INTERNATIONAL MONETARY FUND WORLD BANK GROUP

2018 ANNUAL MEETINGS

CIVIL SOCIETY POLICY FORUM

THE ENERGY TRANSITION IN EMERGING ECONOMIES: ROLE OF POLICY-MAKERS

Surabaya, BICC Bali, Indonesia

Thursday, October 11, 2018

11:00 a.m.

LIST OF PARTICIPANTS

HON. SATYA WIDYA YUDHA MP, Indonesia Chair, Green Economy Caucus Board Member, SW-AQA House of Representatives, Indonesia

HON. MEENAKSHI LEKHI Member of Parliament, Lok Sabha, India

DR. GUOQING SHI Professor & Director Social Development Center Hohai University)

DR. YAXIONG CAO Director Contemporary China Studies Centre Wuhan University

The Energy Transition in Emerging Economies: Role of Policy-Makers

(11:00 a.m.)

MR. WANG: Hello everyone. Let's start now. Good morning, everyone. My name is Jianpeng Wang, I'm the Chairman of Global China Research foundation. Welcome everyone to be here to attend our session today. And let me -- first of all let me introduce our speaker; Honorable Yudha, Member Of Parliament, Indonesia, board member of Air Quality Asia and Green Economy Caucus. Beside me is Honorable Yudha and followed by him is Honorable Sadeem (phonetic), he is also Member of Parliament, Indonesia, chair the budget committee. And followed by him is Professor Guoqing Shi, he is professor and the director of social development center, Hohai University. The last one is Doctor and Professor Yaxiong Cao, he is Director of Contemporary China Study Center, Hohai University, China. Welcome.

(Applause)

And my position, I'm going to chair this event and my position will be neutral, which means I won't ask a question. I would like to leave more time and opportunity to our audience and please do ask question after the presentation of our speaker. And make sure to make it short and, yeah, that's it. Are you ready, Honorable Y Yudha?

MR. YUDHA: Yeah.

MR. WANG: Okay. So let me pass he microphone to Honorable Yudha. And, yeah, thank you.

MR. YUDHA: Well, thank you very much, and thanks for kind introductions about the panelists. I'm one of them and I'm happy to be here. And I'd like to share with all of you with regard to what's the policy of Indonesia, particularly in transitioning from fossil fuel to renewables. And I'm also trying to portray later on Indonesia versus the other country and how do we achieve the goals that has been committed on the sustainable

development goals and as well as our participation as part of the Paris Agreement. There's two kind of policy that has been really develops and we're also trying to break it down into detailed actions. So probably before I go to detail, I would like to give you some flavor that Indonesia has been enjoying the fossil fuel economy for a long time, even now we're still considering that we are in the fossil fuel economy.

So -- but our commitment to the world when we ratify Paris Agreement back in 2016, if I'm not wrong, because I was one of committee who signed for the ratification of the Paris Agreement and it was really fantastic because this is the first ever probably in the history of the Indonesian parliament that we ratify this less than one week. So we are so committed on the ratification of the Paris Agreement.

But again when it comes to the implementation, probably a little bit different story. And as you may know that before we're talking about Paris agreements that we do have what's so called the sustainable development goals. We have 17 goals and if we are talking about the sustainability of energy, it falls under the SDG number 7s. Okay. While the climate change is SDG number 13. So we're trying to combine between the two, and the Government of Indonesia has given to at least two ministries become a focal point on the implementation of those two big commitments. So the Ministry of State Planning Agency is responsible as the focal point for the implementation of the SDG as a whole. And while for the Paris Agreement, we agreed to put the ministry of environments and forestry become the focal point. So those two ministry from the eyes of the parliament, we'd like them to cooperate, to coordinate when it come to the implementation because we don't want that one, you know, focal point is contradictions with the other focal point, this is not the idea that we are looking for. So we need to have cohesions, you know, between those two administrations, you know, between the ministry of state planning agency and also ministry of environment and forestry.

