Indonesia contributes to 5 per cent of CO2e emissions globally, making the nation a essential actor within the world combat towards local weather change. We joined forces with world actors beginning with the 2015 Paris Settlement, recognising that we should curb the worldwide common temperature beneath 1.5 levels Celsius from all components of the financial worth chain in comparison with pre-industrial ranges.
One of the vital vital components of the financial worth chain is industrial processes, similar to metal and cement manufacturing, that are energy-intensive. In reality, Indonesia’s emissions from trade (20 per cent) are increased than electrical energy (14 per cent), based on Breakthrough Power. After we zoom in on heavy industries, they’re answerable for practically 40 per cent of greenhouse gasoline emissions.
Industrial processes, primarily in metal, cement, and petrochemicals, require a lot power, primarily from heating, producing an enormous quantity of greenhouse gasoline emissions. For instance, steelmaking makes use of fossil fuels for burning, similar to coal, to transform iron ore into extra refined supplies.
As well as, the chemical course of for producing the commodities additionally emits greenhouse gasoline. The cement trade releases carbon dioxide because the pure a part of the manufacturing course of, a byproduct of heating the limestone to supply the cement’s main element.
As a fast-growing nation by way of GDP, Indonesia’s heavy industrial actions (primarily metal and cement) have proliferated over the previous decade. It’s poised to change into one of many high 3 world heavy trade commodity producers. In line with the Indonesian Iron and Metal Business Affiliation, the nation’s metal manufacturing capability is predicted to achieve 40 million tons yearly by 2025, up from 20 million tons in 2019.
The nation is already the fourth-largest cement producer on the earth, and its manufacturing capability is predicted to extend additional within the coming years.
“
Decarbonising Indonesia’s metal and cement trade requires a multi-faceted method involving policymakers, trade gamers, and different stakeholders.
In line with the International Cement Listing, Indonesia’s cement manufacturing capability was 109 million tons in 2020 and was anticipated to achieve 120 million tons by 2022. Indonesia’s ample pure assets, similar to iron ore and limestone, drive this. With out greening of the heavy industries, this can change into a serious supply of greenhouse gasoline emissions for Indonesia sooner or later.
Science factors out that the transition in the direction of sustainable practices in heavy industries similar to metal and cement manufacturing is a difficult process. It’s referred to as one of many ‘onerous to abate’ sectors for causes. Its excessive warmth requirement, primarily met via fossil gasoline combustion, ends in excessive greenhouse gasoline emissions.
Furthermore, the capital depth of those industries is important, with an extended asset life, making it difficult to undertake extra sustainable applied sciences and infrastructure, as a lot cash is required—an funding that, with out incentive, has unclear financial advantages.
These are exacerbated as a result of the Indonesian metal and cement trade is primarily dominated by profit-seeking and personal firms that function on low-profit margins because of intense competitors within the world market. Any change in demand patterns can considerably influence the profitability of those industries, making it tough to spend money on sustainable practices.
Moreover, these industries face competitors from cheaper producers in different nations, resulting in a possible lack of market share in the event that they improve their costs to cowl the price of transitioning to greener applied sciences. The transition to sustainable practices additionally requires vital funding in analysis and growth, which is difficult to finance with out authorities or supporting entities’ incentives.
In gentle of this, Indonesian firms and the federal government have begun implementing decarbonisation initiatives within the heavy trade sector, albeit nonetheless inadequate. Within the cement trade, firms are implementing waste warmth restoration techniques, which seize the warmth generated throughout manufacturing and repurpose it to generate electrical energy. Some have put in a waste warmth restoration system of their crops. As well as, firms are additionally exploring various fuels, similar to biomass and municipal waste, as an alternative to fossil fuels.
Within the metal trade, firms are implementing energy-efficient applied sciences, similar to electrical arc furnaces, which use electrical energy as an alternative of fossil fuels to supply metal. Corporations have put in an electrical arc furnace, which has helped scale back its carbon footprint considerably if the supply of energy is from renewables. Hydrogen as an alternative to coal within the metal manufacturing course of can be being explored.
From the federal government aspect, the Indonesian Ministry of Business has launched Inexperienced Business Requirements for the cement trade and several other different heavy trade sectors, which set caps on the power used to supply one ton of product. Future developments of those requirements and the implementation of extra mechanisms to speed up decarbonisation, such because the carbon tax, are anticipated.
Nonetheless, the above initiatives are nonetheless of their early phases, as decarbonising Indonesia’s metal and cement trade requires a concerted effort from policymakers, trade gamers, and different stakeholders. Listed here are 4 suggestions on how one can decarbonise the metal and cement industries in Indonesia:
- Set up extra concrete coverage assist and pathways: The federal government ought to set up clear coverage assist and pathways to facilitate the decarbonisation of the metal, cement, and petrochemical industries. This consists of setting emissions discount targets and methods particular for every sector and firm, implementing carbon pricing mechanisms, and offering incentives for adopting inexperienced applied sciences—all are nonetheless within the grey space right this moment.
- Leverage worldwide finance establishments: Corporations and the federal government can leverage Worldwide Finance Establishments, such because the World Financial institution, Worldwide Finance Company (IFC), and Asian Improvement Financial institution (ADB), to decrease funding danger and subsidise inexperienced premiums. These establishments can present financing for inexperienced know-how adoption, and their assist may also help scale back the price of capital for inexperienced initiatives. As well as, they’ll present technical assist to decrease the chance of adoption of inexperienced applied sciences with capability constructing and know-how requirements.
- Construct inexperienced metal, cement, and petrochemicals demand: To scale back the “inexperienced premium” on low-carbon merchandise, the trade must construct inexperienced product demand by selling the advantages of utilizing low-carbon metal, cement, and petrochemical merchandise. This may be achieved via the federal government’s and corporations’ public consciousness campaigns, inexperienced procurement insurance policies, and certification schemes.
- Associate with know-how options suppliers: The trade can companion with know-how options suppliers, similar to renewable power firms, to ease know-how adoption. These suppliers may also help the trade undertake renewable power options, energy-efficient applied sciences, and waste warmth restoration techniques, which may considerably scale back the trade’s carbon footprint. As well as, extra excessive know-how adoption (similar to hydrogen) can be simpler to undertake with cutting-edge companions.
In conclusion, decarbonising Indonesia’s metal and cement trade requires a multi-faceted method involving policymakers, trade gamers, and different stakeholders. That is crucial for attaining web zero for Indonesia—and with out realising that decarbonising heavy trade is essential, Indonesia will face difficulties in its journey in the direction of decarbonisation.
Aufar Satria is the Commissioner of the Society of Renewable Power Indonesia and is a candidate of the College of Cambridge MBA and Harvard College MPA packages. Rauf Usman is the Chairman of the Society of Renewable Power Indonesia and advisor to firms and governments within the sustainability sector.
