Accelerating to net zero
Transportation. Manufacturing. Mining. Industries that have big power needs also need big change. Delivering radical decarbonisation by powering up renewables and building greener, sustainable infrastructures. Creating greater value for people, planet and performance.
Energy is a crucial input to all economic activity, and a secure and affordable energy supply has been a key enabling factor for global economic growth that has lifted millions out of poverty. However, with continued and overwhelming reliance on fossil fuel sources for primary energy supply, the production, supply and consumption of energy is responsible for approx. three quarters of global greenhouse gas emissions that drives global warming and climate change. The scientific evidence indicates that climate and weather extremes and their adverse impacts on people and nature will continue to increase with every additional increment of rising temperatures.
Transitioning energy production, supply and consumption away from fossil fuels and towards sustainable energy sources, without derailing economic growth and progressing steadily on the unfinished development agenda in developing countries is the greatest challenge of our times.
Achieving this is will be an extremely complex endeavour due to the increasingly narrow window of opportunity, and expected disruption to well established governance frameworks, political economy considerations, technology, financial and product markets, supply chains, and business models. Such a monumental change in status quo will impact all stakeholders, and present opportunities and threats.
Energy in Indonesia
Indonesia has had tremendous success in meeting its growing energy demand, and in shifting to modern, commercial energy sources. However, a significant proportion of the expansion in energy supply has been from coal, reflecting domestic resource abundance and national development policy that emphasised exploitation of national resources for economic growth. This is reflected in the electricity sector as well with over 87% of generation from fossil fuel sources.
The industrial & transport sectors together account or approx. 70% of final energy consumption from fossil fuels, indicating the required sectoral focus for a successful energy transition. Consequently, firms operating n these two sectors, along with the energy production & supply sector will see the most disruption, to achieve a successful energy transition.
Due to low electrification of the economy and overwhelming reliance on fossil fuels for electricity generation, fossil fuel dependence in the final consumption basket remains very high as well. Therefore, Indonesia’s energy transition will require focused, programmatic action on the supply and demand side.
Our perspectives
There are four major levers to decarbonising energy and the economy. All have to be applied simultaneously but to differing degrees nuanced to country, economy, sectoral and competitive position realities, to accelerate the energy transition without impacting energy security and affordability.
Planning, executing, monitoring and course correcting the transition will require a whole of economy perspective.
We believe in the power of the public sector to set the stage and address market failures, and that of the private sector to innovate to protect, create and sustain value within the boundaries set by the public sector.
To achieve accelerated and sustained energy transition across the economy, we believe that a programmatic approach covering governance frameworks, market structures, technology solutions, business models, financing, energy & carbon pricing, and enhanced private sector participation is essential.
We support the public sector in setting the stage considering the greatest good for the broadest set of stakeholders, and preparing to address market failures if they do occur. We work with the private sector in protecting, creating and sustaining value in a socially responsible way, within the field of play set by the public sector.
Green is the new gold
This is mining’s moment. The sector must increase capacity to provide critical minerals for the energy transition, while reducing carbon emissions. The move to low-carbon mining and circularity is key. Costs can be controlled by relocating, reinvesting and realigning vital inputs. And only then can the greener minerals of tomorrow be born. Our climate depends on them.
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An interplay of electrification and alternative fuels
Whilst Electric vehicles are a true megatrend for the 2020s they are not the whole picture. To decarbonize by 2050, the world will need to embrace alternative fuels as well. Scalability and commercial viability will be key. Sustainable Aviation fuel, Hydrogen and Biofuels will become an important power source of the future.
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A new design for life
70% of greenhouse gas emissions come from energy, industry and buildings combined so net zero won’t happen without a coordinated move to green infrastructure – at scale. We must radically reimagine how we live, work, travel and trade; how we produce and distribute. And our future cities? They will need customised, tech-powered green infrastructure solutions to design, create and sustain them. There is no greater challenge.