So gentlemen, if I -- using the data, this is

not the end of my slide, but I can read it here, if you look at the implementation of the SDGs 7 and 13 because we are talking more on the renewable or cleaner energy. So Indonesia is, you know, come to 64.1 on the scale of 100, this is the way we're trying to achieve the SDG number 7, the goals of the SDG number 7. While on the SDG 13, so Indonesia is on the score of 89.1, which is on the 13 is quite progressive. If you look at the number from the statistics that I have here and compare with SDG number 7. Why is that, because of, you know, SDG 13 is covering not only the energy sectors, but also the land use, land use and land use change forestry with all those sectors that we cascade down into what's so called nationally determined contributions.

So we are okay because of –- we have 89 in 100 scale, but on the SDG 7 we are reaching on the 64.1 percent. While the other country, I can quote here like China, China is, you know, for the SDG 7 is ranking 69.1, which is better than Indonesia. Indonesia is 64, China is 69.1 on the SDG 7. But on SDG 13, China is 69.3, which is lower than Indonesia, we are on 89.1 percent. But as a whole, if you look at the SDG 17 goals, there are several ranking on it and Indonesia is really unfortunate, we come to the rank number 99, yeah, out of more than 150 countries. So on the SDGs as a whole from goals number 1 up to the goals number 17s. But if you're talking goal number 7 and 13, there're a lot of improvements in this regard. So that's the thing that I like to give you a kind of portray that where we stand at the moment, where Indonesia stands at the moment.

So when you look at our ambitions, we're trying to reach, you know, reducing the emission up to 29 percent by 2030. This is conditionals. But if unconditional, meaning that if we kept the international aids or international assistance, we are aiming up to the 41 percent by 2030, but quite ambitious. If you look at all those numbers, even for using the renewable energies by 2025, we are aiming to reach up to 23 percent. But at the moment, if we're talking about today, the renewables is around 9 percent, 7 to 9 percent. So still a big task ahead in order for us to achieve the 23 percent by 2025. So that has become our challenge here.

If you look at the nationally determined contributions, we'll come back to it, that's all those items. Energy occupies around 30 percent of it because the rest of it mostly dominated by the land use and land use and land use change forestry who can contribute more on reducing the emissions. So now how do we move forwards in order for us to really achieve like what we expect. If you look at the ranking of Indonesia, you look at the progress, what we have done, if you look at from those two ministries become the focal point. So we are aiming to achieve like what we expect, you know, at the beginning as part of our international commitment. But here if you see all those actions need to be done, particularly on the land use and land use change forestry, it's a really big, big job because of we have to be able to manage on the forestry sectors, which is more environmentally friendly and, you know, we have reduced lot of illegal activities in this regard and also we have to be able to manage the forestry sector in a good manner.

And on the energy sector, we occupy more than 30 percent from our nationally determined contribution. There are several actions needed to be done because if you look at from the pricing issues at the moment, I'd like to touch very basic thing because of the way we manage at the moment, how to see whether the renewables really move faster than the others. It depends on how we can offer to the world, I mean, to the investors for instance because we cannot rely on our state revenue. Probably Honorable, as he is going to talk in more detail about our capability to fund from the state budget revenue. So if you look at from, you know, the way we see the renewables versus the non-renewables, so I'd like to see the slide comparison between renewable and non-renewables. We should be able to, you know, introduce what's so called externality costs. The externality cost, it really drives us, if we want to compete between renewable and nonrenewable, without the externality the renewable is expensive. It's difficult for us to compete between renewable versus coal for instance, coal fire plant. So that's all those factors like I mentioned here, the yellow and also the green one, this is the impact, environmental impact if we put the fossil fuel standalone, fossil fuel. So we like

to have the externality in this regard in order for us to compete between renewables with non-renewable.

Without that, that is quite important, there's going to have a major changes on policy if the government able to really penetrate by introducing the carbon pricing. That's probably one action that needs to be done sooner in order for us to improve the use of the renewable. Without that I doubt, personally I doubt that we can achieve 23 percent by 2025 because people tend to have the cheapest energy, which is coal is still preferable in Indonesia. We're still using coal and we're still exporting, using as a domestic consumptions, then people tend to buy coal rather than build the electricity using the other prime energies like wind or hydro powers or even geothermals because of the price issues. So the government of Indonesia should be able here to attract the investor by giving a more favorable price in order to, you know, to attract the renewable, which is more sustainable in terms of the energy itself.

