REPORT

Studied on Energy Conservation Policies in Indonesia :

Policy Target, Strategy, and Barrier

January 2014

Adrian Danar Wibisono

Intern Student

Directorate General of New Renewable Energy and Energy Conservation

（Electric Engineering, Faculty of Engineering, University of Indonesia）

I. INTRODUCTION

Today, energy crisis is one of the most critical issues besides water and food. During an

industry revolution, human start to use coal which is fossil energy and possible to produce and

transport easily, even easier than use human power or animal power. Since that, energy demand

always growing together with economic growth. Nowadays, there are 4 biggest sectors that

consume energy: industrial, transportation, household, and commercial. Industrial is the biggest

sector that consumes energy, which is showing us the strong relation between economic activity

with energy. The second place is transportation, and it shows us the strong relation between

human mobilization with energy too, and mobilization has relation to economic activity. Of

course easy to understand that commercial sector has relation to economic activity too, and

economic activity always related to development. The third place is household, which means

human activity nowadays, like using electrical equipment in every single thing in the house, very

dependent to energy too.

The problem is 85% of primary energy comes from non-renewable, and fossil sources

(coal, oil, etcetera). It means that we need more fossil energy to reach economic growth, but

fossil energy is limited and continues to decrease. In economic form, it means we must pay

higher prices when fossil energy starting run out. But energy issue is not only about the

economic growth, but also about the environment. Mining coal, oil, and other form of fossil

energy is always giving bad impact to the environment. When we use it (for example for power

plant or transportation), fossil energy also making pollution. Data from ESMAP (Energy Sector

Management Assistance Program) said that coal, oil, and natural gas are the most primary energy

that produce CO2 so much when we use it to produce electricity. We know that too much CO2 in

our atmosphere causes the greenhouse effect on our Earth.

Picture 1.1 Growth of Energy Needs

Because if we can’t and don’t want to stop the development, and also we live in the same

planet, so every country must contribute to solve the energy problem. We can solve it by two

ways, change the supply side and the demand side. Supply side means intervene the supply side

by increase new renewable energy share in the national energy mix below, which known as

diversification energy. Meanwhile demand side means intervene the demand side by to improve

efficiency in energy utilization from up-stream up to down-stream like industrial, transportation,

household and commercial sector, which known as conservation energy.

Energy conservation is an important issue for all countries in the world. Energy

conservation and energy efficiency are different, but in the same concepts. Energy conservation

is achieved when growth of energy consumption is reduced, measured in physical terms. Energy

Conservation, therefore, can be the result of several processes or developments, such as

productivity increase or technological progress. On the other hand energy efficiency is achieved

when energy intensity in a specific product, process, or area of production or consumption is

reduced without affecting output, consumption or comfort levels. Very simply, energy efficiency

means using less energy to perform the same function. Energy conservation also has a relation to

energy management. Energy management is a structured approach designed to manage energy

usage and reduce energy costs, raising productivity and creating a better work environment. So

energy conservation can be reached by use energy management in all of demand section to create

energy efficiency. During the term of country, conserving energy is how to increase development

but also decreasing the energy consumption and save the environment.

Indonesia also has a same interest about conserving energy. Indonesia is not only facing

economic growth, but also population growth. Our estimation of average GDP each year is about

6.1%, and estimation of average population growth each year is about 1.1%. Energy demand

growth is dependent to GDP and population growth. We estimate energy demand will grow

about 7.1% each year. To measure energy conservation, we can use energy elasticity. Energy

elasticity is the ratio between the growth rates of energy consumption with economic growth. If

we have smaller the elasticity, we can be more efficient use of energy in a country. Indonesian

energy elasticity in 2009 is still quite high at 2.69. In comparison, according to the International

Energy Agency study in 2009, Thailand elasticity is 1.4, Singapore 1.1 and developed countries

ranged from 0.1 to 0.6.

If Indonesia can’t consume energy more efficient and decrease energy elasticity, in 2019

Indonesia might be a net energy importer. Of course it is a big problem because it means

Indonesia failed to create the energy security. So, conserve energy is very important to solve this

problem. Also Indonesia energy mix is dominated by fossil energy, like coal, natural gas, and oil.

Related to the president’s commitment on G20 Pittsburgh & COP15 and also presidential

regulation no 61 & 71 year 2011, Indonesia must reduce CHG emission in 2020. Energy sector

contributes about 30 million tons, and can be reached by developing new and renewable energy

and implementing energy conservation by all sectors.

Picture 1.2 President Commitment on G-20 Pittsburg

It is not only about the president’s commitment, but also saves Indonesia environment. Indonesia

still has so much room for energy efficiency. Industrial, commercial, transportation, and

household sector are potential to be more efficient about 15-30%.

Picture 1.3 Potential of Energy Conservation in Various Sector

This report is a policy description, which means an analysis about existed policy. In this

report, the writer will discuss about current energy efficiency and conservation in Indonesia.

