I want to thank the Rector Dr. Akhmaloka and the ITB team for your generous hospitality in arranging my visit. I am delighted to be visiting the Institute of Technology of Bandung, one of Indonesia’s premier universities.
The U.S. Embassy has many areas of collaboration with ITB. One of our most successful is the American Corner here. The Corner Director Yoka Adam Nugraha runs one of the finest and most active of the eleven American Corners currently operating in Indonesia.
Today, I would like to discuss with you what Secretary Kerry has called “the greatest challenge of our generation:” the question of balancing energy security with the consequences of climate change while continuing to ensure economic growth.
Indonesia’s role in the global energy sector is changing. Throughout the 20th century, Indonesia was a major energy supplier to global markets – first of oil and then of gas. Now, Indonesia is focused on meeting the energy needs of its own rapidly expanding economy. Oil production is in decline, while oil demand is rapidly rising, leading to ever larger imports. Clearly, Indonesia is entering a new energy era. But as it enters this new energy era, it also faces another equally important and related challenge: climate change.
The United States and Indonesia are in a similar position with respect to both challenges. As net oil importers, U.S. and Indonesia are both interested in free and robust markets, and in diversifying the mix of our energy sources. As major greenhouse gas emitters, we are both responsible for reducing our impact on the climate damage we inflict on ourselves and on the rest of the world. Having so much in common on both of these major energy challenges of our day, we must work closely together toward solutions. That’s one of the reasons why climate change is one of the most important pillars of our cooperation under the Comprehensive Partnership established by President Obama and President Yudhoyono.
One solution we both agree on is to rapidly scale up renewable energy. We are doing that in the U.S. – renewable energy’s proportion of our overall energy use grew by almost 50% over the last decade.
We are partnering with Indonesia to help your country achieve similar progress using renewable energy. Our efforts are at an unprecedented level and include the Millennium Challenge Corporation’s $333 million Green Prosperity Program that aims to catalyze projects to develop renewable energy and sustainable natural resources management, the US Agency for International Development’s $16 million Indonesia Clean Energy Development program that is partnering with Indonesia to improve energy sector policy and coordination, increase the development of clean energy projects, and builds capacity for clean energy, and the U.S. Department of Energy’s $1.2 million Sustainable Electricity for Remote Indonesian Grids program, and other investments.
Supporting higher education in clean energy is another high priority. I have just come from having lunch with geothermal engineering students, attending ITB on scholarships supported by USAID and by Indonesia’s Star Energy, with the goal of developing local expertise to tap into Indonesia’s vast potential for geothermal energy, another significant renewable energy source.
The private sector must also play a leading role. Private U.S. companies are ready to help Indonesia develop geothermal and other means toward a cleaner, more robust energy network with technologies and services that are unmatched. For example, Chevron is producing significant geo-thermal energy in Indonesia, while at the APEC Summit this past October, Ormat Technologies signed a deal to develop a geothermal site in north Sumatra.
I often read in the Indonesian press that the United States should be doing more to reduce its greenhouse gas emissions. President Obama has taken the moral challenge head on. Thanks to President Obama’s Climate Action Plan, the United States is well on our way to meeting the international commitments to seriously cut our greenhouse gas emissions by 2020.
In fact no country has done more in recent years to reduce its greenhouse gas emissions. Over the past eight years, the United States has reduced our total carbon pollution by 6.9% between 2005 and 2011. We’ve done even better when it comes to CO2 emissions from the energy sector – the single largest contributor to U.S. emissions. In 2013, emissions from the energy sector were down 10% from 2005.
As Secretary Kerry explained during his visit to Jakarta in February, we have achieved these reductions by tackling the largest sources of pollution. We’re targeting emissions from transportation – cars trucks, and rail – and from power sources, which account together for more than 60 percent of the dangerous greenhouse gases that we release.
The President has put in place standards to double the fuel-efficiency of cars on American roads. And we’ve also proposed curbing carbon pollution from new power plants, while similar regulations are in the works to limit the carbon pollution coming from power plants that are already up and already running. At the same time, Americans have actually doubled the amount of energy we are creating from wind, solar, and geothermal sources, and we’ve become smarter about the way we use energy in our homes and in our businesses.
