Speaker 1: Hi, this is Dana Perkins and you're listening to Switched
Speaker 1: On the VNAF podcast. Back in November of twenty twenty two,
Speaker 1: Indonesia was the host of the B twenty and G
Speaker 1: twenty meetings in Bali, and this is when BNAF hosted
Speaker 1: our very first summit in Southeast Asia. In the day's
Speaker 1: leading up, it was at this event that Ben Vickers,
Speaker 1: who is the chief editor for BNAF, first interviewed Anis
Speaker 1: Bizweedan on stage. Now at the time that they met,
Speaker 1: they talked about recording this episode, and a few months later,
Speaker 1: here we are on Switched On talking about the path
Speaker 1: to decarbonization for Indonesia. On today's episode, we hear from
Speaker 1: Pacanis regarding goals for decarbonizing, how Indonesia is approaching the issue,
Speaker 1: and how one might think about timelines for emerging markets.
Speaker 1: As a reminder, BNAF does not provide investment or strategy advice,
Speaker 1: and we have a very complete disclaimer that can be
Speaker 1: listened to at the end of the show. Additionally, if
Speaker 1: you were interested in seeing the videos from bnaf's summit
Speaker 1: in Bali, they can be found at about dot BNAF
Speaker 1: dot com, forward slash Bali Forward slash videos. I'm going
Speaker 1: to take you straight into the interview now because Ben
Speaker 1: provides a great introduction both for Anise Buzuela and for Indonesia.
Speaker 1: Let's hear their conversations.
Speaker 2: So we have with us Anis Buzwaden, candidate in Indonesia's
Speaker 2: presidential election in twenty twenty four next year. Now, among
Speaker 2: much other experience, he's been a Minister Education and Culture
Speaker 2: in the country, and he's been the governor of Jakarta
Speaker 2: until late last year. Now, also Anni, he knows the
Speaker 2: US very well. He was a full Bright scholar at
Speaker 2: the University of Maryland School of Public Policy, and he
Speaker 2: got a doctorate in political science from Northern Illinois University.
Speaker 2: That's some years ago, though a lot of waters has
Speaker 2: passed under the bridge since then. Still Indonesia and standing
Speaker 2: as a candidate for the presidency. This is an amazingly
Speaker 2: complex country. Just to give a little bit of an
Speaker 2: idea of the scale, population of two hundred and seventy
Speaker 2: two million, and it's many thousand, many thousand islands, two.
Speaker 3: Thousand islands, and hundreds of languages languages, one.
Speaker 2: Hundreds of Bogan languages. My goodness. Now, compared that size
Speaker 2: two hudred and seventy two million, compared to the EU
Speaker 2: that has four hundred and forty six million. For example,
Speaker 2: the US, the whole US is three hundred and thirty
Speaker 2: three million. They're about so john seventy two million massive population.
Speaker 2: The economy is growing at five percent per year. One
Speaker 2: other measure as emissions. Of course, so Indonesians per capita
Speaker 2: emissions are two tons of CO two a year. That
Speaker 2: compares to six point one tons in the European Union
Speaker 2: and fourteen tons in the US. That however, you also
Speaker 2: know two tons in Indonesia and it's increasing, whereas the
Speaker 2: six tons in the EU and the fourteen tons in
Speaker 2: US are both numbers that are decreasing over time. Who
Speaker 2: knows if they're going to meet at some point, but
Speaker 2: that's the degarbanization process in which we're going to be
Speaker 2: talking about. First of all, and now what makes Indonesia's
Speaker 2: move to a lower carbon economy especially challenging.
Speaker 3: Part of the reasons is because this is a society
Speaker 3: that use energy at the family level for mobility, which
Speaker 3: is consume a lot of energy, and our development has
Speaker 3: been focusing on the car oriented development and therefore, for example,
Speaker 3: like the case of Jakarta just as and illustrations why
Speaker 3: it is challenging. We have eleven million population in our
Speaker 3: city and we have about the same numbers of motorcycles
Speaker 3: and cars. So actually our motorcycles we have thirteen million,
Speaker 3: thirty million motorcycles and three million cars registered cars and motorcycles.