First part is an introduction to explain why energy efficiency and conservation got to attract

attention from the world. The second part will continue with energy efficiency and conservation

policy and target including law, regulation, etc. The third part is talking about strategies to

increase energy efficiency and conservation, for example about the program, D&R, subsidy,

incentive, public awareness, education & training, standards, and international cooperation. This

part also discusses about the comparison between Indonesia and Japan energy conservation

policy. After that, fourth part will continue with energy efficiency and conservation development

challenges. And the last part is the summary and outlook.

II. ENERGY EFFICIENCY & CONSERVATION POLICY AND TARGET

Indonesia has started to concern with energy conservation for a long time ago. Since

1981, energy conservation is one of energy policy priorities, beside intensification and

diversification. The background is Indonesia’s incomes decrease after the end of oil-shock. In

1980, Indonesia is an oil net exporter. Oil-shock increases the oil price, and as an oil net exporter

country, Indonesia got the benefit of it. But when oil price decrease, Indonesia realized there is a

big problem about the national energy policy which so dependent on oil and also not efficient in

using it. This three main issues (intensification, diversification, and conservation) always appear

even government renews the energy policy in 1987, 1991, 1998, and 2003.

After that, in 2006 President released the Presidential Decree No 5/2006 about the

National Energy Policy. In this Presidential Decree, the President gives instruction to reach

energy elasticity less than 1 in 2025. In 2007, Indonesia Parliament released Law No 30/2007

about Energy. In energy conservation issue, this Law orders about at least 3 rules. First,

government, energy producers and energy consumer are responsible for implementation of

energy conservation. Second, energy conservation is required from upstream to downstream

activities. Third, the government will provide incentive and disincentive for energy efficiency

and conservation implementation. From the legal aspect, Law No 30/2007 more effective than

Presidential Decree No 5/2006. Because constitution said that the Law (Undang-Undang) is

higher than Presidential Decree, and also possible to detailing Law No 30/2007 in Government

Regulation.

As the long term energy demand, on the year of 2025 energy demand will be 2.162

million BOE if it’s managed by business as usual, while if energy conservation applied on the

demand side by 17%, energy demand can be reduced to 1.796 million BOE in 2025. Energy

efficiency in 2025 targeted to be 17% in total for 4 sectors, industrial sector 6,9%, commercial

sector 0,7%, transportation sector 7,4% and household sector 2%2.

Picture 2.1 Energy Conservation Policy Target

As a mandate of the Law No 30/2007, government released Government Regulation No

70/2009. This Government Regulation regulates the energy conservation more specific. There

are 5 main parts of this Government Regulation:

1. Responsibility

There are 3 stakeholders that responsible for energy conservation

a. Government : formulating policy, enhancing capacity building, etcetera

b. Private Sector : conduct energy conservation measures in all stages of activities,

utilize energy efficient technology, produce service and production output

efficiency

c. People : follow the energy conservation rules

2. Implementation of Energy Conservation

Transportation

Household Commercial

Industry

2020

Energy conservation on demand side (17%)

9%

1026 Mil BOE

43%

42%

7%

2162 Mil BOE

1796 Mil BOE

739 Mil BOE

1393 Mil BOE

Transportation

Household Commercial

Industry

Bussiness As Usual

Energy conservation should be implemented in all stages of activity, such as

energy supply, energy business, energy utilization, and conversion of energy resources. It

is also about how to plan, select the installation, and operate efficient of supplying energy.

This report tries to leveling the technique of energy conservation:

a) Use the most efficient design (system) with high cost,

b) Choose the equipment that makes the process more efficient (supporting

equipment) with medium cost, and

c) Operate it as efficient as possible (operation) with low or no cost.

The regulation also separates energy management to 3 main parts: cultivation of

energy resources, exploration of energy sources, and exploitation of energy sources. In all

of that part must apply efficient technology. After that, this Government Regulation gives

the mandatory of energy management for large energy user (more than 6000 TOE). The

energy management must be done by choosing the energy manager, make the energy

conservation program, do the energy audit frequently, give a recommendation after

energy audit, and give the report to the minister or governor.

There are the special terms of energy conservation of energy resources. That

energy conservation of energy resources includes but not limited to the priority energy

resources, the amount of energy resources that can be produced, and restriction of energy

resources that in a given time can’t be cultivated. The process and taxonomy of energy

management as an implementation is shown in this flow diagram:

Picture 2.2 Taxonomy Energy Management

As a part of Government Regulation, the implementation also related to many

regulations which has a lower position on legislation, such as :

a) Minister Energy and Mineral Regulation (MEMR) No 12/2012 about fuel saving

b) MEMR No 13/2012 about electricity saving, and

c) MEMR No 14/2012 about energy management.

d) It also relates to Presidential Instruction No 13/2011 about water and energy

saving.

3. Standard and Labeling

The objective of standard and labeling regulation is introducing energy saving level

as a guidance for consumer and to promote energy efficiency. In simple, the regulation is

implementing the energy efficiency standard and labeling. Because some machine or

electronic is not efficient and consume energy too much. By giving a standard government

can guarantee that the product is saved, and by labeling, government can minimize the

inefficient things are used extensively.

