1. Energy and Mineral Resources for the People’s Welfare By: Dr. Dadan Kusdiana Director for Bioenergy DIRECTORATE OF NEW, RENEWABLE ENERGY AND ENERGY CONSERVATION MINISTRY OF ENERGY AND MINERAL RESOURCES REPUBLIC OF INDONESIA Forum on Biomass Industry in Indonesia: Challenge and Opportunities Jakarta, 5th September 2013

2. Energy and Mineral Resources for the People’s Welfare I. ENERGY CONDITION II. NATIONAL ENERGY POLICIES III. POTENTIAL OF BIOENERGY DEVELOPMENT IV. BIOENERGY TARGET AND INCENTIVES V. BIOENERGY TARGET IMPLEMENTATION VI. STEP FORWARD VII. CONCLUDING REMARKS

3. Energy and Mineral Resources for the People’s Welfare I. ENERGY CONDITION Energy Mix 2011 Share of Non Fossil Energy ≈ 5% Average growth rate of energy consumption is 7% per year High dependence on fossil energy while the reserves are more limited Less of energy infrastructure development, particularly in rural / remote areas and outer islands Utilization of renewable energy and implementation of energy conservation is not optimal Public access to modern energy is still limited ; electrification ratio (2011) is 72.95% Linkage to environmental issues about mitigation of climate change.

4. Energy and Mineral Resources for the People’s Welfare  ENERGY CONSERVATION: to improve efficiency in energy utilization in sectors of Industrial, transportation, household and commercial (Demand Side). ►Huge implementation opportunity due to Indonesia is a wasteful energy consumer, measured from its energy intensity. ►Conservation cost is cheaper than cost of increasing supply. ►Implementing conservation is faster than increasing supply.  ENERGY DIVERSIFICATION: to increase new and renewable energy (NRE) utilization (Supply Side). ►Huge potential. ►Implementable faster than fossil energy. ►No need of massive investment. II. INDONESIA’S ENERGY POLICY (LAW NO. 30/2007 CONCERNING ENERGY)

5. Energy and Mineral Resources for the People’s Welfare NATIONAL PROJECTOIN ON PRIMARY ENERGY MIX MILLION SBM Energi Total 2010201520202025203020402050 1,178.191,593.152,148.902,815.803,556.805,483.407,261.80 Biomass Biofuel37.0574.10111.15222.30296.40518.70703.95 Biomass MSW (electricity)-7.4122.2366.69148.20296.40407.55 Geothermal22.2366.69111.15222.30296.40481.65629.85 Hydro7.4114.8237.0581.51111.15148.20177.84 Ocean--3.717.4110.3722.2337.05 Solar-3.7114.8229.6444.46103.74133.38 Other RNE-1.487.4111.1214.8229.6437.05 Oil585.39615.03629.85666.90689.13926.251,200.42 Gas237.12311.22407.55555.75666.90889.201,037.40 Coal288.99496.47792.87866.971,104.091,645.022,156.31 NE (nuclear and other)--14.8288.92177.84444.60741.00 Subtotal Biomass37.0581.51133.38288.99444.60815.101,111.50 Subtotal RE Non Biomass29.6488.92177.84355.68474.24785.461,015.17 Subtotal RE66.69170.43311.22644.67918.841,600.562,126.67 Total NRE66.69170.43326.04733.591,096.682,045.162,867.67 Source: Draft of National Energy Policy, DEN 2012

6. Energy and Mineral Resources for the People’s Welfare Law No. 30 Year 2007 on Energy Law No. 30 Year 2007 on Energy Presidential Regulation No. 5 Year 2006 on National Energy Policy Presidential Regulation No. 5 Year 2006 on National Energy Policy Presidential Instruction No. 1 Year 2006 on Provision and Utilization, of Biofuel as Other Fuel Presidential Instruction No. 1 Year 2006 on Provision and Utilization, of Biofuel as Other Fuel Ministry of Energy And Mineral Resources Regulation No. 32 Year 2008 on Provision, Utilization, and Procedures of Commerce of Biofuel as Other Fuel Ministry of Energy And Mineral Resources Regulation No. 32 Year 2008 on Provision, Utilization, and Procedures of Commerce of Biofuel as Other Fuel Priority supply and use of renewable energy, including bioenergy. Biofuel is targeted by 5% in 2025 in the national energy mix. Mandatory of biofuel utilization roadmap (biodiesel, bioethanol, and biooil) in transportation, industry, commercial, and electricity generation sectors Instructions to the Minister, Governor and Mayor to take action in order to accelerate the provision and utilization of biofuel; Ministry of Energy and Mineral Resources Regulation No. 4 Year 2012 and No. 19 Year 2013 Electricity Price (Feed-in Tariff ) for Bioenergy Based Power Plant (Biomass, Biogas, and Municipal Solid Waste)

