Capability of Indonesian Oil and Gas Companies to Implement Net Zero Emissions by 2050

This article has been translated and summarized by CORIM Indonesia as part of our highlights of services. We has not completely checked the accuracy and admits no responsibility for the content.

By InfoPublik.id

---

News | January 17, 2024

Companies in the oil and gas (migas) sector around the world are commited to achieve net-zero emissions (NZE) in response to growing concern about climate change. The term "Net Zero" has progressed from a physical climate science notion to an issue of debate in the social, political, and economic spheres (Fankhauser, 2022).

Indonesian oil and gas companies are embarking on their New Zero (NZE) journey, aiming to lead the future energy industry. Despite a profitable year last year, the sector's medium-term prospects remain uncertain. As Indonesia's economy relies on the oil and gas industry, the need for sustainable, ESG-based business practices is increasing. Indonesian companies are aiming to meet clean emission targets, as the Southeast Asian region remains largely reliant on fossil fuels, accounting for 78% of energy demands.

Oil and gas companies worldwide are aiming to achieve net zero emissions by 2050, with major corporations like Aramco and Shell aiming for this goal. They plan for corporate transformation and low-carbon energy development, including biofuels, hydrogen, electric vehicle charging stations, and solar and wind power plants. However, ExxonMobil is pessimistic about achieving net zero emissions and insists on ending oil exploration immediately to achieve this goal.

Indonesia's Situation Indonesia's government is committed to reaching net zero emissions by 2060 through various regulations and promises. The National General Energy Plan (RUEN) encourages the use of EBT and ecologically friendly technology to reduce reliance on fossil fuels. National legislation supports Indonesian oil and gas businesses in achieving clean emissions. A step-by-step plan focuses on renewable energy growth, particularly solar, hydro, and geothermal power. The International Energy Agency (IEA) advised Indonesia to switch to renewable energy and reduce coal dependency. Renewable energy is expected to replace coal and oil at a lower cost, with a 41% drop in coal usage forecasted by 2030 and a further 87% drop by 2050. Oil and gas businesses in Indonesia are under pressure to reduce emissions and focus on environmental sustainability, with climate change and strict environmental rules posing additional corporate concerns.

Indonesian oil and gas businesses can achieve net zero emissions by implementing the following steps:

1. Using Business Intelligence: Business Intelligence allows companies to leverage their industry knowledge and experience for low-emission operations and renewable energy supplies, optimizing data and making informed decisions about capital allocation, investments, and operations.
2. Resources Strategy: Companies can attract investors by focusing on low-carbon solutions like carbon capture, utilization, and storage (CCUS) or sequestration, thereby enhancing energy security and transition.
3. Diversifying Energy Portfolio: Investing in renewable energy sources like solar, wind, and bioenergy can diversify businesses and reduce greenhouse gas emissions by reducing reliance on fossil fuels.
4. Technology Innovation and R&D: Businesses should promote technology innovation and R&D to offer environmentally friendly solutions, including carbon recovery, low-carbon fuel use, and renewable energy in oil and gas operations.