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The changing of the electric and nonelectric energy
productionand technology options for emission abatement on
Indonesia
Armi Susandi
Max Planck Institute for Meteorology, Hamburg,
GermanyBundesstrasse 55, D-20146 Hamburg
Email: [email protected]
Abstract
This paper studies the changing of electric and nonelectric
energy production onIndonesia as impacts of greenhouse gas emission
targets. We use of a Model forEvaluating the Regional and Global
Effects of greenhouse gas reduction policies
(MERGE) to estimate the production on electric and nonelectric
energy on Indonesiafor a business as usual and various Indonesian
mitigation scenarios to 2100.Indonesia will be reduce of their
absolute emissions stars after 2050 with target is its2040
emissions. Concerning to its emissions reduction target and
sustainabledevelopment Indonesia produces energy with low/free
emission. In electric energysector Indonesia using hydropower to
the half of the century and then stars fallinggradually, in the
second of the century the low-cost advance carbon-freetechnologies
generation (ADV-LC) is lead to the Indonesian energy production.
Withinternational trade in emission permits, Indonesia would be
produces more energyfrom hydropower and ADV-LC than other
scenarios. Production ofnonelectric energy
primarily is renewables energy (RNEW), to increase substantially
to the end ofcentury. With emission reduction targets are set
relative to reference scenario,Indonesia renewables energy
production highest.Nevertheless, MERGE has only exogenous
technology in economic models relatedto climate change. New version
of MERGE needs to introducing of endogenoustechnology. In this
paper we analyze some potential technical change options
foremission abatement of Indonesia, especially on
Improved-Technology (IT) toreducing emission in the energy,
transport and industry sectors.
Keywords: Indonesia climate policy; MERGE; electric and
nonelectric energy; hydro;
ADV-LC; renewables energy; technology options;
Improved-Technology (IT)
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1. Introduction
The Kyoto Protocol commits the Annex I countries to reducing
their greenhouse gas(GHG) emissions to approximately 5% below 1990
levels during the commitmentperiod between 2008 and 2012. The
industrialized countries that made the limitation
and reduction commitments are listed under Annex I of the
Climate Convention andtheir commit and their commitments are listed
under Annex B of Kyoto Protocol.
Indonesias greenhouse gas emissions are projected to increase
rapidly after theeconomic crisis has been overcome. The energy
sector in Indonesia has been adominant factor in the economic
development sector of Indonesia. In the last threedecades the
growth of energy utilization in Indonesia was relatively high, that
is 8.7%per annum (ADB, 1997), but oil and gas exports gave
significantly contribution toforeign exchange revenue of the
country. As oil, gas and coal, Indonesia has a widespectrum of
natural energy resources, such as hydropower, geothermal,
biomass,solar energy and wind.
This studies focuses on production of electric and nonelectric
energy on Indonesia asimplications of emission reduction in both
Annex B countries and non-Annex Bcountries (i.e., developing
countries). This paper aims to investigating theimplications of
tradable permits from no emission trading to full global trading.
Westars the Annex B countries with no emission trading case. Next,
we concern wheretrading of emission permits is limited to Annex B
countries only, and then whentrading is enlarged to all countries.
To investigate the role Indonesia plays inemission reduction, we
further included Indonesia with and without full global
trading.
In order to analyze the impacts that different climate policy
scenarios on electric andnonelectric energy production on
Indonesia, we have extend the MERGE model by10 region with separate
out Indonesia. MERGE developed by Manne and Richels(Manne et al.,
1995).
Section 2 gives a brief overview of MERGE, and specifies of
electric energytechnologies and nonelectric energy supplies
available. Section 3 presents thebusiness as usual scenario, and
section 4 the cases with emission reduction commitsfor the Annex B
countries and the Non Annex B countries. Section 5 gives a
shortoverview of technologies options for emission abatement in
Indonesia. Section 6 isconclusion.
2. MERGE 4.3I model
In this section, we provide a brief overview of MERGE (a Model
for Evaluating theRegional and Global Effects of greenhouse gas
reduction policies). MERGE is anintertemporal general equilibrium
model of the global economy. It combines a bottom-up representation
of energy supply sector with a top-down perspective on theremainder
of the economy. See Manne and Richels (1992) and Manne et al.
(1995)for a detailed description. We used the version 4.3 for this
studies (Manne andRichels, 2001). It consists of four sub model:
(1) the economic model; (2) the energymodel; (3) the climate model;
and (4) the climate change impact model.