Implementation of energy performance standards on equipment energy utilization is

done by standardize by SNI (National Standard) and also labeling the level of energy

efficiency. This regulation was detailed by MEMR No 6/2011 about Energy Labeling for

CFL. With this labeling, we can classify the CFL product based on its efficiency. The

principle of efficiency is how to get the same work with the minimum energy. This table can

show us about the classification:

Table 2.1 Labelling of CFL

4. Facilitation, Incentive, and Disincentive

The principle of giving facilitation, incentive, and disincentive is to push and

catalyze especially for commercial or industry that use more than 6000 TOE and

producer of energy-saving equipment. The facilitation is providing information access of

energy efficient technology and consulting service on energy efficiency measures. The

criteria of energy conservation measures are quantity of energy consumption or energy

elasticity.

For incentive, the government gives it for 2 main targets:

a) Large energy users (large energy users mean user that consume more than 6000

TOE each year), and

b) Energy-saving equipment manufacturer.

The incentive will be given if large energy users can decrease specific energy

consumption at least 2% every year in 3 years. And for manufacturer of energy-saving

equipment, incentives will be given if their product appropriate benchmark and match

with the standard.

There are many forms of incentive for large energy users:

a) Tax facilities for energy saving products;

b) Breaks, reliefs, or exemption of local taxes for energy‐saving products;

c) An import tax facility for energy‐saving products;

d) Low‐interest financing for investment in energy conservation;

e) In accordance with existing laws and regulations, and or

f) Energy audit in partnership paid by the government

Meanwhile for energy-saving equipment manufacturer, the form of incentive is:

a) Tax facilities for components/spare parts and raw materials used for

manufacturing energy‐saving products;

b) Breaks, reliefs, and exemptions, of local taxes for components/ spare parts and

raw materials used to manufacture energy‐saving products;

c) Import tax facilities for components/spare parts and raw materials used to

manufacture energy-saving products;

d) Low‐interest financing for investments in order to manufacture energy saving

products

Picture 2.3 Flowchart for Large Energy Users

Disincentive will be given for large energy users if they:

a) are not choose energy manager

b) don’t make energy conservation program

c) don’t do energy audits frequently

d) don’t execute the energy audit recommendation, and

e) don’t give the report about the energy management execution.

The form of disincentive is:

a) memorandum

b) announcement in mass media

c) penalty, and

d) reduction of energy supply.

Picture 2.4 Flowchart for Incentive and Disincentive

Target and form of facility, incentive, and disincentive is shown in this table :

Table 2.2 Facility, Incentive, and Disincentive

Type Target Form

Facility

Energy Users

Information access and consultation services Manufacturer of Saving Energy

Equipment

Incentive

Large Energy Users

Tax facilities for energy saving products; Breaks, reliefs, or

exemption of local taxes for energy‐saving products; Import

tax facility for energy‐saving products; Low‐interest

financing for investment in energy conservation;, and

Energy audit in partnership paid by the government

Producer of Saving Energy

Equipment

Tax facilities for components/spare parts and raw materials

used for manufacturing energy‐saving products; Breaks,

reliefs, and exemptions, of local taxes for components/

spare parts and raw materials used to manufacture energy‐saving products; Import tax facilities for components/spare

parts and raw materials used to manufacture energy-saving

products; Low‐interest financing for investments in order to

manufacture energy saving products.

Disincentive Large Energy Users Memorandum, announcement in mass media, penalty, and

reduction of energy supply

5. Direction and Supervision

The form of direction is conducting training, technical assistance, energy

efficiency dissemination, and facilitation R&D on energy efficient technology.

Meanwhile the form of supervision is implementing energy manager, program, energy

audit, etc. for industries and commercial. It is also has relation to MEMR No. 13/2010

and MEMR No.14/2011 about standardization for energy manager.

The role of Energy Manager is to:

a) Implement energy conservation plan which would include, establishing targets and

energy conservation program, formulating the energy efficiency operating

procedure and executing energy audit.

b) Implement energy conservation which would include implementing energy

conservation programs, carry‐out recommendation of energy audit result; and

increase employee awareness and motivation regarding energy conservation

c) Monitor and evaluate, which includes taking measurements, making notes, prepare

reports and recommendation on improving the execution of the energy conservation

program.

An energy manager is obliged to have a competency certificate in accordance to

regulations and law.

The structure of the regulation of energy conservation can be shown in this table:

Table 2.3 Regulation that Related to Government Regulation about Energy Conservation

Law No

30/2007

about

Energy

Government

Regulation

No 70/2009

about

Energy

Conservation

Responsibility -

Implementation

MEMR No 12 /2012 about fuel saving

MEMR No 13/2012 about electricity saving

MEMR No 14/2012 about energy management

Related to : Presidential Instruction No 13/2011

about water and energy saving

Standard &

Labeling

MEMR No 6/2011 about Energy Labeling for

CFL

Incentive and

Disincentive MEMR No 14/2012 about energy management

Direction and

Supervision

MEMR No. 13/2010 and MEMR No.14/2011

about standardization for energy manager.