So probably I have to close my talk by saying that there are some barrier and obstacle ahead that we need to fight for it in order for us to achieve like what we committed at the beginning. Thank you very much.

(Applause)

MR. WANG: Thank you. My staff just told me that our other speaker, Honorable Lekhi, Member of Parliament, India, spokesperson of BJP, she cannot come today because of parliament committee meeting. But she would like to give a talk after Honorable (inaudible), and the next one, next speaker, welcome Honorable Sadeem (phonetic). Thank you.

UNIDENTIFIED SPEAKER: Thank you, Mr. Jian. Thank you very much for the all participants and then the speakers for today. So we just -- from the budget committee we just continue Mr. Satya Yudha already present that I don't to renew to reply kind of the substance that Mr. Satya Yudha already expose in very detail what's kind of the energy renewable, the committee. In our budget committee, we have some item that we can issue. For

example, in the national energy policy, we have a target in 2025. We have at least 23 percent that we have to migate and then by the 2050 we increase until 31st percent. This is kind of the budget. So by year-to-year the Ministry of the Energy, we have already given the 1.2 trillion Indonesian rupiah with the total budget, this is 1,600 trillion by Indonesian rupiah. But this is the step up the handicap from the Indonesian, the budget policy. This is our sustainable in order to back up the kind of the ministry of the energy and mineral resources to allocate the budget. And the facility that we have already discussed with the Ministry of Finance and then regarding about this kind of the issue that the legal form, the budget and then the regulation we have already put in on the 13 in 2007, and then the regulation with the PEPI (phonetic) number 79 and 2014, with the fiscal incentive and facility.

Number one is stake (phonetic) allowance, that we give with the regulation number 9, 2016, with a 30 percent of the investment of the value. We give it to the –- and then the reduction of the corporate net income taxes is for six year for 5 percent each year, that's our discussion. And then the next -- the second issue is for the tax holiday. Tax holiday, the (inaudible) regulation from the Ministry of Finance number 159, 2015 and then this kind of the facility extended until 20 years percent, 20 years under the certain consideration.

And then the other issue, the third issue, the last issue, this is import duty facility. This is the same regulation number 188 and then 2015 regarding about the import of the duty machinery and equipment, goods and the raw material for production. That's three of the issue that we can support any kind of the private sector will be coming and then join with the energy, renewable energy. That's three of kind of the issue from the budget committee support, that's all item that Mr. Satya Yudha already explained. So no need for me to explain because the data is the same, no need to reply our issue, this kind of issue.

So tax allowance, tax holiday and import duty facility. Thank you.

MR. WANG: Thank you. Thank you. So thank you for the talk. Let's call our other panelist. Lekhi, Honorable Lekhi.

MS. LEKHI: Yeah.

MR. WANG: One moment please. Okay. Maybe we can do later. So, okay, Professor Guoqing Shi.

MR. SHI: I'm sorry, technical problem. It's my pleasure to be here to join the panel to talk about the renewable energy development from a global perspective and China experience and also how to find an alternative for future collaboration between China and other countries.

So I would like to -- first of all we talk about the energy global perspective. And, you know, global energy consumption is, you know, is many from different source. So you can see some changes. But generally in our renewable energies e-coach (phonetic) and to increase especially, you know, you can see by region, but the hydropower is major –- one of the major renewable energy especially in Europe and North America has already done a very good job in the history. And so Switzerland, France, Italy, Germany, Japan, America and China, those have a very good production in hydropower. But basically it's mainly from the developing country and the emerging countries, you can see China, Brazil, Serbia, South Africa, some Asian countries, but also it's for renewable energy is very important due to the quality of the wind power, solar power, we need the storage, pumping, storage hydro power. So it's Japan, China, Americans, European countries develop a lot in this storage associated with wind power and solar power.

And so this is some statement for installation hydro power capacity in the end of 2016, and so this is some figure for hydro power globally and we can see this - - but this -- by WCD (phonetic), you can see China, United States, big term country, and India and Japan. But for renewable energy, we can see this is globally especially due to the climate changing, global warming. So to mitigate those challenges, so the wind power and the solar

power significantly increased since 2000, so you can see this is tendency.