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The energy model distinguishes between electric and nonelectric
energy. There are10 alternative sources of electricity generation
plus two backstop technologies: highand low-cost advanced
carbon-free electricity generation, as given in Table 1.
Table 1. Electricity generation technologies Available to
Indonesia
Technology Identification Earliest possibleintroduction date
Carbon emission coefficients(Billion tons per TKWH)
Hydro Hydroelectric, geothermal andother renewables
Existing 0.0000
Nuclear Remaining initial nuclear 2010 0.0000
Gas-r Remaining initial gas fired Existing 0.1443
Oil-r Remaining initial oil fired Existing 0.2094
Coal-r Remaining initial coal fired Existing 0.2533
Gas-n Advanced combined cycle 2010 0.0935Gas-a Fuel cells with
captured and
sequestration gas fuel2030 0.0000
Coal-n Pulverized coal without CO2recovery
2010 0.1955
Coal-a Fuel cells with capture andsequestration coal fuel
2030 0.0068
IGCC Integrated gasification andcombined cycle with captureand
sequestration coal fuel
2030 0.0240
ADV-HC High cost advanced carbon-freetechnologies 2020
0.0000
ADV-LC Low cost advanced carbon-freetechnologies
2060 0.0000
Source : MERGE4.3
There are four alternative sources ofnonelectric energy in the
model (oil, gas, cldu,renewables) plus a backstop technology, as
given in Table 2.
Table 2. Nonelectric energy supplies
Technology Identification Carbon emission coefficients(tons of
carbon per GJ)
CLDU Coal direct uses 0.0241
Oil Oil 0.0199
Gas Gas 0.0137
RNEW Renewables energy 0.0000
NEB Nonelectric backstop 0.0000
Source : MERGE4.3
The original MERGE model has 9 regions. Indonesia is part of
Rest of the World. Forour purposes, we split this region into two.
In the current version of the model
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(MERGE4.3I), it has been extended to ten regions. Obviously,
there is no conceptualchanges were needed only required changes in
the databases and the scenarios.
In this section, we will examine the economic effects on
Indonesian electric andnonelectric energy of the market from no
emissions trading to full global trading both
on Annex B countries and non Annex B countries, using MERGE by
10 regions. Theten regions considered are given in Table 1. Note
that the countries belonging to theOrganization for Economic
Co-operation and Development (OECD) (Region 1through 4) together
with the economies in transition (Region 5) constitute Annex B
ofthe Kyoto Protocol
Table 3 Regions in MERGE 4.3I
Annex B countries Non-Annex B countries
1. Unite States 6. China2. OECD (Western Europe) 7. India3.
Japan 8. MOPEC (Mexico and OPEC)
4. CANZ (Canada, Australia, and New Zealand) 9. Indonesia5.
EEFSU (Eastern Europe and the Former
Soviet Union)10. ROW (the rest of the world)
Numerous proposals have been put regarding to controlling
greenhouse gasemissions. To analyses the how impact the
international climate policy on changingof the electric and
nonelectric energy production on Indonesian, we have producesome
different scenarios to controlling greenhouse gas emissions.
The MERGE4.3I has seven different scenarios are analysed,
viz.:
Table 4. The scenarios
Scenario Emission reduction Start date Emissions trade
REF No NoKAB Annex B countries 2010 NoKBG Annex B countries 2010
All countriesKAA Annex B countries
China, India and MOPECIndonesiaROW
2010203020502070
No
KAT Annex B countriesChina, India and MOPECIndonesia
ROW
201020302050
2070
All participating countries
KRA Annex B countriesChina, India and MOPEC, relative to
referencescenario.Indonesia, relative to reference scenarioROW,
relative to reference scenario
20102030
20502070
No
KRT Annex B countriesChina, India and MOPEC, relative to
referencescenario.Indonesia, relative to reference scenario.ROW,
relative to reference scenario.
20102030
20502070
All participating countries
We assumed that all Annex B countries adopt the Kyoto Protocol
to reducing of theiremission. We assume that Kyoto will be followed
by subsequent protocols in allAnnex B countries agree to reduce
emission by an additional 5% per decade startingin 2020. Then, we
assume the all countries but non Annex B countries adopt
binding
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targets and timetables by 2030/2050/2070. The other scenarios
non Annex B regionsdo not have an incentive to increase their
emissions before stars reducing theiremissions as KRA and KRT
scenarios.