III. STRATEGY TO INCREASE ENERGY EFFICIENCY AND CONSERVATION

Technically, energy conservation policy is operated by the Ministry of Energy and

Mineral Resources, at the Directorate of Energy Conservation. The draft of RIKEN (Master plan

of the National Energy Conservation) identified 20 energy conservation programs that would

implement 5 policy mandates. The 5 policy mandates are:

1) Establish energy use efficiency targets in the regulations mandated by Law

2) Increase sustained social awareness campaign on energy frugality culture

3) Mandate the implementation of energy management in large users of energy

4) Implement use of technologies and energy systems that are energy efficient from the

energy supply side to final use of energy

5) Implement incentive for energy frugal equipment and energy users

After identifying policy and target about energy efficiency and conservation, in this part we will

discuss about operational strategies to implement policy and reach the target. The scope of

discourse is about what have done and what have not been done. Of course knowing what have

done is easier than to identify what have not done. So first of all, we will see the comprehensive

view about energy efficiency and conservation.

Energy conservation is an issue with many aspects that continue to evolve. It helps to

view information about energy conservation in these groups and sub-groups:

the primary grouping is by energy end-use sector

within each end-use sector, there are sub-groups of information that are targeted to the

practitioners in those sectors

also within each end-use sector, there are sub-groups of information that relate to the

equipment and materials used in that sector2.

For simplicity, we can identify 2 kinds of classification: user sectors and levels of detail.

a) Classification by sectors : household, transportation, industrial, commercial, etcetera

b) Classification by levels of details : system, sector, segment, end-use, technology, and

equipment

This mind map can help us to combine the classification by user sectors and classification by

levels of detail.

Picture 3.1 Mindmap of Energy Conservation Strategy

This mind map will help us to identify what have done and what have not been done.

A. What Have Done (and Ongoing) and Achievement

To find what have not been done we must know about what have done by government.

The major data are obtained from APEC Report: Peer Reviewer of Energy Efficiency in

Indonesia. The ongoing and current programs are:

1. Creating Policy and Regulation

Making policy and regulation are the fundamental issues of energy conservation. In

part 2, we have already discussed about existing policy and regulation. Government

Regulation No 70/2009 is the main regulation that will be breakdown in MEMR. It is also

about preparing a policy on energy efficiency in industrial, household, and transportation

sector. For example, Ministry of Mineral and Energy preparing MEMR about labeling AC,

refrigerator, etc.

2. Raising Public Awareness

Public awareness pertaining to energy conservation is promoted by the MEMR,

regional government, and state owned energy/electricity company, private companies, and

NGOs. The public awareness campaign is by means of public advertisement, printed

materials, and the web, and also through seminars and workshop.

MEMR has not a specific number as a parameter to scoring this policy. From the

mass media, many experts and internal of MEMR said that campaign program is not really

effective yet because it doesn’t significantly contribute to increase energy elasticity and

intensity. But MEMR have already create any picture/poster, video, discussion forum,

etcetera as an implementation of this strategy.

3. Energy Management

Energy management is a mandatory of Government Regulation No 70/2009 to be

implemented by energy users that consume energy more than 6000 TOE per year. The

energy management must be done by choosing the energy manager, make the energy

conservation program, do the energy audit frequently, give a recommendation after energy

audit, and give the report to the minister or governor.

In 2012, MEMR have already facilitate to implement energy management in 806

large energy users (industry and commercial). It’s exceeded the target (797 large energy

users). Implementing energy management in large energy users is one that MEMR very

concern. Because they use the number of large energy users which has been facilitated by

MEMR as a parameter, one of three parameter besides decrease energy intensity and

decrease carbon emission.

Related to this issue, MEMR also has cooperation with United Nation Industrial

Development Organization (UNIDO). UNIDO promote ISO 50001 Energy Management

Standard. The target is some industry, specifically textile, chemical, pulp & paper, and food

& beverages. Mostly energy consumption of this type of industry is under 6000 TOE, but of

course depends on scale of the industry itself. To promote the implementation of ISO 50001,

which now become SNI 500001, government, especially MEMR and Ministry of Industry,

must socialize it to the industry that consume more than 6000 TOE. UNIDO gives 2 days

training for free to some industry to train their employees to become capable to be energy

manager. Now, ISO 50001 become SNI 50001, as a Indonesia National Standard.

Picture 3.2 Energy Management Cycle

a. Partnership Program for Energy Conservation

The Government–Private Sector Partnership Program for Energy Conservation is

designed to encourage industry and commercial building to implement energy efficiency and

conservation measures, through participating in a free energy audit program provided by the

government. Industrial and commercial building need to qualify to participate in the

program; sign an agreement to execute the energy audit recommendations, and report over a

certain period. This strategy is related to energy management.

b. Certification for Energy Manager and Auditor

The most important point of certification is an enactment of a competence standard

for energy manager and auditor, and also by Establish HAKE (Association of Energy

Conservation Expert) as a Certification Institution for Energy Manager. The data of the

number of certification that has been given is :

Table 3.1 Number of Energy Manager and Energy Auditor

Year Certification Total

Energy Manager Energy Auditor

2012 50 0 50

2013 20 20 40

Total 79 31 110

The criteria of certification are already existing (Kep.321/MEN/XII/2011 for energy

manager of building and Kep.323/MEN/XII/2011 for energy manager of industry).

