Indonesia Drives Energy Conservation to Empower Sustainability

On June 16, 2023, the Indonesian Government introduced a landmark change in the energy sector through Government Regulation Number 33 of 2023 on Energy Conservation (“GR 33/2023”), supplanting the previous regulation, Government Regulation Number 70 of 2009 (“GR 70/2009”). This new regulation signifies a paradigm shift in energy conservation efforts, imposing updated obligations on both energy users and suppliers. One of the pivotal alterations is the introduction of the "Energy Management" program, compelling specific industries to actively participate in energy conservation initiatives. These measures encompass a spectrum of activities, including energy conservation training, certification processes, and rigorous energy audits. Additionally, GR 33/2023 underscores the government's proactive role, offering financial support to bolster energy conservation endeavors, demonstrating a firm commitment to sustainable energy practices in the country

The preparation of an energy efficiency program must include details about the planned actions, the types and amounts of energy used, the use of energy-efficient devices, measures taken to enhance energy efficiency, the quantity of products or services, and the energy performance.

A. Energy Conservation in Energy Utilization

According to GR 33/2023, certain business sectors (based on specific energy consumption criteria) are obliged to implement and report their Energy Management implementation to the Ministry of Energy and Mineral Resources (“MoEMR”) every year. For businesses not falling within this category, although it's not mandatory, there is a strong recommendation to embrace Energy Management practices.

The business sectors that are obliged to implement and report their Energy Management are:

1. Energy Providers (e.g., power plants) who utilize Energy Sources and/or Energy greater than or equal to 6,000 (six thousand) equivalents to tons of oil per year
2. Transportation sector that utilizes Energy Sources and/or Energy greater than or equal to 4,000 (four thousand) equivalents to tons of oil per year
3. Industrial sector that utilizes Energy Sources and/or Energy greater than or equal to 4,000 (four thousand) equivalents to tons of oil per year
4. Building sector (e.g., office building management, shopping centers, education centers, hotels, apartments, and/or hospitals) that utilizes Energy Sources and/or Energy greater than or equal to 500 (five hundred) equivalents to tons of oil per year

Please take note that GR 33/2023 specifies that the requirement to carry out the aforementioned Energy Management activities will be enforced within a period of 12 months from its enactment, commencing on June 16, 2024.

B. Various Efforts for Energy Conservation

GR 33/2023 also regulates the subsequent activities concerning energy preservation:

1. Energy Performance Standards and Energy-Saving Labels
   

   Energy-efficient and/or energy-saving labels will be granted as evidence that a product has fulfilled energy performance standards, which will be affixed by the producers/importers. Energy-efficient technologies must comply with the Domestic Component Levels (Tingkat Komponen Dalam Negeri, “TKDN”)

2. Financing
   

   The government will cooperate with the Indonesian Central Bank (Bank Indonesia, “BI”) and the Financial Services Authority (Otoritas Jasa Keuangan, “OJK”) to give financial support for energy conservation.

3. Development of Energy Conservation Services Businesses
   

   Encouragement is given to businesses engaged in energy conservation services to enhance their support for energy preservation. This support encompasses:

   
   
   1. Investment Grade Energy Audit;
   2. Financing of Energy Efficiency Projects;
   3. construction, development, and/or monitoring of projects related to Energy Efficiency Projects;
   4. operation, maintenance, and reparations of energy installations; and/or
   5. measuring and verification of energy performance.

GR 33/2023 provides a comprehensive framework to assist energy providers, users, producers, and importers in their energy conservation efforts. This support encompasses the provision of information, consultation services, and facilitated financial access.

Businesses actively engaged in energy conservation efforts will receive incentives, including favorable taxation policies and official recognition certificates issued by the government. Conversely, companies failing to implement Energy Management measures may face formal written warnings, publication in mass media, and/or the potential revocation of incentives as disciplinary actions.

Conclusion

GR 33/2023 brings significant changes to Indonesia's energy sector, focusing on energy conservation. It introduces the "Energy Management" program, requiring specific industries to participate. These sectors must appoint energy managers, develop energy efficiency plans, conduct regular audits, and implement audit recommendations. GR 33/2023 also establishes Energy Performance Standards and Energy-Saving Labels for products, encourages financial support through collaborations with financial institutions, and provides incentives like tax benefits and government recognition for businesses actively conserving energy.

For non-compliant companies, there are penalties such as warnings and public exposure. Overall, GR 33/2023 aims to promote sustainable energy practices and accountability in Indonesia.