7. Energy and Mineral Resources for the People’s Welfare i.Provision of bioenergyas the final energy consists of liquid, gas, solid, and electricity forms. ii.Bioenergy in a liquid form, namely biofuel consists of biodiesel, ethanol, and pure vegetable oil, can be used as a substitute for oil fuel. iii.Bioenergy in a gas form, namely biogas, can be used as fuel for stoves and power plants. iv.Bioenergy in a solid form can be produced as briquettes or pellets. v.Bioenergy can also be converted into electricity (by using biofuels, biogas, and gasification). Bio-Refinery Distribution Integrated Generator BIOENERGY CONVERSION INSTALLATION Bio-Gassification Anaerob Digestion Bio-Gassification Anaerob Digestion 1.Biodiesel 2.Bioethanol 3.Biooil Biogas Bio-Briquettes/Pellet Electricity Bio-Briquettes Bio-Cook Stove

8. Energy and Mineral Resources for the People’s Welfare 1.Bioenergy can be utilised for various of needs (fuel, heat and electricity) and can be produced in many ways (liquid, gas and solid forms). Therefore, bioenergy are relatively easy to continuously adjusted to the needs; 2.Type of fuel: biodiesel (substitution for diesel oil), bioethanol (substitution for gasoline), biooil (substitution for diesel oil), agricultural waste, biogas, briquettes. 3.Bioenergy technology is to be continuously developed in order not only to increase an efficiency/productivity, but also to produce other types of bioenergy products, such as pellets, DME, biomethanol, refuse derived fuel (RDF), biobuthanol, biooil, green jet oil, green diesel, etc.

9. Energy and Mineral Resources for the People’s Welfare 1.Indonesia as an agricultural country is blessed by various types of crops, where crops – due to climate and soil condition, can grow faster. Moreover, farming has become a major activity. 2.When other renewable energy production are really depended on nature condition, bioenergy production are mostly can be managed by human being; 3.Bioenergy can be developed in all regions. 4.Short life cycle supply of bioenergy resources (3 months for sweet sorghum, 4 years for palm, and 3 months for cows). 5.Bioenergy can be directly utilized in energy conversion systems/existing equipments (biomass on power plant, biofuel in vehicles). 6.Bioenergy utilization has directly impacts to community (pro-growth, pro-job, pro-poor).

10. Energy and Mineral Resources for the People’s Welfare 1.BIOFUEL Biodiesel:CPO production rate is about 28 million tons per year - where it is only a small part of it is used for biodiesel. Many other biodiesel sources: Jatropha, Nyamplung, Kemiri Sunan, etc. are potential to be developed. Bioethanol:Mollasses production rate is 1,5 million tons; cassava production rate is 22 million tons. Many other bioethanol sources: sorghum, corn, etc. are potential to be developed. 2.BIOGAS Biogas can be produced from organic materials, such as animal dung, and organic wastes. Currently, it is estimated that population of ruminants is about 17 million of big ruminants and 28 million of small ruminants in Indonesia. 3.BIOMASS Indonesia has a wide range of biomass type of wastes in large amount produced from agricultural industry and municipal. Biomass potential for electricity in Sumatera region is estimated about 12,961 MW, while in Kalimantan region is about 4,493 MW.

11. Energy and Mineral Resources for the People’s Welfare IV. TARGET AND INCENTIVES: Bioenergy Roadmap and Incentives...(1/4) 1. BIOENERGY ROADMAP 2015-2025 TypeUnit201520202025 BiofuelMillion kL2,695,8013,51 Biodiesel Million kL 2,354,739,52 Bioethanol Million kL 0,200,803,45 Biooil Million kL 0,130,270,54 BioAvtur* Million kL 00,140,16 BiogasMillion m37,76228,821107,012 BiomassMWe8752.6708.149 Note: * Starting with 2%-bioavtur concentration in 2016; developed by DGNREEC MEMR based on Draft of National Energy Policy, Nationel Energy Council

12. Energy and Mineral Resources for the People’s Welfare NoDevelopment201020112012201320142015 IPlan based on National Energy Policy: - Installed Capacity (MW) 2050100200690 IIDevelopment 1. Added Capacity (MW) 20 21159172415 2. Installed Capacity Cumulative (MW)500 5205417008721.287 IIIRatio of II/I (%) 26001082700436187 DEVELOPMENT OF BIOMASS ELECTRICITY 2010 – 2015 Note: - CF = 70%