So the major challenge of energy and electricity is first place is how limited the natural resource and also pollution and emission and the global climate change, environmental impacts on irrigation because when we choose the renewable energy especially hydropower, wind power, solar power, we also face some environment issues, social issues. Land acquisition (inaudible) and marketing investment and also tariff, pricing, also we have to sharing the benefits. So this is a major challenge for green energy and electricity globally.

So internationally we have some international standards, how to adjust especially the environmental and social challenge. World Bank, they have ESS, Environmental Social Standard, and now changed for the ESF and IFC performance standards, eco principle. So those are global experience and the policy to adjust some concerns especially for hydropower and other renewable energy. Asia is one international platform to create the international tool, protocol to promote the sustainable hydropower. And so they make link; energy, water, climate change and the marketing program and also have the protocol is cover full stage, early stage preparation, implementation and operation stage, how to promote those sustainable hydropower. So this is a framework and over 20 topics consistently with global policy with IFC, World Bank, good principle, WCT, so this is a very important platform. So this is from since 2000 after WCT report, so IHA conducted this sustainable hydropower initiative and setup, develop some guidelines, some protocol to formulate this.

So the protocol itself is kind of to cover the different topic and so this is a different stage. And also it's very important nature platform to global benchmark and it's very strong sign to all the stakeholders in the hydropower. So this is how, this is the preparation stage, we have 23 topics to assess how the sustainable hydropower performance. And so they have a console, to manage this as a console. And so the global message is that energy consumption is increased and the

major energy steer from the coal and oil, but the rate decreased recently, the gas power and the future energy increased significantly, renewable energy, hydropower, wind power, solar power increased significantly, but still not the major source. So the developments are reaching and the major countries have developed most hydropower resource. China, USA, India have major dams in the world. And so China has very fast socioeconomic development and especially in last 40 years is average -- the GDP growth near about 9 percentage. So you can see this is GDP growth since 1978. And you can see this urbanization and also the capital income. And this very important industrializing and modernization is the need for energy. So energy consumption increased and -- but the major steers are coal and oil, but to the nuclear and also special hydropower, renewable energy increase. So this is especially renewable energy in the last 5-10 years has significantly increased.

So this is some structure. So this is due to installation in the 2017, so you can see the same power as (inaudible) takes a major role and then hydro, then the wind, then solar, so then the nuclear. So this is comprehensive source of energy. So this is forecast by 2020, but we also face the price, the issues and challenge. So the energy sector have many, you know, challenges because of the location and the source. So the wind power, solar power is significantly increased, but the electricity production stay less for the installation capacity. So this is some figure in the 2003 and 2015. You can see these significant impacts, some significant change. And so the hydropower not only surrounds probability area, so not only for energy security but also is support the socioeconomic development, to meet the needs and the demand of the human being for livelihoods, for sustainable conditions and change, and also to mitigate the climate change, and also very important to securities of the people. So we also have a very good policy for the small hydropower.

I think some key elements for this mechanism, the first one is motto, objective than development, not only for hydropower, but also for flood defense, for irrigation for the supply and so on. So then this is

(inaudible) gorgeous, so we can say this as a big -- the biggest hydropower in the world and -- but the first objective of them dam is the flood defense. You can see this is in the history, the big damage in the 1971 is 145,000 people died by this flooding. So now we can use the dam, storage, flooding and to keep the safety of the people. So this is very important concern by the hydropower development associated with the dam.

Then the hydropower, then the navigation and also water supply, the fish farm, the tourist, the climate change. So this very important to take account not only the hydropower itself, but also they have many other benefits, comprehensive development.

So this is something I think I introduce to you, it's very important to promote the green energy, but also integrate with other objective especially also SDG 7, 13, but also others, okay.

MR. WANG: Thank you Professor Shi and because the rule of the conference, we cannot call Lekhi, I'm sorry about that. And please professor Cao, if you're okay to talk now.