Speaker 3: So when we're talking about the carbonization, so it is
Speaker 3: challenging because you have to handle it at the smallest
Speaker 3: units of your society, which is a family level, at
Speaker 3: individual levels, right, and that's why this is one of
Speaker 3: the one of the big challenges. So converting into transit
Speaker 3: oriented development that has been our commitment and we work
Speaker 3: on it in the past five years and we're seeing
Speaker 3: a tremendous change. So if we are able to continue this,
Speaker 3: then we tackle one of the challenges on the governmentization.
Speaker 2: That's really interesting. So is the scale of the carbonization,
Speaker 2: the little details you have to go into my spait,
Speaker 2: that's one of the challenges. Yes, yes, and there's not
Speaker 2: two big companies you can go to and get the
Speaker 2: job done. It's many millions of people that have to
Speaker 2: change their habits and have to change.
Speaker 3: And on top of that, our fuel is heavily subsidized.
Speaker 3: So what happened is mobility we're using private vehicles, and
Speaker 3: the private vehicles we're using fuel that is heavily subsidized,
Speaker 3: and reducing the subsidy is politically challenging and now with
Speaker 3: the increase of world oil price, it has put price
Speaker 3: sure us in government. But on the other hand, this
Speaker 3: also one of key reason why the carbonization becomes important.
Speaker 3: From the government point of view. We need to reduce
Speaker 3: that subsidy, and to reduce that subsidy, then peoples need
Speaker 3: to reduce their oil consumption fuel consumption, and to do
Speaker 3: that give incentive for conversion into electric vehicles, and that
Speaker 3: is the avenue that we are now doing.
Speaker 2: That's super interesting. Now, there was some good news at
Speaker 2: the end of last year in November, I think it
Speaker 2: was the just Energy Transition Partnership, which was led in
Speaker 2: this case by the US and Japan, along with Canada,
Speaker 2: the EU, Germany, France, the UK normally a bunch of
Speaker 2: countries signed a deal to help fund the energy transition
Speaker 2: in Indonesia. Now that's going to provide twenty billion dollars
Speaker 2: over the next three to five years. Now, I think
Speaker 2: at the point was the biggest deal and been done
Speaker 2: this sort. That was very exciting, but we have to
Speaker 2: put that in context. The country has a target to
Speaker 2: reach at zero in twenty sixty and our calculations indicate
Speaker 2: that the cost of reaching by that time is going
Speaker 2: to be it's going to require three point five trillion
Speaker 2: dollars of investment. This is a massive process. There's only
Speaker 2: a lot of money as to border into the country.
Speaker 2: That was the twenty billion dollars in a different life.
Speaker 2: So my question to you is where is this money
Speaker 2: going to come from?
Speaker 3: That's one of the biggest challenges actually, And when you
Speaker 3: look at this issue, there are a few area that
Speaker 3: you have to look at it. One is what I
Speaker 3: mentioned earlier, mobility, Two is power plans that we have
Speaker 3: in the country, and three is the new constructions of
Speaker 3: power plants across Indonesia. Let me give you a illustrations.
Speaker 3: You talk about the country earlier. This is two hundred
Speaker 3: and seventy million peoples and you know what often offerlook
Speaker 3: is this is an archipelago. This is not a continental
Speaker 3: so you don't have a centralized boarding grip that distribute
Speaker 3: power across the country. The other hand, it gives you
Speaker 3: incentive to create more sustainable power generator because then small
Speaker 3: islands across Indonesia do you have and in the tropical
Speaker 3: area in the equator, which definitely solar generated energy is
Speaker 3: something that we are pursuing. So how do you finance
Speaker 3: all of this? I think, based on our experience in
Speaker 3: the PARTA for example, PPP is one of the way
Speaker 3: to go. So private public partnership, right, So when it
Speaker 3: comes to public project, inviting private sectors to come into
Speaker 3: the equation is key. For example, when we are doing
Speaker 3: electrifications of our buses, then we partners with the private
Speaker 3: sectors and they do the investment, we purchase their services,
Speaker 3: and it was a way to go and otherwise it
Speaker 3: would cause us a lot. But by having that kind
Speaker 3: of partnership then we're able to attract a large number
Speaker 3: of investment and still from the business point of view,
Speaker 3: that can make it a good business. But on the
Speaker 3: other hand, it is in line with our sustainable objective.