13. Energy and Mineral Resources for the People’s Welfare IV. TARGET AND INCENTIVES: Bioenergy Roadmap and Incentives...(1/4) 1. BIOFUEL USAGE MANDATORY ROADMAP (As stated on Draft Revision of the Ministry of Energy and Mineral Resources Regulation No. 25 Year 2013) BIODIESEL (Minimum) SectorSept 2013Jan 2014Jan 2015Jan 2016Jan 2020Jan 2025 Transportation, PSO10% 20% 25% Transportation, Non PSO 3%10% 20% 25% Industry and commercial5%10% 20% 25% Electricity Generation7,5%20%25%30% BIOETHANOL (Minimum) Sector Sept 2013Jan 2014Jan 2015Jan 2016Jan 2020Jan 2025 Transportation, PSO0,5%1%2%5%20% Transportation, Non PSO 1% 2%5%10%20% Industry1%2%5%10%20%

14. Energy and Mineral Resources for the People’s Welfare IV. TARGET AND INCENTIVES: Bioenergy Roadmap and Incentives...(2/4) 2. BIOFUEL USAGE MANDATORY ROADMAP (As stated on Draft Revision of the Ministry of Energy and Mineral Resources Regulation No. 25 Year 2013) PURE PLANT OIL (Minimum) SectorSept 2013Jan 2014Jan 2015Jan 2016Jan 2020Jan 2025 Industry and Transportation (low and medium speed engine) Industry1%5%10%20% MarineTransportation5%10%20% Air Transportation2%3%5% Electricity Generation1%6%15%20%

15. Energy and Mineral Resources for the People’s Welfare IV. TARGET AND INCENTIVES : Bioenergy Roadmap and Incentives...(3/4) 3. FEED-IN TARIFF FOR BIOENERGY BASED POWER PLANT (As stated on the Ministry of Energy and Mineral Resources Regulation No. 4 Year 2012 and No. 19 Year 2013 ) No.EnergyCapacityElectricity TariffNote Medium Voltage 1.Biomassuntil 10 MWRp. 975,- / kWh X F 2.Biogasuntil 10 MWRp. 975,- / kWh X FNon Municipal Solid Waste 3.Municipal Solid Waste (MSW)until 10 MWRp. 1.450,- / kWhZero waste *) 4.Municipal Solid Waste (MSW)until 10 MWRp. 1.250,- / kWhSanitary Landfill *) Low Voltage 1Biomassuntil 10 MWRp. 1.325,- / kWh X F 2Biogasuntil 10 MWRp. 1.325,- / kWh X FNon Municipal Solid Waste 3Municipal Solid Waste (MSW)until 10 MWRp. 1.798,- / kWhZero waste *) 4Municipal Solid Waste (MSW)until 10 MWRp. 1.598,- / kWhSanitary Landfill *) F is an incentive factor based on the region where the power plant is installed, as follows: Jawa, Bali, and Sumatera region: F = 1 Kalimantan, Sulawesi, NTB and NTT region: F = 1,2 Maluku and Papua region: F = 1,3

16. Energy and Mineral Resources for the People’s Welfare 4.BIOFUEL USAGE MANDATORY ROADMAP a. Priority for local Potential NRE (no bidding) b. The Obligation of NRE electricity puchasing by PT. PLN (Persero) c. Feed-in-Tariff for NRE electricity d. Income Tax Incentive for RE Invesment e. Incentive on permit of biomass facility IV. TARGET AND INCENTIVES: Bioenergy Roadmap and Incentives...(4/4)

17. Energy and Mineral Resources for the People’s Welfare V. TARGET IMPLEMENTATION: Bioenergy Based Power Plant...(2/3) 1.Implementation of bioenergy based power plant (from biogas, biomass, and municipal solid waste) has increased significantly since the enactment of the new feed-in-tariff; 2.Current installed on-grid capacity of bioenergy based power plant in 2012 was 75.5 MW (in 2012, an increase capacity was 16.5 MW). NoCompanyCODContractLocationConnection regionBiomass Type Conracted Capacity (MW) 1PT Riau Prima Energy2001Excess powerRiauPLN Wilayah Riau palm waste5 2PT Listrindo Kencana2006IPPBangkaPLN Wilayah BangkaPalm waste5 3PT Growth Sumatra2006Excess powerSumatera UtaraPLN Wilayah SumutPalm waste6 4PT Indah Kiat Pulp & Paper2006Excess powerRiauPLN Wilayah Riau palm waste2 7PT Belitung Energy2010IPPBelitungPLN Wilayah BabelPalm waste7 8PT Growth Sumatra2010Excess powerSumatera UtaraPLN Wilayah SumutPalm waste9 9PT Pelita Agung2010Excess powerRiauPLN Wilayah RiauPalm waste5 10Permata Hijau Sawit2010Excess powerRiauPLN Wilayah RiauPalm waste2 11PT Navigat Organic2011IPPBaliPLN Dist BaliMSW2 12PT Navigat Organic2011IPPBekasiPLN Dist JabarMSW6 13PT Growth Asia2011Excess powerSumatera UtaraPLN Wilayah SumutPalm waste10 14PT Growth Asia2012Excess powerSumatera UtaraPLN Wilayah SumutPalm waste10 15PT Navigat Organic2012IPPBekasiPLN Dist JabarMSW6.5 TOTAL ON-GRID CAPACITY75.5