Picture 3.3 Certification Procedure

c. Education and Training

Government officials could receive training on energy conservation at the Centre for

Training and Education of the MEMR and participate in energy conservation training abroad

through bilateral programs and other international cooperation. This strategy relates to

certification for energy manager.

4. Incentive and Disincentive

The detail about incentive and disincentive regulation has been explained in the

second part. The program or execution of that is repairing mechanism of fiscal incentive,

incentive for import duty of energy efficient appliances, etcetera. The program also will

assess a financing scheme for energy efficiency implementation and assess criteria for energy

efficiency appliances and implementation of energy conservation which will receive

incentive and disincentive.

5. Standard and Labeling

Standardization is a mandatory for any product (in this case which related to energy

conservation) to protecting the consumers from hazardous products. There is some

standardization (SNI) which has been regulated, such as:

o SNI T-14-1993-03 : Technical Planning Procedures Energy Conservation In Building

o SNI 03-6196-2000 : Procedures on Building Energy Audit

o SNI 03-6197-2000 : Energy Conservation in Building Lighting Systems

o SNI 03-6389-2000 : Energy Conservation in Buildings Building Sheath

o SNI 03-6390-2000 : Energy Conservation in Buildings Air System Administration

Building

o SNI 04-6958-2003 : Label Level Energy Saving Electric Power Utilization for

Household and Similar Purposes

o SNI 03-6572-2001 : Design Procedures for Ventilation and Air Conditioning System

In The Building

o SNI 03-6575-2001 : Procedures At Artificial Lighting System Design Building

o SNI 03-6759-2002 : Design Procedure for Energy Conservation In Building

The energy labeling program is intended to provide information to consumers about

the energy efficiency level of a product, as well as to encourage manufactures to increase the

level of energy efficiency of products that they produce. Indonesia currently has an energy

labeling system that uses a star‐rating system of 4 stars, which also includes information

about the absolute energy efficiency of the product. The energy labeling program in defined

in RIKEN.

In 2011, Indonesia launched an energy labeling for compact fluorescent lamps (CFL),

by Ministerial Regulation No. 06/2011 regarding Applying Energy Saving Label for Self‐

Ballasted Lamp. Indonesia also has energy performance testing standards (EPTS) for select

electrical appliances/devices, which are established as Indonesia National Standard (SNI).

The purpose of these standards is to specify technical requirements for energy efficiency and

safety, and for the purpose of energy labeling.

There is a progress of labeling some appliance. Energy efficiency labeling has 3

steps: testing procedure, energy efficiency criteria, and certification. Based on data from

BPPT in 2011, until now there is only CFL that has been certificated and labeled.

Table 3.2 Labelling Planning

6. Pilot Project : EE Street Lighting

There is a pilot project of energy conservation: EE Street Light. The 3 main activities are:

Developing standard for street light system

Promoting energy efficient technology in street light

Developing guidelines for implementing energy efficient technology street light

7. Clearing House Energy Conservation

This program tries to make an information center for energy efficiency and energy

conservation. The pilot energy-saving office is on the 5th floor of Gd. Annex Directorate

General of Electricity.

8. International Cooperation

The MEMR has bilateral and regional/multilateral international cooperation

specifically on energy efficiency and conservation. Some of the international cooperation

involves multiyear programs.

Bilateral Indonesia –Denmark (DANIDA) – Energy Efficiency in Industrial, Commercial

and Public Sector (EINCOPS)

Bilateral Indonesia-Netherland (NL Agency) – Energy Potential Scan (EPS)

Bilateral Indonesia-Japan (JICA & NEDO) – Demand Side Management

Multilateral with UNDP – Standard and Labeling

Multilateral with UNIDO – Energy Management Standard

Multilateral with ASEAN – Energy Efficiency and Conservation – Sub Sector Network

(EE&C SSN)

The other Donor Agency such as International Copper Association, etcetera

B. What Have Done and What Have Not Been Done

After identifying the existing strategy of energy conservation, we can classify it to mind

map. Creating policy and regulation and international relation are related to the whole

system of energy conservation. We can say that because both of it has a far-reaching effect, no

matter in what sectors or what level it is. Actually, both of it relate to any others program.

Creating public awareness is really strategic especially for household, because there are only 2

main issues in household: use of energy efficient appliances (lighting, water heaters, air

conditioners, refrigerators, TV, etc.) and energy saving behavior. Energy efficient appliance is an

external factor in the house, which means approach must be done to the producer, not the

consumer. The only way to approach energy efficiency in the household sector is making people

have energy savings behavior by raising their awareness.

Related to energy efficient appliances, use some standard and labeling are effective to

make sure that all appliances which was sold to the consumer in all sectors meet the criteria of

energy efficient appliances. In other word, the appliances (machinery things, electronic things,

etcetera) which not efficient enough and doesn’t meet the efficiency criteria can’t be sold by the

producer. This program will reach all appliances in technology levels in all sectors, depending to

its type.