Speaker 2: So you're suggesting part of this money, a sizeable chunk
Speaker 2: is going to have to come from private investors. I think,
Speaker 2: So essentially, what is what you're saying.
Speaker 3: On the one have a private investment but also government
Speaker 3: driven project, So it's a punish yes, but the utility
Speaker 3: in the country is still stay controlled PLN. Is that
Speaker 3: likely changes the reforms likely to come in that area
Speaker 3: or is that it's likely to come. Reform likely to
Speaker 3: come given the challenge that we have and the speed
Speaker 3: of supply. The growth of supply has not been satisfying.
Speaker 3: So I think we will come to a point where
Speaker 3: major reform needs to the place.
Speaker 2: That again, probably a contentious issue, quite quite a complicated
Speaker 2: political brass. I imagine all right, now, Indonesia's power demand
Speaker 2: is expected to grow three to five times by twenty fifty,
Speaker 2: just because the economy is growing, population, so on. But
Speaker 2: that means that the power system itself is going to
Speaker 2: need to expand probably more than eightfold by that time,
Speaker 2: and potentially much more than that. So as this power
Speaker 2: system grows in all the ways it can, how are
Speaker 2: we going to balance that against sticking to these emissions
Speaker 2: targets which have in next area by twenty sixty? Yeah,
Speaker 2: I was how do you keep that? Think earlier?
Speaker 3: The setting of Indonesia is an archipelago, but also this
Speaker 3: is an area it's often called a spring of fires.
Speaker 3: That's where Innunicia is. So we're talking about solar generative power.
Speaker 3: Indonisio has one of the richer's potensils for that and
Speaker 3: that has not been explored much. And those tools were
Speaker 3: sustainable source of power. So I think on the one
Speaker 3: hand we have that target. On the other hand, we
Speaker 3: are seeing opportunity in the new area. However, there's one
Speaker 3: more things is we need to have more fair and
Speaker 3: just transitions from call power generated energy which we have
Speaker 3: been using in the bus a few decades into a
Speaker 3: cleaner one. But that transition will require times for that.
Speaker 3: So I'm seeing for the futures the transition needs to
Speaker 3: take place. But on the other hand, we need to
Speaker 3: address seriously about taking new avenues which is a soller
Speaker 3: generated and also the theodre so.
Speaker 2: Just energy transition partnership that we talked about earlier. The
Speaker 2: twenty billion dollars are aimed at taking cold out. Yeah,
Speaker 2: because the Indonesia is the largest the world's largest export
Speaker 2: of thermal coal at the moment. The various things going
Speaker 2: on there in that market to ensure the country has
Speaker 2: enough coal for its own needs. But that's something that
Speaker 2: will potentially need to be need to be addressed because
Speaker 2: fair enough they can burn it, but if you're still
Speaker 2: exporting coal where everyone else is burning coal. There's still
Speaker 2: a good business there. But there are other other things,
Speaker 2: and as somebody's starting to some of these things, for example,
Speaker 2: the renewable generation targets for twenty thirty, the target at
Speaker 2: the moment is for twenty three to twenty five percent
Speaker 2: of renewable generation of power generation to be coming from
Speaker 2: renewables by twenty thirty. That sounds like a lot twenty
Speaker 2: thirty twenty five percent our generation by twenty thirty, but
Speaker 2: it's actually the lowest among twenty countries. So is that
Speaker 2: something that is changing. That's that's one question.
Speaker 3: Up to twenty thirty, maybe among the lowest, but when
Speaker 3: you're talking about twenty fifty, then we were catching up
Speaker 3: in the immediate first decades of that transitions. As I
Speaker 3: mentioned earlier, we have quite a large burden on our soldiers,
Speaker 3: so we don't want to be too ambitious the first
Speaker 3: ten years. However, this is not only about twenty thirty.