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A new formula for success
For the chemicals sector to catch up in the great energy transition, it must make huge strides. Moving to green energy, clean feedstocks and circularity; collaborating with agriculture and manufacturing and tapping into the potential of new and substitute chemicals. Decarbonising hard-to-abate sectors is a complex formula – and vital to get right.
Learn moreEnd-to-end ESG and energy transition solutions
Our Energy Transition teams is made up of various industry, sector and service experts, whose diverse background and shared values are unified around a common driver to help clients anticipate challenges and unlock potential across the entire project-life cycle.
We focus on value creation and preservation, partnering with clients to support an equitable transition that tackles their specific decarbonisation and renewable energy imperatives, and the complex and multi-faceted ESG issues that result from their transition pathways.
We combine deep insight with human-led technology to build coherent strategic models
We combine deep insight with human-led technology to build coherent strategic models that map risk variances and market shifts, revealing environmental and social impact potential and corresponding commercial opportunity.
Energy transition & ESG strategic narrative
- Developing narrative around your ambition to move from current to future state, identifying the shifts across your energy value chain
- Assisting with storytelling and change management for sharing your vision with internal and external stakeholders
Energy Transition & ESG Roadmap
- Building a detailed roadmap with actions across multiple horizons to connect near and longer-term transition activities
- Developing plans across workstreams* including climate change action, new operating models and infrastructure, economic development and workforce change, resource extraction and recovery
*Note that any of the supporting work streams can also be developed as standalone strategic roadmaps
Delivering sustained financial outcomes built on a deep understanding of market needs and expectation
Delivering sustained financial outcomes built on a deep understanding of market needs and expectation, we design, test and deploy investment solutions that align economic growth potential with environmental and social value.
Renewable energy project development support
- Supporting commercials, financing and execution of renewable energy projects including legal and tax advice
Clean energy financing
- Identifying and securing clean energy finance including understanding expectations of financial institutions and investors
Creating value from ESG in deals
- Identifying and activating the ESG levers that make companies more attractive to investors
Blended finance
- Involving the systemic and strategic use of development finance and philanthropic funds to mobilise and engage private capital at scale through concessional financing and risk coverage.
- Aiming to deliver measurable social, environmental and economic impact.
- Delivering market-based, risk-adjusted returns for private investors that meet business goals. This is often achieved through the allocation of some risks in part or full to the development finance tranches on non-commercial terms.
- Involving the allocation of certain risks to public or private parties depending on who is best placed to manage and mitigate them.
- Complement or supplementing the existing potential financing sources and correcting market failures, rather than seeking to compete with the private sector.
Green financing
Five key investments are required to accelerate the energy transition in Indonesia:
- the development of transmission and distribution networks
- the early retirement and phase-down of coal-fired power plants starting in 2025 and ending in 2056
- dispatchable renewable energy acceleration
- variable renewable energy acceleration
- the development of renewable energy supply chains.
Leveraging firm-wide capability in audit, advisory and governance, we build robust risk reporting and governance frameworks that isolate potential threats and elevate opportunity.
Leveraging firm-wide capability in audit, advisory and governance, we build robust risk reporting and governance frameworks that isolate potential threats and elevate opportunity.
ESG strategic review and advisory support
- Assessment of materially significant risks and opportunities related to energy transition and broader sustainability scopes
- Advisory support on reporting and governance frameworks as to what is fit-for-purpose and intentions
ESG training
- Training support for Boards and Executive teams on the growing expectations around ESG reporting and action plans
Highlighting and providing legal solutions, tax optimisation and risk perspectives to address the complexities of energy transition.
Highlighting and providing legal solutions, tax optimisation and risk perspectives to address the complexities of energy transition.