MR. CAO: Ladies and gentlemen, good morning. It's my great honor to have the opportunity to give -- to share my ideas with all of us. We know that energy is very important for the development and people's life. And especially for China, you know, China is the biggest, largest population in the world and its development is very fast. So the energy is a big problem for the government. So I just would like to the several ministers to just talk about the country's energy policy, but I think that China have encountered quite different kind of situation in energy. So -- and the policy is also very important.

I'll just introduce you to China's policy and its practice. I just want to speak from the three aspect. The first is the energy situation in China. The second is the China's policy on energy translation. The third is assessment and some suggestions.

We know that the China -- situation in China, energy is very, very special. We have two characteristics, the first is the shortage. We know that China have more –- the largest population and its energy reserves and production is not sufficient. So each year we have to purchase a lot of energy from other countries and other place. And the China's energy structure is also not so rational, especially we rely much more on coal. There is some data that say that only China and India is energy based on the coal, almost over 17 percent. And China's energy reserves are also unbalanced, that means that unbalanced in the regional distribution. I will give you some chart and some data to you to show the situation of China energy problem. Okay. These are the energy production in China, this is the chart. From the 2005 and 2017, the energy increase is very fast. The total, which I said that the first one, the total, the first chart, and second is coal, the second chart is the coal. And the third is the oil and the first is gas and the last is the nuclear -- is the renewable energy. This is the chart.

The consumption, we know from the chart also know that the consumption has also increased greatly. This is the demand and supply. The energy (inaudible) which show that each year we import lots of energy from other site. Each year is different, but I think that electricity, gas, oil coal are all import, but except oil we needn't to import. But other kind of energy we have to import. This is the world comparative. China, the first one, is largest demand in the world. Second is the U.S. and others just says that. So this kind of situation gives the Chinese government a good (inaudible), you have to have sufficient energy for the needs of the people and the development. So I think that there is one part with shortage. Another thing is that the regional distribution is also quite irrational. The first is that, okay, we just know that we rely on the coal energy occupy the 61 point edge, is (inaudible) clean energy is just 19.2 percent, and energy efficiency need to be improved. Okay. And the pollution, the covered CO2 also increased greatly. This is the -- we will just say, this is a chart of the distribution -- of the regional distribution. Just look at this colorful place, is concentrated on fossil energy. But other place is short of energy. But -- and 80 percent

of usage of the energy just on the coastal line instead of energy reserves, so this is the situation. If you want to use the energy, we have to transmit the energy from the western part and the northern part to the south and east part. So it's a long distance and lot of money to transport.

And according to the energy consumption we just said is just the -- Professor Shi told about that is the construction, structure, energy structure. And this is the CO2 emission. We just see that China's emission has increased quickly. This is the one -- is because the consumption increased greatly. Another thing is that we rely too much on coal. So this is the situation of China's energy. And CO2 emission, there is the chart. We just say that black to the red one, China is among the red one, is great. And the U.S. and the Russia and the Canadian is green, it's quite green. Okay. Okay. The situation is this. But how Chinese government reflect to the situation, the first one I think that China have a very, very –- government is coming to the energy. They have to put forward a series of energy policies. And this policy I think that is compatible with China's strategy. That is the scientific sustainable development outlook and I think that this strategy and this ideas is also compatible with the United Nations 2030 sustainable goal and also is I think abide by the Paris agreement.

So I think that this policy energy is, idea is the same. The first is innovation, green, coordination, openness and assuring, this is the five kind of thinking. I think that it's very, very useful for Chinese policy making. So I think that Chinese government energy policy has three goals, and this three goal is connected together, the first is security. You know that so many people rely on the energy. You have to give them security, so basically for their needs. The second is efficiency. We try to use less energy to make higher life centered and higher efficiency production. And the third is clean, big city and bigger population needs clean air and clean waters. So I think that these three goals combine together.

How the Chinese government policy, how to do

that? I think that Chinese policy have four aspects. First is reform energy governance system. I think this part is very, very important. We know that Chinese is at period of reform, so first just reform our government system. We used to have the environment protection ministry. We now also have the major resource ministry, but now we combine the ministry into one and just pay attention to the energy usage and another is protection environment. The second government policy is just that we try to break out the monopoly of energy production and consumption, pay more attention to market oriented. We try to use the –- try to establish the market system of energy usage, production and transmission and let market form the price and try to use this price to lead the government, lead the production of energy. This is the first item.