Speaker 3: We're talking about twenty fifty, twenty sixty. Our ambition and
Speaker 3: twenty fifty is at par with other countries, and we
Speaker 3: do hope by then we will have more rooms to
Speaker 3: maneuver in terms of financial support, in terms of source
Speaker 3: of new energy, and hopefully in some of technology available.
Speaker 3: The technology that we may be seeing in twenty thirty
Speaker 3: would may have been completely different than what we have today,
Speaker 3: So we have to put that into account when we
Speaker 3: talk about the speed of that transition. So, yes, we
Speaker 3: may be among the lowest to reach the twenty to thirty,
Speaker 3: but we're at par for twenty fifth.
Speaker 2: Okay, so it's not fair comparison. Yeah, it's not fairy invisive,
Speaker 2: you're starting slowly. It's like place for your catching outrivaty. Yeah.
Speaker 3: And even in our case in Zakarada, for example, we
Speaker 3: aim thirty percent reductions of greenhouse emissions by twenty thirty.
Speaker 3: That target was achieved much earlier. We reached twenty six
Speaker 3: percent reduction in twenty twenty one.
Speaker 2: You know, so you're setting let's target so you can
Speaker 2: look really good.
Speaker 3: But once we get there, then we expedite the process.
Speaker 2: Yeah, yeah, yeah, it makes sense, makes sense. Yeah, you
Speaker 2: didn't want to shootself in the foot with targets being
Speaker 2: too high and no achieving you right, Yeah, Okay.
Speaker 3: It's not like Michaelangelo, say, you know, I'm not worried
Speaker 3: about it you feel to it's if you're target when
Speaker 3: I'm worried, is your dargist too law?
Speaker 2: And it's different REI. So there are other ways. I
Speaker 2: think of Indonesia participating in this energy transition to a
Speaker 2: sort of clean, cleaner economy in a way. And of
Speaker 2: course there's EBS entrification of transport, which is a big thing,
Speaker 2: and I named Jacati did some things in that respect.
Speaker 2: But I want to talk about nickel because Indonesia has
Speaker 2: about a quarter of all known nickel deposits in the world,
Speaker 2: and nickel, of course is an important component of batteries.
Speaker 2: And sorry, what's going to happen there? What would you
Speaker 2: like to see happen with mining and potentially being part
Speaker 2: of the supply chain for.
Speaker 3: Batteries, Persia will play a major roles in the supply
Speaker 3: channel batteries for sure, big as our nickels. But also
Speaker 3: we would like to see advancement of technology on the
Speaker 3: use of nichols, and we have invested a lot. And
Speaker 3: what we'd like to see also the fact that we're
Speaker 3: to see more of battery manufacturing taking place in Indonesia,
Speaker 3: so instead of us exporting raw madrials of nickels, we'd
Speaker 3: like to have battery productions here in the country. So
Speaker 3: in that directions electrifications of our public transport of private
Speaker 3: vehicles in line with the presence of supply of battery,
Speaker 3: which is key for electric vehicles. I believe it would
Speaker 3: help to expedite the process of achieving authority.
Speaker 2: So you want to stimulate internal demand for batteries as
Speaker 2: it were, within the country as a way of enabling
Speaker 2: that industry to grow. And indeed, who's going to make
Speaker 2: batories in Indonesia. It may not immediately an Indonescient company,
Speaker 2: but at least it is being produced within Indonesia in Indonesia.
Speaker 2: And since the demand is so high in terms of
Speaker 2: battery for electric vehicles as well as for other like
Speaker 2: solar panels and et cetera, again, that's going to need investments.
Speaker 2: So presumly money is the product three point five trillion
Speaker 2: whatever it is.