Regulatory & Legal Support
Our legal team has deep and wide-ranging knowledge of the sophisticated legal frameworks across Energy, Utilities and Resources sectors. We have advised many reputable clients and investors on energy projects (including wind and solar projects) across the full project lifecycle, from planning up to multi-year operations. Our ability and experience in providing advice are among our key strengths when highlighting and providing legal solutions to address the complexities of energy transition. Energy companies are competing to become part of Indonesia’s energy transition initiatives and to combat climate change. Diversification of energy, energy efficiency and energy security are a few of the main topics around energy transition, and activities executing those initiatives may have legal issues or consequences (both regulatory and contractual). Legal compliance and governance play roles of the utmost importance in realising the nationwide objectives of a just energy transition. We can assist you with the following regulatory and legal support:
- We can analyse the legal and regulatory frameworks governing energy transition, encompassing mandatory and voluntary reporting obligations, decarbonisation strategies, renewable energy incentives, potential legal actions pertaining to environmental compliance within the Indonesian jurisdiction, and comprehensive legal challenges that may potentially hamper energy transition.
- We can provide tailored legal solutions to navigate complex regulatory landscapes in the energy sectors. This includes guidance on regulatory compliance, risk management, and enhancing competitiveness within evolving legal frameworks.
- With a deep understanding of the existing legal frameworks and performance of laws, we offer specialised expertise across various domains, including the transition to renewable energy sources. We can review contractual arrangements that are already in place, and identify potential legal issues and/or challenges that may arise from energy transition initiatives (such as early termination, rights of ownership, concessions, etc.).
- Leveraging our legal expertise, we may review sustainable investment structures and financing options, such as green bonds, carbon credits trading, and sustainability-linked loans from a legal perspective. This enables businesses to align their financial endeavours with their sustainability objectives, while ensuring compliance with relevant legal requirements.
Tax Support
With the Energy Transition as one pivotal ecosystem for a nation’s net-zero commitment/target, the Government of Indonesia has applied and will introduce more fiscal/taxation incentives and disincentives. Further new investment for decarbonisation as part of the Energy Transition is typically new frontier, and lacks both tax guidance and precedent. With our in-depth understanding of tax rules and our global network, we should be able to navigate you along any sustainability path in the Energy Transition, particularly from tax optimisation and risk perspectives. We can assist you in the following tax support procedures:
- Tax Advisory on Energy Transition initiatives. This may include renewable energy investment, phasing out/down of coal-fired power plants, carbon storage investment, development of smart grids, etc., either locally or involving cross-border transactions.
- Tax Advisory on the possible integral parts of the Energy Transition, such as decarbonisation monetisation in the form of carbon market trading.
- Exploring potential tax incentives/facilities which can optimise the tax efficiency in investment related to Energy Transition, or activities and assistance in obtaining tax incentives/facilities.
How we can help
Our Energy Transition team helps clients unlock the environmental, social and economic impact of Indonesia’s energy transition.
We connect insight and expertise from a diverse capability set, shaping ecosystems that help organisations solve seen and unseen energy transition issues across their value chains.
Our experience drives confidence and trust in the delivery of meaningful outcomes, ensuring clients stay ahead of the forces reshaping the world, and unlocking their potential to find, create, preserve and recover value.
Speak to us about how we can support you in solving your energy transition challenges in a way that protects, create and sustains value.
Our presence
Fuelling our future
Fuelling our Future campaign is an integral part of The New Equation Strategy, aligned to both the ESG and transformation platforms and a key domain of Value in Motion. Our goal is to deliver sustainable outcomes by addressing the global transition to net zero and support our clients in their application of alternative fuels and sustainable infrastructure.
We work collaboratively with our community of PwC solvers and clients, joining forces with alliance partners to create a unique combination of skills in strategy, tech-enabled project delivery, financial and deals value creation. We aim to become a ‘go-to’ partner for the following domains: sustainable transportation, sustainable chemicals, sustainable infrastructure and green minerals.
Our participation at the 2022 B20-G20 Events
B20 Conference
PwC Indonesia at the B20-G20 Dialogue: Energy, Sustainability & Climate Task Force - 30 August 2022
Accelerating the Transition to Sustainable Energy Use
PwC Indonesia at the B20-G20 Webinar: Energy, Sustainability & Climate Task Force - 10 August 2022
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