But actually Indonesia is a bit late to do it because China and other country are already

doing it. It causes so many inefficient appliances which can’t be sold in the country were

exported to Indonesia. Even Indonesia already has labeling regulation about the CFL, but

unfortunately there are so many appliances which not been standardized and labeled yet. The

government also can give incentive for the manufacturer of energy-savings equipment. Giving

incentive will catalyze them to produce more energy-savings equipment. Then, energy-savings

equipment will be a lot on the market. In the long term, this policy will decrease the Indonesia

energy elasticity faster.

Picture 3.4 Analysis of Mindmap of Energy Conservation Strategy

Industrial and commercial sectors have a similar characteristic: many consumers with

large consumption. Large energy consumer (consume more than 6000 TOE every year) always

comes from both of them. The issue is not how much they consume energy, but how efficiently

they use it then consequently can reduce energy demand. There are many strategies to do it, such

as make clearing house (center information for energy conservation) and force them to do an

energy audit frequently and make an energy conservation program based on it.

Table 3.3 Potential of Mitigation Action

The challenge is how making them want to do it. So government must give incentive

for large energy users who run it and give disincentive for large energy users who don’t run it.

There are about 600 industries whose use energy more than 6000 TOE every year and still far to

reach all of industries (about 600). Besides incentive and disincentive, energy audit and

conservation program also need an energy manager who must have capable and competence in

this field. To increase number of person who meets the criteria, education and training is a

strategic program. A certification program for energy manager also makes it more complete.

From the mind map, we can see that by leveling (system, sector, etcetera), energy

conservation strategies in Indonesia is fairly complete. But by sector (household, transportation,

etcetera), transportation is the sector which not be touched well by the energy conservation

policy and regulation. Whereas, the transportation sector is the most potential sector for energy

conservation (about 35%). Energy conservation program which has been targeted to

transportation sector is a pilot project of EE Street Lightning. Beside it, there still no other

strategic program in transportation sectors (such as providing public transportation, use biofuel,

etcetera), at least based on information from the Ministry of Energy and Mineral Resources.

This is seen by check to Accountability Report Government Performance of MEMR that

transportation sectors are not prioritized by MEMR. Policy about transportation sector also

contradict each other: want to reduce use of subsidizing oil (premium) but permit to sell “cheap

car” in Indonesia. The government still inconsistent with their own policy by choosing to sell

“cheap car” than catalyze company that produce efficient car or natural gas vehicle and develop

mass transportation. Data from BPS (National Statistical Agencies) in 2011 said that the number

of private cars is 9.548.866, bus is 2.254.406, and motorcycle is 68.839.341. And land transport

consumes subsidize fuel more than 90%. It means that subsidize fuel majority was consumed by

private vehicle. Sell “cheap car” increase number of cars in Indonesia especially in the big city.

Of course it will create more traffic and inefficiency in the transportation sector. We can see data

in this table (NGV Global, 2011) that Indonesia is late to promote natural gas vehicle than

another country.

Table 3.4 Number of Natural Gas Vehicle

Country Initial Period of Development

Number of Natural Gas

Vehicles

Number of Natural

Gas Station

Iran 1995 2.859.385 1.574

Pakistan 1999 2.850.500 3.285

Argentina 1984 1.900.000 1.878

Brazil 1970 1.694.278 1.725

India 1993 1.100.000 571

China 1996 1.000.000 135

Italy 1930 779.091 790

Ukraine 390.001 285

Colombia 348.747 614

Thailand 1984 300.581 426

Indonesia 1995 4.137 11

There are two main reasons why transportation is still not have been managed well:

because it needs a high cost program and needs very good communication and coordination with

many stakeholders. The Directorate of Energy Conservation identified that in most cases, only

no‐cost and low cost recommended measures have been implemented. Based on this analysis, we

try to compare Indonesia energy conservation policy with Japan energy conservation policy.

Japan has started to implement an energy policy since 1979. It was established triggered

by Oil Crisis. Meanwhile Indonesia has (seriously) started to implement energy conservation

policy since 2009, when Government Regulation about energy conservation was established and

MEMR has a new Directorate General that implement energy conservation policy. By

comparison of Indonesian and Japan energy policy, we know that the both strategy almost the

same, except energy conservation policy in the transportation sector.

In Japan, the strategy of energy conservation in the transportation sector is obligation for

business operators make an effort and public disclosure of judgment standards :

Specified carriers (freight and passengers) (Fleet of vehicles: At least 200 trucks or at

least 300 railway cars for railroads, etc.)

o Obligation to submit medium and long term plans.

o Obligation to periodically report energy consumption status.

Specified consigners (Annual transport volume of at least 30 million ton-km.)

o Obligation to submit plans

o Obligation to periodically report consumption of energy related to consigned

transportation

Table 3.5 (a) Energy Conservation Policy in Transportation sector in Japan (b) in Indonesia

(a) (b)

Indonesia doesn’t have this kind of policy. Japan also has a policy to give incentive to

Eco Car reduction, similar with Low Cost and Green Car (LCGC) policy in Indonesia. But based

on Victoria Transport Policy Institute (VTPI) research, cleaner vehicle policy doesn’t always

better that mobility management to conserve energy in the transportation sector. Because giving

incentive to cleaner vehicle and make it cheap can increase the number of people that use the

vehicle in the street. It will cause traffic jam, and of course contradictive with energy

conservation target.