Speaker 3: See again, when it comes to this, I think from
Speaker 3: the government point of view, we outline the policy direction
Speaker 3: and then give the incentive and disassentive from fiscal point
Speaker 3: of view, right, that's to allow market to actually grow
Speaker 3: and provide solutions. So the solution to this problem can
Speaker 3: be from by us creating us in government creating the
Speaker 3: markets for that. The demand is definitely there, but we
Speaker 3: need to create markets that supply will grow.
Speaker 2: Is that going to require more reform or pieces in
Speaker 2: place distangy.
Speaker 3: Definitely, some regulations need to be revised. Give you an example,
Speaker 3: all of regulations with regard to private vehicles has always
Speaker 3: been combustion based vehicles and we need to revise all
Speaker 3: of that and it requires a lot of work, but
Speaker 3: we need to do that. And then tariff barriers on
Speaker 3: electric base equipment from motorcycles all the way to solar
Speaker 3: panels for example. This is very interesting for importations and
Speaker 3: for productions. So we really have to look at details
Speaker 3: of many of our policies to give incentive of conversion
Speaker 3: into a more sustainable approach of technology. That's what needed
Speaker 3: and if we do that, market will grow.
Speaker 2: Yeah, it's the current government so aligned with these sort
Speaker 2: of idea.
Speaker 3: I think so LUs two years ago it was twenty
Speaker 3: twenty that of a President Jocob we issued the new
Speaker 3: regulations that they got to this and we need to
Speaker 3: have more of this. It's in the directions of creating
Speaker 3: new markets for sustainable solution.
Speaker 2: Interesting. So we're getting close to the end of the
Speaker 2: time we have so just one, maybe two more questions. Now,
Speaker 2: with investment required a discale three point five trillion dollars,
Speaker 2: it's going to be important to establish priorities. I would
Speaker 2: imagine we can't do everything or once. What will be
Speaker 2: top of the list and most effectively? And what road
Speaker 2: does government have in attract this mine. You've alluded to
Speaker 2: that already.
Speaker 3: I speaks the question here is what would be your prior
Speaker 3: ships focus on the urban areas in Indonesia. Indonesia is large,
Speaker 3: but it has to start somewhere, and the best way
Speaker 3: on addressing this challenge is by focusing on major cities.
Speaker 3: When you say major cities, how many is twelve twelve citasties,
Speaker 3: twelve big cities, and then from there you go to
Speaker 3: the more medium size this which will have around fifty
Speaker 3: of roll. If you address that, then we will be
Speaker 3: able to significantly improve our speed of achieving our target.
Speaker 3: Many thought that Indonesia is an agriculture base. It's a
Speaker 3: rural based society. It used to be, but by now
Speaker 3: fifty seven percent of our population is living in the cities.
Speaker 3: Right and this is a trend across the globe. The
Speaker 3: world will have around seventy percent of our populations by
Speaker 3: twenty thirty twenty thirty five. So if we address our privy,
Speaker 3: put our priorities into sustainable urban mobility and a transit
Speaker 3: oriented development in our urban area, we will significantly reduce
Speaker 3: our burden. And I think that's where the priority should be.
Speaker 2: Just because I think networks of cities are a very
Speaker 2: interesting way maybe of working in getting a European Union
Speaker 2: and many places where it might work. But in the
Speaker 2: case of Indonesia, would you have to work with the
Speaker 2: individual governors of different cities and different administrations or is
Speaker 2: there a network? Are they coordinated? Are they used to
Speaker 2: working together those twelve seasies.
Speaker 3: There's not a formal network of those cities. But what
Speaker 3: happened is this city government may not have the physical
Speaker 3: capacity to convert from cor oriented development into transit the
Speaker 3: development the way Jakarta did it. Because Jakarta has the
Speaker 3: fiscal power. That's where national government can step in, right
Speaker 3: by assisting these twelve cities. Let's convert into trugit oriented development.
Speaker 3: Here are the policy framework, here are the channel for financing,
Speaker 3: Here are some rules and regulations, and then they will
Speaker 3: definitely willing to join that. But if we are only
Speaker 3: giving them sort of instructions unit to achieve this target
Speaker 3: and that target, they would say, where can I get
Speaker 3: the money? What are the policy framework to allow us
Speaker 3: to achieve that? So the fact that we have a
Speaker 3: lot of major cities and they don't have the physical
Speaker 3: capacity for that conversion, we have to look at it
Speaker 3: as an opportunity for center government.
