Indonesia: Huge Islamic Country, Emerging Economy, & Climate Risk

September 16th, 2016 by Michael Barnard

Indonesia is a much storied land globally, with places such as Bali and Sumatra holding mindshare as exotic destinations. But Indonesia is much more than gorgeous and fabled locations. It’s the world’s largest Islamic state with over 87%, or 200 million citizens, identifying as Muslim. It’s on the BRIC-replacement list, MINT, or Mexico, Indonesia, Nigeria and Turkey, as a major developing and transforming economy which will be a globally significant generator of wealth in the next decade or two. It is an archipelago nation of 17,500 islands, 6,000 of which are inhabited.

And Indonesia is both heavily threatened by climate change and a significant contributor to it. Indonesia’s boundaries are threatened by sea level rise, its food production is seriously threatened by weather pattern changes and sea level rise, its economy is threatened, its major northern cities are at risk of flooding and inundation and it has to massively and expensively transform its energy sector to reduce its emissions. It is likely to see famines in the coming decades due to climate change and will be hard pressed to balance competing forces.

Emissions

Indonesia was the third largest source of greenhouse gases globally after the USA and China until recently. Indonesia’s CO2 emissions increased drastically from 95 million metric tons in 1980 to about 330 million metric tons in 2006. The emissions are predominantly due to its massive deforestation program, which saw a reduction from 65% forested to 48% forested in only 16 years.



Forestry Impacts

The first impact of climate change on Indonesia has been a global focus on making it change its forestry practices, and this has borne fruit. Deforestation has slowed considerably, although it is still occurring. Similarly, burning off forest to create new land for palm oil plantations has come under international attention, in part for climate change reasons, in part because the annual burning casts a choking pall over the region, creating dangerous air quality in Malaysia, Singapore, and much of Indonesia itself. A two-year moratorium was put in place in 2011, yet 2013 saw the worst haze in a decade.

Energy Impacts

While Indonesia is improving its track record on deforestation, it is rapidly increasing its emissions in other sectors.

The current emissions from the energy sector accounted for 9% of Indonesia’s total emissions. As a result of economic growth and industrialization, the emissions from industry, transport, and power generation are also increasing. It is expected that these emissions will continue to grow and actually triple in the next few years, increasing from 275 Mt CO2e in 2003 to approximately 716 Mt CO2e in 2030.

This is typical of developing countries, which usually place raising their populace out of deep poverty above issues such as pollution and climate change. And it’s made much worse by Indonesia being an archipelago of 17,500 islands, 6,000 of which are inhabited. Islands are much more expensive to link together with transmission and distribution grids, and a large number of the islands depend on oil for generation. The grid is deeply unstable, with rolling blackouts even in the most developed areas being common.

On the other hand, compounded by its geographic complexity, without available electricity imports, and reluctant to rely on diminishing domestic oil supplies that fuel off-grid diesel generators on the nation’s 6,000 inhabited islands, the country has been stricken by a critical undersupply of power. Though it is one of Southeast Asia’s biggest economies, it has one of the lowest electrification rates in the region. This dilemma is underscored by forecasts suggesting that between 2009 and 2019, national electricity demand will increase by an average 9% per year and reach 328.3 TWh in 2020—more than double last year’s figure of 162.4 TWh.

At present, its electricity generation is deeply negative from a carbon perspective. As this shows, Indonesia generates over 95% of its electricity from fossil fuel sources, with half of that being oil generation.

The second major impact of climate change on Indonesia will be an expensive and difficult transformation of its energy grid, something that it has started on. Electrifying the poor regions of Indonesia and stabilizing the grid will be rewarding economically, but it’s far from trivial to bring subsistence farmers out of poverty.

It’s not going to be easy to decarbonize electricity in Indonesia. The wind potential is fairly poor, but solar is very good.

An effective and economical decarbonized grid based on renewables requires a diversification of renewables with strong wind, solar and hydro generation assets playing roles, along with increments of other forms such as tidal and biomass generation. It also requires a stable, large geography grid to allow power to be shifted from points of generation to points of use and to reduce stochastic variability.

Hydropower is a decent story in Indonesia, but has concerns.

According to the Jakarta Post, the sites have a potential total capacity of 12,800 MW, although data provided by the country’s Energy and Mineral Resources Ministry says Indonesia has an overall capacity of 75,670 MW of hydropower. Currently, hydropower accounts for only 5,705 MW.

The PLN report reflects Indonesia’s recent emphasis on hydroelectric power. In the past year alone, the country has moved forward on projects that include 1,030-MW Upper Cisokan, an 88-MW project in Aceh province, 187-MW Jatluhur, and 90-MW Karebbe.

This implies that solar and hydro could be developed to meet Indonesia’s electrical needs and that electrification of transportation is possible with the generation capacity that it has. However, it will be challenged by the lack of a third major form of renewable generation to balance the grid.

The other major catch with hydro in equatorial, forested regions is that it isn’t carbon neutral. The reservoirs submerge large regions of forest and the trees decay anaerobically, releasing CO2 and methane rather than having it dominantly be reconsumed by additional plants. Hydro plants in temperate and sub-arctic regions are much more carbon neutral. It’s possible to reduce this impact with run-of-the-river hydro approaches, but these are much smaller in scale and cannot act as passive hydro storage, a key mechanism for grid balancing.

