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Indonesia’s waste to energy: Assessing opportunities and barriers

Indonesia’s waste to energy: Assessing opportunities and barriers

Investigating the potential of waste to energy technologies as a solution to Indonesia’s growing waste and energy challenges.
Good Practice
  • Market analysis
  • Understanding barriers and opportunities
  • Political commitment
  • Capacity building
  • Understanding public reliance on existing waste treatment methods
  • Awareness training for public knowledge
  • Feed-in-tariffs
  • Tax reduction policies
Themes
  • Energy
  • Finance
  • Market analysis
  • Waste Management
Location

Indonesia, Asia

Year Published

2014

Case Summary
Background

The waste stream compositions in Indonesia, with their high concentrations of organics, make Waste-to-Energy projects a viable opportunity for the country. Over 50% of the municipal solid waste in 2008 was from organic materials, and 40% of total waste was sourced from households. The decomposition of highly organic material leads to numerous environmental externalities, and by some inventories caused the waste sector to account for 25% of the country’s green house gas emissions in 2005. Thus, Indonesia’s implementation of waste-to-energy technologies is one solution to curb the country’s waste problem while increasing its share of renewable energy. This market assessment report delves into opportunities to increase the economic environment for waste-to-energy projects in order to spur development and create viable markets, by focusing on barrier identification and recommendations for deployment. Multiple economic, social, and political barriers are identified and presented with accompanying solutions for building investor and social confidence in the Indonesian waste-to-energy market. The increasing municipal waste streams, coupled with strong economic growth in Indonesia, position it as a potentially ripe market for waste-to-energy technologies, if the appropriate policies and strategies are applied.

Actions profiled

The five part assessment includes; (1) understanding Indonesia’s waste and energy situation; (2) examining the viability of waste-to-energy technologies; (3) Evaluating existing and new policies; (5) Barrier identification and finally (6) solutions to be implemented by the Indonesian Ministry of Energy and Mineral Resources. When identifying the economic value of waste-to-energy technologies, an evaluation of cost and output from each waste category and technology was established by comparing with those of other countries (see full report for further information). An analysis and overview of Indonesia’s existing policies showed that the government has actively engaged in greenhouse gas emissions reduction in the past decade. However, as landfills such as Bantar Gebang approach maximum capacity, waste management policies have re-entered the political agenda. In 2011, Indonesia’s national action plan for greenhouse gas emission reduction includes a target of reducing 48-78 MtCO2 from the waste sector.

Outcomes

The challenges and solutions developed in this study focused on strategic partnerships among industry, regulators, and communities. Identified barriers were categorized into broad areas such as (i) economic (revenue, cost and policy included), (ii) lack of capacity (limited experience) and political (politicization of projects) and (iii) social (addressing the income of waste pickers). Having a long-term national agenda, supportive of local initiatives through guidance and strategy, is identified as a regulatory barrier that is solvable through improved government capacity. Educating locals and supporting local concerns is necessary, such as those of waste pickers who depend on waste for their livelihood. The expected revenue of 15% internal rate of return from waste-to-energy facilities is often not achieved, and thus requires either an increase in the tipping fee for waste pickers or the feed-in tariff, or a reduction in the facilities cost.
Collaborators
  • Indonesian Ministry of Energy and Mineral Resources (MEMR)
  • The Carbon Trust
  • Institute for Essential Services Reform
  • Waste to energy developers
  • The UK Foreign and Commonwealth Office
  • South East Asia Prosperity Fund funded the report

Results supported byUNDPWorld Resources InstituteTransparency partnership