3. Business as usual
Electrical generating capacity has installed in Indonesia
estimated 21.4 gigawatts, ithas coming from thermal (oil, gas and
coal) sources, 14% from hydropower, and lessfrom geothermal. Beside
of government electricity production by Perusahaan ListrikNegara,
so called PLN, Indonesia had plans for expansion of power
generation byIndependent Power Producers (IPP), even it progress no
satisfied. Indonesiacurrently produces electric energy from hydro
power generation, remaining initial oiland gas fired and some coal
fired. Hydro power production is to decrease till the endof
century, but advance combined gas cycle will be change this
condition and alsowill be dominant on electric energy production
after 2010 to the second half ofcentury. As of 2010, carbon free
technologies start in Indonesian market, nuclear
starts 2010 but decrease up to 2100, furtherly high cost and low
cost advancedcarbon-free technologies produce increase after 2020
and 2060. Carbon freetechnologies will be dominant to producing
electric energy in Indonesian energymarket after 2050, in 2060 it
will changing from high cost advanced technologies tolow cost
technology. In this scenario electric energy is no produce from
pulverizedcoal without CO2 recovery and IGCC. Generally, the first
of half century electricenergy production of Indonesia market
dominated by hydro and advanced combinedgas cycle and next second
of half century carbon free technologies will be inIndonesian
market position. On the other word, Indonesian electric energy
productionis dominated by energy with low emission.
In the nonelectric energy, Indonesia produces primarily by oil,
gas and some coal-direct uses. Currently Indonesia produces more
energy with high emission (oil) andthen is to decrease
substantially to the end of century; gas stars increasing to
themiddle of the century but then starts falling gradually before
the end of century,obviously gas export vary little over the
century (Susandi, 2002). Renewable energyproduces after 2030 stars
dominated on producing nonelectric energy while oilproduction
decreases dramatically. Some backstop high cost and low
costtechnologies stars in Indonesian energy market in the middle of
century to 2100,even it have less. Carbon emission from nonelectric
energy is higher than carbonemission from electric energy sector as
indicated by using of oil, coal and gas in
Indonesian energy sector fornonelectric energy.
4.1. Emission reduction in Annex B countries
If the countries of Annex B commits to reduce their emissions of
six greenhousegases (GHG) average by 5.0% below 1990 levels in the
commitment period 2010and also when trading of emission permits is
allowed among Annex B countriesfreely, Indonesia expands the
production of advanced combined gas cycle (gas-n) inelectric energy
sector, it has be dominated in Indonesian production electric
energyduring the half of century. In the second half of century,
coal of advance combinedcycle starts production as continuation of
remaining initial coal fired production. High
cost advanced carbon-free technologies are negligible in
Indonesian energy market.Total production of electric energy in
this scenario is more than business as usual.
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In the nonelectric energy, oil is primarily produces in
Indonesian to the middle ofcentury and some to export even more gas
export (Susandi, 2002), and thenrenewable energy production
increases dramatically. Coal will always produces evendecrease
gradually. Nonelectric backstop technologies are negligible over
thecentury as Indonesia dont participated on international emission
reduction yet.
Indonesian carbon emission from energy sector higher than
business as usual.
When trading is enlarged to included non Annex B countries, high
cost advancedcarbon-free technologies return to producing as the
last scenario even smaller thanreference scenario while gas-n
produces lesser than last scenario. Nonelectricenergy production
almost the same with the last scenario but renewable
energyproduction earlier in 2020. Indonesia reduces their emissions
by reducing coalconsumption (Susandi, 2002). Total nonelectric
energy productions is more than lastscenario but almost the same
with the business as usual.
4.2. Emission reduction in Indonesia
In the fourth scenario, not only Annex B countries but also all
other countries reducetheir emission with variation of date as
scenarios above. Emission reduction targetsare set relative to the
emission reduction scenario. Under this scenario, Indonesiaelectric
energy production of coal especially pulverized coal without CO2
recovery;earlier than other scenarios to the middle of century and
gas production is lesser thanthe last scenarios. Total electric
energy production is the highest from the lastscenarios. Production
of nonelectric energy in this scenario, gas production isdecrease
gradually to the end of century while oil productions longer with
moreproduction. Renewable energy production is increasing sharply
after 2060. AsSusandi (2002), this results indicates coal
production shifted forward in time, and gasproduction is postponed.