The grid has been a recurrent theme throughout the energy discussion, and while there is a solution, it is challenging in and of itself. High-voltage direct current transmission (HVDC) has been around and in operation for 60 years in various parts of the world. A major advantage of HVDC is that it is much less lossy when used underwater with much less insulation, allowing for less expensive alternatives for underwater transmission lines. But there are two important factors to consider. It is less expensive than alternatives for underwater transmission, but it is still more expensive than transmission over land for usual distances. Breakeven, according to one source, is 800 km overland and 50 km undersea. Given the 6,000 inhabited islands and the need to link them together in order to allow multiple, more renewable generation sources to balance one another, the initial capital cost is much higher than would be experienced in most landlocked countries. The second factor is that the investment in expensive transmission would have to occur in lockstep with the capital intensive investment in renewables. Indonesia has a capital challenge facing it.

Interestingly, with its 17,500 islands and many protected areas, Indonesia is actually a strong potential growth area for wave energy as that technology emerges. In archipelagos, wave energy has the potential to become price competitive, and in more sheltered waters the engineering challenge of making it sufficiently robust is substantially decreased.

Unfortunately, coal is a domestic product and a large percentage of future electricity growth is expected to depend on it.

Weather Impacts

Indonesia is already a hot country and it’s going to get hotter, unsurprisingly. It won’t experience the extremes that Australia is seeing in its interior however.

What will be a challenge is the shift in precipitation patterns. Overall, its annual precipitation is expected to increase by 2% to 3%. Further, the rainfall will be lower in the south and higher in the north. Finally, the rainy season is expected to shorten. The combination of the three means that the northern parts of Indonesia will see a much higher volume of precipitation in a shorter period of time than the vegetation and infrastructure is adapted to, resulting in serious flooding due to excess rainfall.

For example, the Jakarta flood in February 2007 affected 80 districts and caused traffic chaos paralyzing the affected cities. In the flood more than 70,000 houses had water levels ranging from 5- 10 cm, and an estimated 420,000 to 440,000 people were displaced from their homes (Case, Ardiansyah and Spector, 2007, pp. 4-5).

As with other regions of the world where this is playing out, 100-year floods are becoming 10 year floods, and 500 year floods are becoming 20 year floods. The built infrastructure of northern cities in Indonesia is not designed for this and there will be both substantial devastation and expensive adaptation.

Sea level rise impacts

Indonesia is in trouble with sea level rise. The median projected rise of one meter by 2100 will result in loss of territory and significant economic disruption.

Even a moderate sea-level rise will conclude in significant socio-economic and physical impacts because much of Indonesia’s population, infrastructure, and fertile agricultural lands are located in low-lying coastal areas.4 Approximately 60 percent of Indonesians live in low-lying coastal cities such as Jakarta and Surabaya, and thus these people will strongly be impacted by the sea level rise. The sea-level rise, along with the observed sinking in the Jakarta Bay region, will have massive influences on infrastructure and businesses (Case, Ardiansyah and Spector, 2007, p. 3)

It gets worse. Not only will Indonesia’s major population and agricultural areas be threatened, the definition of Indonesia is threatened as well.

As mentioned above, coastal environment of Indonesia consists of a large number of small islands spread within its territory. It is estimated that 1 m SLR will flood approximately 405,000 ha of this coastal environment areas, including the small islands (Environment 2007). Reports also indicate that Indonesia may lose up to 2,000 small islands by 2030 due to a climate change induced SLR (Joan Fabres 2011). Losses of the small islands may seriously impair the territory of Indonesia since in many occurrences the outmost small islands mark the boundaries of the country. Studies indicate that at least 8 of 92 outmost islands which constitute baseline for the sea territory of Indonesia are highly vulnerable to SLR as indicated in table 2 (Environment 2007).

This latter will lead to even more artificial island extensions in the South China Sea, likely leading to further conflicts in the region as China does the same in its unsupported claims to greater international waters.

The combination is going to have significant impacts on food production and the economy of Indonesia.

The rise will also reduce coastal livelihoods and farming. The sea-level rise will most likely affect the production of both fish and prawn, with an estimated loss of over 7,000 tons, worth over 0.5 million US dollars, in the Krawang and Subang districts. The Citarum Basin is also expected to experience a loss of 15,000 tons of fish, shrimp, and prawns yield. The overall effect of this sea-level rise will result in the reduction of potential average income. For example, it is predicted that in the Subang region alone, 43,000 farm laborers will lose their jobs. Also, more than 81,000 farmers will have to seek other sources of income due to the flooding of farms from rising sea-levels (Sari, Maulidya, Butarbutar, Sari and Rusmantoro, 2007).

Additionally, the changing weather is already impacting rice farmers with growers of that staple who were able to predictably harvest three times a year now guessing in the changing weather patterns.

The farmers who tend the rice fields are currently confused about the irregularity of the harvests. Parto, a Java rice field farmer, states that “The harvests have become irregular (…) normally we harvest two to three times a year, but it depends on the weather. We need to wait for the right conditions, but now that’s become unpredictable.”

The combination of impacts on food production could very well mean sweeping famines in significant parts of Indonesia.

The rising threat of extremism

Indonesia is the world’s largest secular Islamic state, recognizing six religions officially, holding regular elections and generally being an excellent counterpoint to people who claim that Islam is by definition an extremist religion. But Indonesia is no stranger to the challenges of extremism, from the Bali bombings of 2002 and the two dozen local groups who have pledged allegiance to ISIS. As has been seen in Syria, climate change is a destabilizing force in countries which contributes to the rise of forces such as ISIS. Indonesia is facing an increase in internal radicalization at the same time as it must transform itself due to climate change. Extremists remain a tiny percentage of Indonesia’s population, but climate change assists their causes.

Indonesia is a regional powerhouse and a growing economy of value to itself, the region and the world. Yet it is also uniquely challenged by climate change. The potential for transformation for the better and the worse is very large.











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