Climate Change
Environmental, social, and governance (ESG) issues have received substantial interest from national and global groups. Therefore PT PERTAMINA (Persero) is committed to managing ESG issues by applying sustainability principles to our operational and business activities.
Climate Change Issue and NREEC Development
We manage climate change issue with strategy and planning, both for operations (infrastructure) and the physical environment. The efforts include GHG emissions reduction, renewable energy development, as well as clean and environmentally friendly production. The management of climate change issues is integrated and involves all Directors and company officers in Holding and Subholding, subsidiaries and operating units/business units. The management of the climate change issue is included in the Board of Directors' KPI.
In addressing the energy transition from fossil energy to green energy, PERTAMINA supports the development of new, renewable energy and energy conservation (NREEC) through the establishment of Power and & NRE Subholding. Transition to green energy in the future will reduce the demand for oil and gas, which is Pertamina's current core business. On the other hand, the transition to green energy opens up future business development opportunities for PERTAMINA. It supports the transformation as an energy company on its journey to realize a 10 GW power project.
Sustainable Efforts to Develop NRE and Use of Environmentally Friendly Materials
As a response to climate change issues and low carbon development, PERTAMINA has been developing NRE using environmentally friendly materials that are abundant in Indonesia. In 2020, the use of environmentally friendly materials increased in volume and type compared to 2019. The development plan for new and renewable energy projects until 2026 aims to increase the total generating capacity by approximately 10.2 GigaWatt (GW) and manufacture by around 30.2 GWh to increase the Indonesia energy mix to 23% by 2025. The projects consist of 5.7 GW gasification power plant; 1.1 GW of geothermal energy; 3.4 GW of solar energy, bioenergy, hydro and wind power plants; electric vehicle battery of 30.2 GWh. PERTAMINA has allocated investment of around USD6.96 billion. NRE development is the responsibility of Power & NRE Subholding, while the development of palm oil into biofuels is carried out by Refining & Petrochemicals Subholding. The evaluation is conducted by the Board of Directors through assessment of reports and KPI achievements. The evaluation results showed that NRE development in the reporting period has been in line with the roadmap.
NRE development opens new business opportunities for PERTAMINA as a world-class energy provider. However, it also faces challenges, including Government policies that prioritize NRE for the electricity sector. Another challenge is that NRE development must remain relevant in the next 10 to 20 years, especially in terms of technology, to prevent it from becoming outdated. PERTAMINA has allocated USD6.96 billion for the NRE development up to 2026 to realize the 23 percent of national energy mix target by 2025.
In 2020, PERTAMINA developed several forms of NRE. One of them was geothermal, which covered 14 working areas with concession rights and 2 working areas with geothermal permits. The total installed capacity as of 2020 reached 1,877 MW, consisting of 672 MW own operation and 1,205 MW joint operation contracts (JOC).
Another form of NRE is bioenergy based on CPO, which is a renewable material. At the end of 2019, the Company started producing biodiesel B30, with a total increase in FAME absorption and the assignment given by the Government to PERTAMINA of 7.15 million Kiloliters (KL) in 2020. According to data from the Ministry of Energy and Mineral Resources, biodiesel consumption in Indonesia continues to increase, so that the opportunities are quite promising in the future.
In 2020, PERTAMINA successfully tested 1,000 barrels of Green Diesel (D100) production at Dumai Refinery. Previously, the Company also conducted a co-processing trial of Green Gasoline at the Cilacap Refinery. The trials continued for Green Avtur co-processing, which was targeted by the end of 2020. The Green Diesel D100 is produced from processing CPO into refined, bleached and deodorized palm oil (RBDPO). Later on, the product is reacted using the Red and White catalyst produced by PERTAMINA in collaboration with the Bandung Institute of Technology (ITB).
PERTAMINA has built and operated a 2.4 MW Biogas Power Plant (PLTBg) in the Sei Mangkei Special Economic Zone (SEZ), Simalungun, North Sumatra, in collaboration with PT Perkebunan Nusantara (PTPN) III (Persero). PLTBg supplies electricity to the SEZ, which raised the interests of various companies to use renewable energy sources for their business sustainability. Pertamina has also collaborated with PTPN II (Persero) for the operation and maintenance of 1 MW PLTBg Kwala Sawit and 1 MW PLTBg Pagar Merbau in Langkat Regency, North Sumatera.
During the reporting period, PERTAMINA continued the Java-1 independent power plant (IPP) project, which integrated floating storage and regasification unit (FSRU) with a 1,760 MW combined cycle power plant (PLTGU). Gas from the FSRU flowed through a 21 kilometers pipeline to the PLTGU Jawa-1. The power generated will be sent via a 500 kV transmission line to the PLN substation in Cibatu Dua District, Bekasi Regency, West Java. The operation of PLTGU Jawa-1 has managed to increase the electricity supply for 11 million customers.
NRE development is the Company's support in achieving Sustainable Development (SDG) Goal 7.
Although PERTAMINA has started to develop NRE as energy for the future, we still fulfill the national oil and gas supply. During the reporting period, we continued to seek and increase hydrocarbon reserves to maintain the sustainability of oil and gas production. The hydrocarbon reserves are needed because it is a non-renewable and consumable material. Other non-renewable materials that are consumable in the oil and gas production process are chemical auxiliaries.
Sustainable Energy Efficiency Efforts
Efficient use of energy is one of the efforts to support PERTAMINA’S efficiency strategy in dealing with the three shock effects of the COVID-19 pandemic. Energy efficiency is implemented through various policies, initiatives and sustainable innovations, including the use of NRE. PERTAMINA succeeded in making energy consumption savings during the reporting period of 92.57 million GigaJoule (GJ). The implementation of energy efficiency is the responsibility of the operational and engineering functions, while the HSSE function acts as a consultant or advisor regarding energy efficiency programs. The implementation and achievement of energy efficiency performance is evaluated through a mechanism for assessing the results of regular energy audits and periodic reports.
Emission Reduction
PERTAMINA supports the Government's efforts to reduce greenhouse gas (GHG) emissions and other emissions that cause global warming. The attempts to reduce emissions from operations and production activities include initiatives to utilize gas flares and the Blue Sky Program to urge people to use low-carbon emission fuels. Total GHG emissions reduction in the reporting period reached 6.79 million ton CO2eq. The Board of Directors assesses the performance of GHG emission control through periodic reports to the authorities and the achievement of KPIs for HSSE Function in holding company, sub-holding companies, and subsidiaries. The evaluation results showed that GHG emission reduction had met the set target.
PERTAMINA’s efforts to reduce GHG emissions have become part of the Indonesian Government's national program, which has been carried out since 2010. The calculations referred to the Methodology for Inventory of Emission Sources and the Calculation of Emission Load for Oil and Gas Industry Activities at PT Pertamina (Persero) in 2010. PERTAMINA recorded total GHG emissions of 25,078 million tons CO2eq in 2010, which was determined as the baseline for the measurement of GHG emission reduction. The amount derived from upstream activities was 9.22 million tons of CO2eq, refining 15.42 million tons of CO2eq, marketing and trading of 0.48 million tons of CO2eq. By the end of 2020, PERTAMINA managed to reduce GHG emissions by 6.7 million tons of CO2eq, and the total decrease in emission reached 27.0% from emissions measured in 2010. Several emission reduction initiatives carried out include energy efficiency in the upstream, refining, and gas segments; utilization of gas flare in the upstream and refining segments; fuel gasification in the upstream segment, and utilization of solar panels.