Oil is imported, as oil demand falls sharply in the rest of
theworld.
When trading is enlarged to all participating countries,
pulverized coal without CO2recovery produces highest to electric
energy starts 2010, and then decreasegradually after 2050. Oil
production is the lest in this scenario. High cost advancedcarbon
free technologies produces in electric energy sector as business as
usual butlater 2050. Gas of advanced combined cycle is lesser than
other scenarios anddecrease slightly. In this scenario, nonelectric
backstop produces earlier than
business as usual start 2060, others nonelectric energy
production almost the samewith the last scenario.
If emission reduction targets are set relative to the business
as usual scenario,Indonesia produce more advanced combined gas
cycle to the end century but lesspulverized coal without CO2
recover start 2060 and some carbon free technologies.Both gas and
carbon free technologies are dominated of electric energy market
ofIndonesia. Production of nonelectric energy produces primarily
oil and renewableenergy, but the others are les. Oil production
increase to 2040 and then fall sharplyafter 2050 while renewable
energy starts 2060 increases significantly to the end ofcentury. In
this scenario gas export increases slightly, and oil import lesser
than the
previous scenario (Susandi, 2002).
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With international emission-permit trade, production of electric
energy almost thesame with the sixth scenario but more produces
carbon free technologies, starts2040. Gas production in nonelectric
energy increasing again after 2040 while coaldirect uses decrease
gradually.
5. Technology options for emission abatement
Nevertheless, MERGE has simulated on Indonesia energy sector
only as exogenoustechnology in economic models related to climate
change. We need new version ofMERGE with introducing of endogenous
technology. Concerning this paths, in thispaper we analyze some
potential technical change options for emission abatement
ofIndonesia.
There are two classifications of technologies for reducing GHG
emission in theenergy, transport, and industry sector. It has end
of Pipe Technology (EPT) orImproved-Technology (IT). An EPT is
proposed to reduce the GHG in the flue/waste
gas by treating this gas prior to its venting to the atmosphere.
An IT technology isbased on a concept and design that it either
reduces the GHG emission in theflue/waste gas or will not produce
any flue/waste gas. Otherwise an EPT can beincorporated into IT
could be the flue gas much cleaner.
In this section, we focused a brief overview of Improved
Technology could bedeveloped in Indonesia as the technology option.
The economic attractiveness of thetechnology options are shown in
Table 5. The yardstick of economic attractivenessused here is the
marginal costs of GHG reduction resulting from the adoption of
aproposed or suggested technology option in place of a reference
technology.
The lower the marginal cost the more economically promising
technology in reducingthe GHG emissions. Furthermore, negative
value of the marginal cost means that thetotal annual (investment
plus operating) cost of the technology is lower than that ofthe
reference technology. The table ranks the technologies in each
categoryaccording to economic attractiveness. Note that, among the
improved technology forpower generation, solar photo voltaic power
plant presently ranks next to last(marginal cost per reduced GHG of
0.15 US$/kg), but it will presumably ranks third inthe future (2005
2015; marginal cost per reduced GHG -0.025 US$/kg)
becausepredictions indicate that technological advancements will
reduced its installed costdown to one-seventh of the present
value.
Though economically attractive, LWR nuclear power plant has a
critical prohibitivefactor inherent to it, i.e. the high human life
risk resulting from operational accidents.Considering this, the
application of nuclear technology to power generation inIndonesia
seems has be wait until the LMFR technology, which is advocated as
safeand efficient but presently still in demonstration stage,
become mature and reachcommercialization.
All the improved technologies for road transportation shown in
Table 5. are based onalternative fuels and have positive marginal
(incremental) costs. This may lead one tothink that improving the
efficiency of conventional (fossil fueled) vehicle might be
more economically attractive and, thus, a better alternative.
However, the quality andquantity of roads in Indonesia, though
continually improved and expanded, are on theaverage less than
adequate to accommodate the rapidly increasing number of cars.
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Therefore, urban transportation vehicles often are trapped in
traffic jams or forced tomove at less than optimum velocity. This
results in excessive fossil fuel consumptionand its consequential
GHG emissions. Abatement of such emissions will thus be
trulyeffective through the use of alternative fuels that are less
GHG emitting.
