The Indonesian Ministry of Energy and Mineral Resources (ESDM) is drafting regulations to offer incentives and tax relief to green hydrogen developers, aiming to speed up the growth of the country’s green hydrogen industry.
“Measures aiming to speed up the growth of the country’s green hydrogen industry will be included in the Draft Law on New and Renewable Energy (EBET), which is currently under review. In addition, the government is also evaluating a national hydrogen strategy expected to reduce fossil fuel usage,” Andrian Feby Misna, Director of Various New and Renewable Energy (EBT) at the Directorate General of New and Renewable Energy and Energy Conservation (EBTKE), Ministry of ESDM, said as quoted by Antara on Friday, June 21, 2024.
Andrian noted that the hydrogen regulations will also cover standards for tax holidays, tax allowances, taxes, and the fundamental regulations for carbon trading.
According to ESDM data, the target for hydrogen production is set to reach 9.9 Mtpa (million tons per year) by 2060. This target is intended to meet the demands of various sectors: industry (3.9 Mtpa), transportation (1.1 Mtpa), electricity (4.6 Mtpa), and household gas networks (0.28 Mtpa). These four sectors could also be potential export commodities.
Julfi Hadi, President Director of Pertamina Geothermal Energy (PGE), emphasized that price subsidies and funding are crucial elements that need to be prepared by the government, in addition to incentives and tax relief.
“So far, there are no standard guidelines. We hope that in the future, there will be regulations on hydrogen exports, production and transportation standards, and power wheeling schemes,” Julfi said.
Eka Satria, President Director of Medco Power Indonesia, expressed hope that the government would create regulations supporting a sustainable industry and a low-carbon hydrogen ecosystem that would encourage foreign investment.
Seno Adhi Damono, Senior Adviser at the Hydrogen Energy Center Indonesia, added that investment in hydrogen development could help create a more environmentally friendly future, and also reduce the dependency on fossil fuels.
Earlier, Jodi Mahardi, Deputy Minister for Maritime Sovereignty and Energy at the Coordinating Ministry for Maritime Affairs and Investment, said that Indonesia is geographically close to countries with high demand for clean hydrogen, such as Japan, South Korea, and Singapore, which together represent a hydrogen market of approximately 4 million tons per year.
Indonesia has the second-largest gas reserves in the Asia-Pacific and the third-largest CO2 storage potential in the region for blue hydrogen. Meanwhile, for green hydrogen, Indonesia has the world’s second-largest geothermal potential and over 200 GW of solar power capacity potential. These potentials create opportunities for Indonesia in leveraging its abundant resources in a bid to drive higher economic growth.