In case of Japan, mobility management is good enough. Japan already has so many public

transportation facilities in many kinds. The majority of its operating company is owned by the

government. If the public transportation is good enough, give incentive for cleaner vehicle will

not increase the number of vehicles significantly. In other words, the price of the vehicle will not

too sensitive with the number of vehicles, and of course not sensitive too with energy

consumption in the transportation sector. But in case of Indonesia, public transportation facilities

are not good enough. If government gives incentive to cleaner vehicle (LCGC), it will increase

the number of vehicles significantly, make more traffic jam, and increase the energy

consumption.

Picture 3.5 Japan Energy Conservation Policy

IV. ENERGY EFFICIENCY AND CONSERVATION DEVELOPMENT

CHALLENGE

On a policy, at least there are 2 main processes: drafting and implementation. After

making a policy become law and make more technical instruction to implement it, the next step

is identifying barrier and challenge when the policy tries to be implemented. In this report,

“barrier” is defined with some aspects which possible to make us fail to reach the policy goals.

And “challenge” is defined with some aspects which possible to make us fail when we try to

solve or break the barrier. In simple, the barrier is the problem itself, meanwhile challenge is the

problem of the solving action.

By using that definition, in this part we will discuss about the barrier and the challenge of

energy efficiency and conservation policy. Of course energy efficiency and conservation

program is created by identifying the barrier. Identify barrier is almost the same with identifying

a problem that must solve by a policy. Actually when we discuss about policy, we must identify

the problem in the first step. But this report is a policy description, so it is OK if we reverse the

process: explain the policy and check it by identifying the problem.

A. Barrier

1. Knowledge and understanding of the importance and benefits of energy conservation are

still limited.

Since elementary school, Indonesian student be taught that Indonesia is rich with natural

resources include fossil energy resources. So many Indonesian people think that they can

consume energy as much as they want. This way of thinking makes Indonesian people don’t care

about energy conservation and don’t want to change to energy-saving habit. This barrier can be

dealt with the raising public awareness program.

2. Encouragement for Energy Conservation is still weak, because subsidy for energy is still

high

Related to the first one, awareness to energy conservation is also weak because the

subsidy for energy is high. In other terms, it means energy price is cheap. Of course that is good

if energy price is cheap. But the side effect is people feel no need to energy conservation. They

think that they can consume energy as much as they want as long as they are able to pay. This

barrier can be dealt with incentive and disincentive program for large energy users.

3. Electrical equipment on the market is still much to be inefficient.

Nowadays, almost every activity in every sector uses electrical equipment. With that

massive user, if the electrical equipment is not efficient, then it contributes to nation’s inefficient

energy consumption. The company can produce inefficient products just to make it as cheap as

possible. This barrier can be dealt with standardize and labeling the electrical equipment.

4. Ability to implement an Energy Management and Energy Audit is still weak

Both of energy management and audit are very strategic to reach energy efficiency and

conservation, especially for large energy users. Even everyone already understands about how to

important it is, but not all of them understand how to implement it. So, besides make regulation

to obligate the large energy users to do both, government also needs to help large energy users

who almost of them are private sector to implement by making clearing house, mentoring energy

program, and also standardized for energy manager.

5. Most of the energy efficient technologies are still imported

The presence of energy efficient technologies in local market is important to catalyze

energy efficiency and conservation program. If it is hard to find it, then the cost of energy

efficient and conservation program become high too. Import energy efficient technologies also

not a good solution because the price is still too high. This barrier can be dealt with give

incentive for a manufacturer of energy efficient technology.

B. Challenge

1. Implementation of Energy Audit results is still limited, therefore the ability to invest in

the field of Energy Conservation of energy is still low

This is the challenge of the implementation of the energy audit. The government already

makes a policy that supports to implement energy audit. But the challenge is limited time and

budget which means limited access to large energy users as a target.

2. Support from Financial institutions for Energy Conservation business is still weak

This challenge is related to the first one. The energy conservation policy is already

planned and become legal, but the budget is limited even from a financial institution. Apkenindo

with Investment Grade Audit (IGA) have the solution of this problem. They have a program that

support investment for energy conservation. The procedure is :

Picture 4.1 IGA Procedure

3. Financing institution/banking do not yet interested to finance the energy efficiency

Project (Business in energy efficiency is seen as uncertainty business)

Energy Services Company (ESCO) to support Energy Conservation is still limited.

Related to the budget, we know that limited access to accelerate the energy conservation activity

impact of bad investment climate. If the investment climate in energy conservation still that

weak, then the growth of ESCO also limited. If ESCO is still limited, then the energy

conservation activity will not grow so fast.

4. Standardization and labeling programs have not been fully implemented and functional

The challenge of standardization and labeling is almost the same, but the most challenge

is coming from labeling: lack of accredited testing laboratories, especially for refrigerators and

air conditioners. And also the problem is about range parameter of labeling. Range parameters

are only created by ideal terms, but not calculate the existing manufacturer. Then the effect is

existing manufacturer don’t want to use that labeling, which means make labeling program have

not implemented and functional.