Among these, Table 5. shows that ethanol fueled vehicles stands
out as the mosteconomically attractive option for reducing the GHG
emissions resulting from roadtransportation. Considering that the
fuel is derived from renewable sources, i.e.carbohydrate or
biomass, Indonesia has a quite large potential to produce it and
theproduction could result in the absorption of a much larger
number of workers and themore even spreading of economic welfare,
ethanol fueled vehicle technology shouldbe given a high
priority.
6. Discussion and Conclusion
This paper has investigated the implications of international
emission reduction to
Indonesian electric and nonelectric energy sector from no
emissions trading to allcountries trading. Our results show that if
Annex B countries reduce their emissionwithout any trading,
Indonesia would produce higher gas than business as usualscenario.
Much of oil and coal produce to domestic needs and some gas
export(Susandi, 2002). While Indonesia starts reduce their
emission; it produces moreenergy with low emission to electric and
nonelectric energy sector as switch fromcoal. By contrast,
production of energy with the low emission in Indonesia is highest
ifscenario set relative to business as usual, start the beginning
of century.
Some potential energy with low emission technologies produces by
different date asbalancing of the other source of energy. Generally
for all scenarios in electric energy,Indonesia has potential
produces gas to the middle of century and switch by low
costadvanced carbon free technologies. Oil production will
dominated in nonelectricenergy market and then decrease sharply
after 2040, nonelectric energy productionwill be changing with the
low emission technologies such as renewable energy.
We considered to reduce of emission from industry energy as the
highest GHGemission in Indonesian energy sector (ADB, 1997). To do
this development ofhydropower and geothermal for electric
generation have large potency with the lowmarginal cost per unit
output.
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Table 5. Economic Attractiveness of Technology Options for
Greenhouse Gases (GHG) Mitiga
No. Sector and category Technology Options Reference Technology
GHG reductionpotential,kg CO2 eq./MWH
1. Home water heating technology Solar Water Heater LPG-fired
water heater 1250 2. Add-on and end-of-pipe Combustion-Air Preheat
No air-preheating 133
technology for fired furnaces Flue gas utilization for
microalgae cultivation Disposal to atmosphere 1000 CO2 Recovery and
Disposal to reservoir ditto 1000
3. Improved technology for Geothermal Power Plant Pulv. coal
power plant 946 power generation Hydropower Plant Pulv. coal power
plant 1000
Biomass Cogeneration Power Plant Pulv. coal power plant 1000
Nuclear Power Plant (LWR
a)) Pulv. coal power plant 1000
Gas-Fired Combined-Cycle Plant Pulv. coal power plant 550.4
Nuclear Power Plant (LMFR
b)) Pulv. coal power plant 1000
IGCCc)
Power Plant Pulv. coal power plant 61.5
Solar PhotoVoltaic Power Plant Pulv. coal power plant 1000
PFBC
d)Power Plant Pulv. coal power plant 5
4. Improved technology for road Ethanol Vehicles Gasoline car
1693.6 transportation Electric Cars Gasoline car 967.8
Fuel Cell Vehicles Gasoline car 2080.7 Compressed Natural Gas
Vehicles Gasoline car 483.9
a) Light Water Reactor; b)Liquid Metal Fast Reactor; c)
Integrated (Coal) Gasification Combined-Cycle; d) Pressurized
Fluidized-Bed Co
Source : ADB, 1997
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Figure 1. Production of electric energy of Indonesia
Reference scenario
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclearoil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
KAB scenario KBG scenario
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
KAA scenario KAT scenario
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
KRA scenario KRT scenario
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2000 2020 2040 2060 2080 2100
Year
TKWH
hydro
nuclear
oil-r
gas-r
gas-n
coal-r
coal-n
IGCC
ADV-HC
ADV-LC
Source: Authors model results
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Figure 2. Production ofnonelectric energy of Indonesia
Reference scenario
-
2
4
6
8
10
12
14
16
18
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
KAB scenario KBG scenario
-
2
4
6
8
10
12
14
1618
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
-
2
4
6
8
10
12
14
1618
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
KAA scenario KAT scenario
-
2
4
6
8
10
12
14
16
18
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
-
2
4
6
8
10
12
14
16
18
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
KRA scenario KRT scenario
-
2
4
6
8
10
12
14
16
18
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
-
2
4
6
8
10
12
14
16
18
20
2000 2020 2040 2060 2080 2100
Year
Exajoules
RNEW
CLDU
NEB-HC
NEB-LC
OIL
GAS
Source: Authors model results