A huge amount of carbon pollution comes out of buildings, and it’s important in terms of the lighting, in terms of the emissions from those buildings, the air conditioning – all these kinds of things thought through properly can contribute to the solution. As a result, today in the United States, we are emitting less than we have in two decades. Through all of these efforts, we have learned that the balance between energy security and climate change must take into account a country’s environmental security. These three factors are not an either/or proposal; they are inseparable and must be balanced.
For instance, if Indonesia rapidly increases its use of biofuel from palm oil, improving its energy security, will that result in land use changes that will ultimately increase greenhouse gas emissions and further diminish Indonesia’s rich biological heritage? Or if Indonesia continues to rapidly ramp up coal use for energy security purposes (from 50% of power generation today to an estimated nearly two thirds by 2025), the resulting impacts on climate change and the environment may well diminish Indonesia’s economic, environmental, and food security.
On Monday, the Intergovernmental Panel on Climate Change released their Fifth Assessment Report that defined the potential cost of climate change to Indonesia. Analysts forecast the market impact on Indonesia could be significantly greater than the global average with an annual 2.2 % reduction in GDP by the end of the century with a disproportionate negative impact on farm laborers and the urban poor.
The report also warned that climate change may lead to a significant decline in Indonesia’s fisheries catch potential. Rising average temperatures are already approaching critical levels during the late rice planting season. And drought-associated fires increase vulnerability of agriculture, forestry and human settlements, particularly in peatland areas. This is the challenge Indonesia faces today: expanding energy access to more than 50 million citizens still without it, while not adding proportionately to greenhouse gas emissions.
This is not only a challenge for Indonesia; it is a challenge for all of us. As Secretary Kerry said, “Addressing climate change requires a substantial transformation of the world’s energy systems. Fossil fuel based energy production accounts for about 60 percent of global greenhouse gas emissions. At the same time, 1.3 billion people–almost 20 percent of the world’s population–currently lack access to electricity in their homes . . . Reducing energy poverty without dramatically increasing greenhouse gas emissions will be one of the key development challenges of the next decade.”
To meet this challenge, governments and international financial institutions need to stop providing incentives such as fuel subsidies for the use of energy sources like coal and oil. Instead, we have to use and promote innovative energy technology that entrepreneurs are developing all over the world. In Indonesia, for example, Sky Energy is building solar and battery storage and projects that can help power entire villages.
We will have to invest in new technology that will help us bring renewable energy sources like solar, wind, and hydro power to every community including those on some of the more remote islands in Indonesia, where many people currently rely on diesel generators and building coal powered power plants is uneconomical. This will not be easy for Indonesia, the United States, or any country, but it is possible and indeed necessary. In Indonesia, some of your largest state-owned companies – Bukit Asam and Pertamina – are coal and oil companies. Many of the wealthiest and most successful Indonesian businessmen got their start in the coal industry.
But it will be easier if you include in your calculation the long term costs of carbon pollution when using coal and oil. If you include these costs, then governments will find the cost of pursuing clean energy is far cheaper than paying for the consequences of climate change later. As students of one of Indonesia’s best universities and future leaders of the country, this is the challenge you will be facing.
You will be asked to make difficult choices regarding subsidies, land use, economic growth, development, poverty alleviation, to name a few. You will be asked to make changes to the way you live, accept tighter environmental laws and better enforcement, and be more open toward foreign investment to ensure access to the best energy technology available at the least cost. You will be asked to develop new technologies, find innovation solutions, and form partnerships within and outside Indonesia. But as future ITB alumni, I am confident you are up to this challenge and will not only accept it, but turn this challenge into new opportunities. In meeting these challenges, we can create jobs and economic growth in Indonesia and in the United States, but also throughout the world; we can create clean air, improve health, and make our neighborhoods better places to live; we can avoid disputes and possibly wars over oil, water, and other limited resources.
Most importantly, we can provide for our children and grandchildren a world that is clean and sustainable for the future. The U.S. is working with Indonesia on multiple fronts, and we stand ready to do more as we tackle these challenges together. As Secretary Kerry said, “With Indonesia and the rest of the world pulling in the same direction, we can meet this challenge, the greatest challenge of our generation, and we can create the future that everybody dreams of.”