Indonesia’s Pertamina signs up for hydrogen development | Asian Business Review
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Indonesia’s Pertamina signs up for hydrogen development

Pertamina is set to produce green and blue hydrogen as part of its clean energy target in 2030.

There has been an imbalance between the potential and utilisation of renewable energy in Indonesia. Of the 3,686-gigawatt (GW) potential renewable energy estimated by the Ministry of Energy and Mineral Resources in Indonesia, only 0.3% has been utilised. State-owned gas and oil company Pertamina, through its sub-holding, Pertamina Power and New Renewable Energy (Pertamina NRE), seeks to fill this space with hydrogen development amidst its energy transition.

In line with the government's plan to reduce greenhouse gas emissions by 29% in 2030 and net-zero emissions by 2060, Pertamina NRE will invest US$12b to meet its clean energy target in 2030. One of its clean energy targets will be fulfilled through its green and blue hydrogen pilot project. 

"We believe that [there will be a switch from] fossil fuels to new and renewable energy, and Pertamina, as an oil and gas company, will participate in the transition. We will also focus on developing new energy, namely hydrogen," said Pertamina NRE Chief Executive Officer, Dannif Danusaputra in an exclusive interview with Asian Power.

Cleaner energy

Green hydrogen comes from a chemical process known as electrolysis. This method uses an electrical current to separate the hydrogen from the oxygen in the water. Electricity can be obtained from renewable sources such as wind or solar energy. Therefore it produces energy without emitting carbon dioxide.

Hydrogen use has advantages, including easy binding to other elements such as water and hydrocarbons. It has a large energy density, approximately 140 megajoules per kilogram (MJ/kg), or six times greater than coal. One kg of hydrogen can be used by a vehicle to cover about 140 kilometre (km) of travel. 

“The development of hydrogen use is necessary because it can be used for long-distance transportation such as buses, which usually travel 100 km every day. A bus cannot use batteries because it requires a very high density so it is too heavy and will take too long to charge. By using hydrogen in the form of liquefied gas, it will be more feasible and can reduce emissions from fossil energy," said Dannif.

The government stated that it will be developing hydrogen as part of the clean energy target. The Ministry of Energy, Mineral Resources of Indonesia and the German government through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH studied the potential of the green hydrogen market in Indonesia and found it was around 1,895 kT/year in 2021

Through Pertamina Geothermal Energy (PGE), Pertamina’s subsidiaries under Pertamina NRE, a green hydrogen development pilot project has been carried out in the Ulubelu geothermal working area, Lampung with a production target of 100 kg per day. In the long term, the production of green hydrogen is targeted to reach 8,600 kg per day.

Pertamina NRE also produces blue hydrogen from natural gas using carbon capture. The CO2 emissions released from the process are stored in special containers so that the carbon footprint is reduced. Pertamina, through PT Refinery Pertamina Internasional (KPI), is developing blue hydrogen at the Plaju and Cilacap refineries.

Energy transition challenges

New and renewable energy sources are expected to contribute 4 GW to the Pertamina long target of clean energy in 2030. From the 4 GW target, a significant contribution comes from geothermal power managed by PGE. Other sources come from solar power, biogas-fueled power plants, smart grids, green and blue hydrogen, electric vehicles, and natural climate solutions. 

Dannif recognises that Pertamina’s energy transition is facing several challenges. The first challenge comes from cost financing.

“One of the solutions is to increase the scale of the installed capacity of new renewable energy projects,” he said.

The second is technology. According to Dannif, technological developments in this field have only been going on for about 10 years, so Pertamina NRE continues to adapt to it.

“At Pertamina, we have a research and technology innovation team specially prepared to anticipate and adopt technological developments. We invest in companies that have the potential to develop superior technology. What we are doing is partnering and investing in companies that develop green and blue hydrogen,” Dannif said.

Pertamina joined Indonesia Battery Corporation (IBC) with three other state-owned companies to develop an electric vehicle ecosystem.

“We want to increase the adoption of electric vehicles in Indonesia, which is still low. Adoption (two-wheeled electric vehicles) is only 0.1%. Meanwhile, there are 130 million motorcycles and five to seven million new motorcycles sold every year. This is a huge potential," said Dannif.

A third challenge arose from this—the price of electric vehicles is much higher than vehicles with fossil energy. Dannif said the provision of incentives for electric vehicle users can be initiated at the regional level such as in Bali with Peraturan Gubernur Bali 48/2019.

The Indonesian government announced the implementation of a carbon tax effective from 1 July 2022 for coal-fired power plants, but the policy was postponed. The unfinished work on the policy’s derivative regulations, as well as prolonged global economic turmoil, are risks that are needed to be taken into account by the government.

Under the government's carbon tax draft, emissions are charged a minimum rate of IDR30 (US$0.2) per kg of CO2-eq and are to be implemented under a cap-trade scheme. The tax is the amount companies must pay for surplus emissions above the government’s cap for a certain period.

“With increasingly sophisticated technology in the transportation sector, the cost of energy will decrease. The energy transition will run naturally, where fossil energy will pay a carbon tax, whilst new and renewable energy will receive incentives,” said Dannif.

Pertamina NRE will continue to follow developments in new and renewable energy, finding solutions to challenges as part of their purpose to provide clean energy which is in line with the government target.

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