The second is try to streamline the government structure and try to change the function of the government from the monopoly of the company, just try to make the standard, try to supervision, try to maybe strategy stream, this is the second. The third is try to use their lower mega series or lower to guide and achieve, guide their energy production and energy usage, this is the first one. The second one is just look at this. This is a series of law we make just several years. And this way we channel, we know that each year we have our energy plan. Each five year we have our plan and each 10 years we also have the energy plan. So this is very important and the discipline are very useful for the economy and for all the local government, they have to abide by this.

And this the chart of 13 five years plans. This plan just say that we have to increase our renewable energy to almost 20 percent is a very -- I think that is very ambitious goal, but I think that Chinese government will try to carry out it. This is first. The second is enhance the energy guarantee capability. We know that the Chinese shortage of energy, but you have to try to guarantee the security. How to do that? Firstly, we try to overall consideration, all kind of energy. So we need –- even though we have not enough energy, but we try to maybe throw Indonesian Corporation and import some energy. And other side we just maybe try to improve the efficiency

of the production of the energy. Okay. The fourth part is try to adjust the energy structure, increase the clean energy. And this part I think that we need more investment in clean energy and we try to improve the technology, especially the research and education. Our university and Chinese maybe ministry of education and science, scientific development, they have a lot of labs and a lot of plan to try to improve their technology.

Okay. Asset management suggestion, I think that through these policies, the Chinese energy I think that make a lot of progress, we've just done with that. Firstly is the power supply has strongly increased. And the energy saving I think that is greatly, especially where the energy we decreased from 10 percent. The third one is the non-fossil fuel energy increased greatly, they almost amount 80 percent. Under the right technology advancement, especially solar energy infrastructures and nuclear infrastructure and hydro, you know, hydro is great. So I think these three parts in renewable energy is very important in China and we're making very, very good rapid progress. Okay. This is the first, the last is the mandatory and the consumption, the situation especially we separate to the plant and agreed just maybe make the network of the electro, the network to the remote rural areas, especially the rural area, counter site, almost is covered all the nations is great and it improved the efficiency of our electricity transition.

And the last place is just try to cut down the CO2 emission and to point the five. And the improvement of -- I think that we still have some suggestion and problem, this more investment. Even though we have invested a lot in this energy industry, but we're still short of energy, short of maybe money, especially the private sector. Even though some people say that we need absorb a lot of private, but you know that the private energy –- private enterprises, they try to make their money, make their profit. If you put a lot of –- you know that this is the kind of energy, energy industry need is concentrated and technology concentrated areas, so the private sectors don't like to put money into this place. So we try to abstract the profit money. The second is technical difficulties. Even though we improved a lot,

but we have to improve it greatly. The third is we try to cut down the rely on coal to almost maybe 30 percent, 40 percent, but now we have 70 percent, so it's a big problem and it's a long way to go.

Thank you for listening to my ideas. Thank you.

MR. WANG: Thank you, Professor Cao.

(Applause)

MR. WANG: Other announcement. The handout includes Honorable Lekhi's presentation. If you are interested in it, you can look at it yourself. And since she cannot come, we have a little bit more time. So I would like to ask Honorable Yudha and Honorable Sadeem, do you have any question or comment to our Chinese professors? Thank you.

UNIDENTIFIED SPEAKER: I need regarding about the problem and suggestion, there is any incentive opportunity that is given by the government to the private sector regarding about the energy, renewable energy?

UNIDENTIFIED SPEAKER: Yeah, the private -- private sector?

UNIDENTIFIED SPEAKER: Now?

MR. WANG: Yeah, you can have a small conversation now, then we take our question.

UNIDENTIFIED SPEAKER: We collect from the other question.

MR. WANG: Yeah, okay. Anyone? Okay. Okay. You go first and then, okay. Go first. Okay. Go ahead.