Speaker 2: You're going to help them over with that barriox because exactly.
Speaker 3: Because at the end of the day, the report will
Speaker 3: be at the national level, so local achievement will be accumulated,
Speaker 3: the numbers will be acculiumated in the national level, and
Speaker 3: we need to start somewhere, and that somewhere is the
Speaker 3: urban area. So why do we just do that and
Speaker 3: do that approach? And I think to be able to
Speaker 3: report to the world, then interne Easia is being responsible
Speaker 3: and we cantribute our parts.
Speaker 2: That's great. Well, as governor of Jakarta, you've had some
Speaker 2: experience at how cities operate, so hopefully that plan works out.
Speaker 2: In terms of the scale of transformation that's requires. We
Speaker 2: say there's lot of money, but there's transformation in many
Speaker 2: other ways as well. And of course it's consumer choice,
Speaker 2: its habits. It's economic transformation and different sorts and creating
Speaker 2: new industries such as battering manufacturing. And I'm wondering if
Speaker 2: transformation this scale, is there a risk that it could
Speaker 2: actually become a hindrance to development in the country, Decarbonization
Speaker 2: becomes something hard to do and grow at the same time,
Speaker 2: and other trade offs to be made. There are we
Speaker 2: at risk of overregulation sort of excessive adminisrative burden. I'm
Speaker 2: getting these things done. What's your view?
Speaker 3: Theoretically people can say that, but it cannot be an
Speaker 3: ecology can work hand in hand and we'll work it
Speaker 3: up together. Theoretically we can say that, but in reality
Speaker 3: the challenge is on how do we go about it.
Speaker 3: I think one important aspect is, let's not reinvent the wheel. Okay,
Speaker 3: let's learn from countries cities across the globe what our
Speaker 3: breakthrough that we can actually learn, adopt, adapt And I
Speaker 3: think that's where cooperation is important so that we can
Speaker 3: learn that. But I do think that we are at
Speaker 3: the point where we cannot tolerate this anymore. So this
Speaker 3: is a time in which we just have to take
Speaker 3: a responsible policy into action. And it may be hard,
Speaker 3: but we just have to do it because if we delay,
Speaker 3: if we don't take this route, regardless of how heavy
Speaker 3: it is, we will not have the kind of earth
Speaker 3: and ecosystem that we like to be for our children
Speaker 3: and the children of our children. It sounds like a
Speaker 3: very idealistic but it is actually the reality. So we
Speaker 3: just have to do it.
Speaker 2: That's an interesting idea to keep in mind, isn't it.
Speaker 3: Yeah, it sounds, but it is reality we need to address.
Speaker 3: And I think new generations of nonations we're really for it.
Speaker 3: So even though if at the beginning it may cause
Speaker 3: us extra in terms of resources, in terms of time
Speaker 3: and all of that, I think the band will keep
Speaker 3: that in mind that this is something that we have
Speaker 3: to do.
Speaker 2: Okay, one last line, one sentence. If do you have
Speaker 2: a message I space for the international finance community or
Speaker 2: investor community, what would you say to them?
Speaker 3: One thing, Let's put time perspective of our transition in
Speaker 3: a fair way.
Speaker 2: As we thought earlier.
Speaker 3: If we look at our transition in the period of
Speaker 3: ten years, we may be seeing different approach if we
Speaker 3: do it in twenty thirty or fourth years. For a
Speaker 3: country like us who have undergone I would say less
Speaker 3: sustainable oriented development in the past, I give us time
Speaker 3: and then number two is partnering in terms of financing.
Speaker 3: We need the world to help the flopping countries including
Speaker 3: Indonesia to pay for the way basically in term of
Speaker 3: unecessarily sources to reach Arthajit.
Speaker 2: It's been really interesting to talking to you and thanks
Speaker 2: plus great on ik give your time, most welcome.
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