost of electricity
So impacting to the cost of electricity because we see uh the formula for the
because we see uh the formula for the BPP is also have a WACCC variable in
BPP is also have a WACCC variable in that we expect the solar power will be
that we expect the solar power will be reduced cost about 25 to 30%. While for
reduced cost about 25 to 30%. While for the geothermal will be reduced from uh
the geothermal will be reduced from uh about 10 to 15%. If you see the
about 10 to 15%. If you see the geothermal with coal it's shrinking the
geothermal with coal it's shrinking the gap. if we are inducing the tax credit
gap. if we are inducing the tax credit but if you see solar yes it's still high
but if you see solar yes it's still high but actually it's more uh moving forward
but actually it's more uh moving forward to PPA approval threshold although it's
to PPA approval threshold although it's still high that's why I'm asking like
still high that's why I'm asking like probably green suk energy bit it could
probably green suk energy bit it could help to make the solar could more moving
help to make the solar could more moving forward to PPA national threshold
forward to PPA national threshold national threshold is only 4,400
national threshold is only 4,400 if I'm not mistaken but for the solar in
if I'm not mistaken but for the solar in region because uh as Mascal Stalani
region because uh as Mascal Stalani previously mentioned it's uh different
previously mentioned it's uh different in region so is region for solar is
in region so is region for solar is around 3,000 so it's moving forward if
around 3,000 so it's moving forward if we are in imposing the tax credit to the
we are in imposing the tax credit to the solar PV project
solar PV project so this is my last slide this is
so this is my last slide this is actually so the result in discussion we
actually so the result in discussion we expect that on micro level we really
expect that on micro level we really expect the tax credit if using as a
expect the tax credit if using as a collateral. It could be uh increase the
collateral. It could be uh increase the project bankability. So investor would
project bankability. So investor would shift from the non-renewable to
shift from the non-renewable to renewable energy because it's less risky
renewable energy because it's less risky right now after using the tax credit as
right now after using the tax credit as collateral. On the micro level if I'm
collateral. On the micro level if I'm not mistaken I just read about the
not mistaken I just read about the ministry of finance report they they are
ministry of finance report they they are using a recursive dynamics CGE modeling
using a recursive dynamics CGE modeling to see the evaluate green invest fiscal
to see the evaluate green invest fiscal tool. So if the there are many project
tool. So if the there are many project could use the tax credit as cultural we
could use the tax credit as cultural we can see the aggregate impacts for the
can see the aggregate impacts for the future is it effective or not there is
future is it effective or not there is future research of course and then for
future research of course and then for the regional level we see this is a
the regional level we see this is a crossborder recognition of tax credit as
crossborder recognition of tax credit as collateral yes tax credit is remain
collateral yes tax credit is remain sovereign but it's just a trust between
sovereign but it's just a trust between Asian regional to to accept this as
Asian regional to to accept this as collateral that's what we need So this
collateral that's what we need So this could be used as well like professor
could be used as well like professor said at the early uh speak it could be
said at the early uh speak it could be used as well for the Asian joint
used as well for the Asian joint renewable project and actually is
renewable project and actually is already aligned with Asian green finance
already aligned with Asian green finance taxonomy to deepen regional capital
taxonomy to deepen regional capital markets. So basically the innovation
markets. So basically the innovation about the
about the uh this paper is about no extra fiscal
uh this paper is about no extra fiscal burden. So we don't create new incentive
burden. So we don't create new incentive but we are use the static incentive to
but we are use the static incentive to become attractive and to become dynamic
become attractive and to become dynamic in uh collateral for the renewable
in uh collateral for the renewable energy projects. So we want to shift the
energy projects. So we want to shift the investment you as professor say
investment you as professor say investment is tradeoff it's the same
investment is tradeoff it's the same actually for non-renewable and
actually for non-renewable and renewable. So because of the trade-off,
renewable. So because of the trade-off, we want to make the renewable energy
we want to make the renewable energy more attractive rather than the
more attractive rather than the non-renewable energy. So we are imposing
non-renewable energy. So we are imposing the tax credit rather than just a static
the tax credit rather than just a static t tax credit. We want to integrate as a
t tax credit. We want to integrate as a collateral. So it will increase the
collateral. So it will increase the project bankability and bridging fiscal
project bankability and bridging fiscal policy with the green finance. I think
policy with the green finance. I think that's all for me. Thank you.
that's all for me. Thank you. >> Thank you very much uh for the present.
If not then maybe one question from me. Um so this uh regional level is actually
Um so this uh regional level is actually quite interesting. Uh maybe the question
quite interesting. Uh maybe the question is uh is it also happening somewhere
is uh is it also happening somewhere else in the US or in the European case
else in the US or in the European case that the tax credit as uh uh yeah for
that the tax credit as uh uh yeah for new uh assets can be recognized cross
new uh assets can be recognized cross border.
border. >> Okay. Uh so basically it's still on the
>> Okay. Uh so basically it's still on the US and Europe but if we see that
US and Europe but if we see that Malaysia have a green investment tax
Malaysia have a green investment tax loans if I'm not mistaken so it could be
loans if I'm not mistaken so it could be used as well to be as collateral and
used as well to be as collateral and actually we already like having in-depth
actually we already like having in-depth interview with the commercial banks like
interview with the commercial banks like Amandiri they said they're really having
Amandiri they said they're really having a good appetite and they are having fun
a good appetite and they are having fun to be green renewable project but the
to be green renewable project but the risks because of that uh what I says the
risks because of that uh what I says the purchasing power agreement is not is
purchasing power agreement is not is never met with the like PLN like the
never met with the like PLN like the government it making it's more risk for
government it making it's more risk for them to distriute distribute the fund to
them to distriute distribute the fund to that one so uh yet yes it's not yet but
that one so uh yet yes it's not yet but we already considered that and once it's
we already considered that and once it's become regionally accepted and each uh
become regionally accepted and each uh country has in its own regulated tax
country has in its own regulated tax credit I think it will be a great uh
credit I think it will be a great uh support for the financial market for the
support for the financial market for the renewable energy project. That's all.
renewable energy project. That's all. >> Thank you. Um yeah, please.
>> Um thank you Bira for a really great presentation on a tax credit. My
presentation on a tax credit. My question is that in your conclusion you
question is that in your conclusion you mentioned that uh by by imposing tax
mentioned that uh by by imposing tax credit it can lower the solar BPP up to
credit it can lower the solar BPP up to 25% and geothermal BPP up to 10 to 15%.
25% and geothermal BPP up to 10 to 15%. So do you infer that uh tax credit will
So do you infer that uh tax credit will be more beneficial for solar PV projects
be more beneficial for solar PV projects compared to geothermal or uh what do you
compared to geothermal or uh what do you think about it? Yes. Uh actually the tax
think about it? Yes. Uh actually the tax credit in here
credit in here uh I am uh imposing more on
uh I am uh imposing more on the production tax credit and investment
the production tax credit and investment tax credit like in the US. Uh this is
tax credit like in the US. Uh this is only for the renewable because uh when
only for the renewable because uh when you are invest in renewable energy the
you are invest in renewable energy the more you produce uh clean energy the
more you produce uh clean energy the more you get the tax credit at the
more you get the tax credit at the future and for the investment tax
future and for the investment tax credit. If you are invest more like in
credit. If you are invest more like in the solar grid the more you invest right
the solar grid the more you invest right now in the future the more you get the
now in the future the more you get the tax credit. That's why uh like coal is
tax credit. That's why uh like coal is not really impacted while for the hydro
not really impacted while for the hydro solar is also not impacted because the
solar is also not impacted because the infrastructure infrastructure already