5. Lack of coordination of stakeholders to implement energy conservation

Technically, the implementation of energy conservation must involve many stakeholders.

For example, for incentive, Ministry of Energy and Mineral Resources must involve the Ministry

of Finance. For standard and labeling Ministry of Energy and Mineral Resources is cooperation

with Ministry of Industry and Ministry of Trade.

Picture 4.2 Coordination in Standard and Labelling Policy

If there is no coordination between MEMR and Ministry of Industry, what will happen is

labeling has not been fully implemented because the parameter of labeling is not realistic just

like what have been explained in the previous point. It is similarly of lack of coordination

between MEMR and the Ministry of Finance, but the problem effect the incentive policy

implementation.

V. SUMMARY AND OUTLOOK

Summary

We can solve the energy problem it by two ways, change the supply side and the demand

side. Demand side means intervene the demand side by to improve efficiency in energy

utilization from up-stream up to down-stream which known as conservation energy. Energy

conservation can be reached by use energy management in all of demand section to create energy

efficiency. During the term of country, conserving energy is how to increase development but

also decreasing the energy consumption and save the environment.

As the long term energy demand, on the year of 2025, Indonesia energy demand will be

2.162 million BOE if it’s managed by business as usual, while if energy conservation applied on

the demand side by 17%, energy demand can be reduced to 1.796 million BOE in 2025. Energy

efficiency in 2025 targeted to be 17% in total for 4 sectors, industrial sector 6,9%, commercial

sector 0,7%, transportation sector 7,4% and household sector 2%. This table will show us about

the law and regulation that related to energy conservation:

Table 5.1 Regulation that Related to Government Regulation about Energy Conservation

Law No

30/2007

about

Energy

Government

Regulation

No 70/2009

about

Energy

Conservation

Responsibility -

Implementation

MEMR No 12 /2012 about fuel saving

MEMR No 13/2012 about electricity saving

MEMR No 14/2012 about energy management

Related to : Presidential Instruction No 13/2011

about water and energy saving

Standard &

Labeling

MEMR No 6/2011 about Energy Labeling for

CFL

Incentive and

Disincentive MEMR No 14/2012 about energy management

Direction and

Supervision

MEMR No. 13/2010 and MEMR No.14/2011

about standardization for energy manager.

There are 8 main strategies to increase energy efficiency and conservation: 1.Creating

Policy and Regulation; 2.Raising Public Awareness; 3.Energy Management; 4.Incentive and

Disincentive; 5.Standard and Labeling; 6. Pilot Project (EE Street Lighting); 7.Clearing House

Energy Conservation; 8.International Cooperation. But unfortunately, the transportation sector is

the most programs are still not touched by energy conservation policy except the EE Street

Lightning program.

In this report, “barrier” is defined with some aspects which possible to make us fail to

reach the policy goals. And “challenge” is defined with some aspects which possible to make us

fail when we try to solve or break the barrier. In simple, the barrier is the problem itself,

meanwhile challenge is the problem of the solving action. Barriers of energy conservation policy

are: 1. Knowledge and understanding of the importance and benefits of energy conservation are

still limited; 2. Encouragement for Energy Conservation is still weak, because the subsidy for

energy is still high; 3.Electrical equipment on the market is still much to be inefficient; 4.Ability

to implement an Energy Management and Energy Audit is still weak; 5.Most of the energy

efficient technologies are still imported. Meanwhile the challenges are: 1.Implementation of

Energy Audit results are still limited, therefore the ability to invest in; 2.Support from Financial

institutions for Energy Conservation business is still weak; 3.Financing institution/banking do

not yet interested to finance the energy efficiency Project (Business in energy efficiency is seen

as uncertainty business); 4.Standardization and labeling programs have not been fully

implemented and functional; 5.Lack of coordination of stakeholders to implement energy

conservation

Outlook

Depends on public policy analysis, the most fundamental thing about public policy is the

mission of the country. Indonesia’s mission is: protect all the people of Indonesia and the entire

country of Indonesia, promote the general welfare, the intellectual life of the nation, and

participate in the establishment of world order based on freedom, eternal peace and social justice.

Besides mission of the country, as a presidential country, the president’s vision is fundamental

too. Based on both of it, then government creates the strategy of energy sector, specifically

energy conservation sector. After creating strategy, then the government makes some policy or

law to support the strategy from a legal aspect. Program of energy conservation must be created

based on the policy or law.

From this report, we can conclude that Indonesia already has a good energy conservation

policy. Indonesia energy conservation policy is already stated since 1981, but the law about it is

still fairly new. It is reasonable because Directorate General of New, Renewable Energy and

Energy Conservation as the executor is fairly new too. Unfortunately the transportation sector

has not managed well by energy conservation policy. It is because energy conservation in

Indonesia still concentrated with no-cost and low cost strategy. Labeling of appliance is still

limited because of lack of accredited testing laboratories.

Overall, lack of coordination is the main problems to optimize Indonesia energy

conservation policy. Energy conservation policy needs strong coordination and coordination

because it has a broad scope. Bureaucratic culture and selfishness ministry will make the policy

not good and realistic enough, and also hinder the implementation of policies.

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