18. Energy and Mineral Resources for the People’s Welfare VI. STEP FORWARD: Current Issues on Bioenergy Development …(1/4) 1.Development of integrated Bioenergy production facility with dedicated feedstock; 2.Regulating of Biomass/waste export/trading puposes; 3.Expansion of transmission network/national grid; 4.Biomass utilization in existing power plants (Co-firing); 5.Permit of non biofuel bioenergy facility; 6.Pricing policy for bioenergy; 7.Allocating special fund for implementation of biomass power plant by local government as energy access program

19. Energy and Mineral Resources for the People’s Welfare VI. STEP FORWARD: Effort to Support Bioenergy Development...(2/4) The Government cq. Ministry of Energy and Mineral Resources has a high commitment to continuously develop bioenergy and increase its utilization in order to strengthen the national energy security, by: a.Encouraging an upstream side development to secure the supply of bioenergy raw materials, eg. creating a dedicated land for bioenergy feedstock. b.In a coordination with the Ministry of Agriculture, creating some regulations and policy in an upstream side to ensure the availability of raw materials and land use and increase research and development for bioenergy crops. c.Creating some regulations and policy in biomass export to secure the feedstock of Biomass Power Plants. d.Enacting a sustainability development concept for bioenergy production. Currently Indonesia has developed Indonesia Sustainable Palm Oil (ISPO) and actively participate in international forum on sustainable bioenergy: Global Bioenergy Partnership (GBEP), and ISO for Sustainable Bioenergy. 1. Feedstock

20. Energy and Mineral Resources for the People’s Welfare a.Updating the standar specification for bioenergy production process. b.Adopting of second generation technology to reduce a competition level with food security. c.Reducing or exempted custom tax for renewable energy technologies. d.Integrating system to optimize utilization of bioenergy by-products and waste. e.Initiate a technical study for bio-avtur specification standard followed with provision of the specification standard to starting bioavtur program. f.Initiate a technical study for biomass cofiring on power plant. 2. Technology and process VI. STEP FORWARD: Effort to Support Bioenergy Development...(3/4)

21. Energy and Mineral Resources for the People’s Welfare VI. STEP FORWARD: Effort to Support Bioenergy Development...(4/4) a.Updating the standar specification for bioenergy to guarantee the quality and safety of bioenergy products to end users. b.Updating the pricing regulation of bioenergy product to increase the utilization of bioenergy (especially for biofuel to cover blending and transportation costs). c.In a coordination with Ministry of Industry, enacting some regulations and policy to obligate automotive engines manufactured/distributed in Indonesia to use biofuel and to produce Flex Fuel Vehicle (FFV) that can take advantage of biofuels up to more than 50%. d.Encouraging a utilization of biofuel in the transportation for non-PSO, industry, and electricity generation sectors. e.Increase capacity building and knowledge access for bioenergy to create people’s awareness. 3. End user a.Enacting and updating the feed-in-tariff (regulated purchasing price) for bioenergy based power plant to increase the investment. b.Giving some incentives that consider macroeconomic aspects since bioenergy industry is still an infant industry. 4. Incentives and Mandatory

22. Energy and Mineral Resources for the People’s Welfare VII. CLOSING: Concluding Remarks 1.As part of the national energy policy, bioenergy development and its utilisation will be continuously implemented in order to strengthen the national energy security as well as to improve the people’s welfare. 2.Bioenergy development and utilization is one of essential keys to reduce the dependence on fossil fuel; 3.Among stakeholders, it is important to hand-in-hand in bioenergy development to achieve the goal on bioenergy development, giving benefits on economic, social and environment for Indonesia’s welfare.

23. Energy and Mineral Resources for the People’s Welfare www.ebtke.esdm.go.id Directorate General of New, Renewable Energy and Energy Conservation Jl. Pegangsaan Timur No. 1, Cikini, Jakarta, Phone/Fax: +62-21 31924585