Strategies for Implementing Renewable Energy Initiatives Within the PSC Fiscal Frameworks: An Indonesian Case

Abstract

Abstract Renewable energy initiatives are of utmost importance on a worldwide level, as they address environmental concerns and promote sustainable development. Customizing these activities to the unique characteristics of each country is crucial for attaining success. Developed nations place a higher importance on technological advancements and the integration of power grids, whereas undeveloped countries prioritize making electricity accessible to all and implementing decentralized energy systems. The importance lies in the reduction of carbon emissions, ensuring energy independence, and fostering economic growth. Countries should use their unique resources, such as solar, wind, or hydropower, in order to maximize their impact. The implementation of various renewable energy solutions demonstrates the growing international collaboration and demonstrates a shared commitment to a greener and more resilient future. Indonesia, adopting a fiscal framework known as a Production Sharing Contract, aims to achieve net zero emissions by the year 2060. The energy sector, which is responsible for the highest level of emissions, including those from oil and gas, has implemented a program aimed at reducing these emissions. The government entity responsible for managing the PSC contract, SKK Migas, has a program focused on renewable energy efforts and low-carbon initiatives. This program is coordinated with oil and gas companies. The approval of the program and budget for low-carbon initiatives provided by SKK Migas provides a positive signal for investment by oil and gas companies, where they receive certainty that the low-carbon initiatives program will be reimbursed by the Indonesian government through a cost recovery mechanism.