Mr. SWARD: My name is Jon Sward, I'm with the Bretton Woods Project, U.K. based organization. As we're at the World Bank and IMF annual meetings, I'd be interested in hearing from the Indonesian panelists around whether there's particular blockages in sort of scaling up investment in renewable energy, that's IFI's in particular

might be able to assist with and what financial instruments do you think would be most relevant in terms of not just loans, but providing sort of derisking for large scale renewable projects and instruments of this nature, if you could comment on that, that would be fantastic. Thank you.

MR. WANG: Thank you. Let's take one or two more questions. Yeah, go ahead.

UNIDENTIFIED SPEAKER: Hi, I'm from the Indonesian House of Representatives. I have a quick question for Professor Guoqing Shi and also for Professor Yaxiong Cao. For Professor Guoqing Shi is on –- you mentioned a lot about hydropower and my question is on the, what's your take on the ideal economic model of provision? I mean, you know the world is experiencing a rise of public partnerships, how does that work in China, what are your experiences on that and also regarding, you mentioned about social and ecological safeguards also in connection with the World Bank also. I was wondering, what are China's experiences with land acquisition conflict and social sustainability. And for Professor Yaxiong Cao, I would like to just if you could elaborate a little bit more about China's carbon pricing mechanisms? I know that China has an emissions treating systems you introduced I think in 2014, and you're aspiring to become I think one of the largest ETS' in the world. How does that work and also what are the challenges and feedbacks from your newly implemented environmental protection tax law in 2018? Thank you.

MR. WANG: Thank you. Any more question? We can take more. Anyone? Okay. No, okay. Maybe we can try to answer that. It's okay. Please?

UNIDENTIFIED SPEAKER: Yeah, let me answer the first questions. With regard to you offer us, I mean, you offer assistance, you know, but the Government of Indonesia could really speed up the implementation of the STGs. Yes, I may say that, you know, the biggest challenge at the moment is really, you know, revolve around pricings. Pricing has become a prime issue at the moment. It's quite difficult for us to attract the

investor to come without any incentive from the government, you know, if we have to compete between fossil and non-fossils. Because fossil is -- at the moment is still preferable. You know, if we like to see the development of the power plant in Indonesia, it's 35,000 megawatts dominated by coal fired plant. You see because of again modern issue. So, you know, the thing that probably the UN or the international community particularly from developed countries wants to have the implementation of renewables to developing country, please invent the technology that can make the renewable energy become more competitive than fossil fuel.

It's quite important, you know, because of like solar panel for instance, in the UAE they offer very -- it's very cheap, just only 2.5 cents per kilowatt hours while in Indonesia we cannot go that low. And when you look at why they can develop that low because of they don't have any issues on land, they don't have any issues on tax, they don't have any issues on all the technicalities, you know, basically on the bureaucracy thing. So while Indonesia, we don't provide that kind of massive land, you know, for the solar power. So the investor to come to Indonesia has to really fight to get that land and also we have to deal with all the bureaucracy down in the district levels. Well, we understand that now are moving from the autonomy, I mean, from the centralized government become decentralized government, a lot of hurdles that happened at the district level, at the provincial level. Lot of permit has to be done, has to be really obtained before they really kept what's so called license to operate. So that is one item that I, you know, probably from the international perspective again, you know, if you could provide something that can really cheap, that's wonderful. I mean that's really we're looking for. Battery storage for instance on the solar, if there is any technology that can improve the battery storage, then we can promote in rural area.

If you look at Indonesia, I have a figure here, but I don't put into my slide presentations. If you look at the production capacity of the electricity, it's around 221.3 billion kilowatt hours, this is figure done in 2015,

but the consumption is just only 199.3. It looks like that the installed capacity versus the consumption is unbalanced. I mean, we have a big installed capacity. But if you look at the electrification ratio at the moment, not even reaching 90 percent because of what, because of a lot of area, particular remote area has not been really electrifying. So we need to have a kind of a breakthrough by promoting like solar panels or hydro, mini hydro to that rural area. By having that kind of, you know, facilities or at least we can improve the electrification ratio. So the installed capacity mainly is developed by the state owned electricity company Paiton, it's on the you know island like Java (phonetic), Kalimantan and Sumatra, probably Sulawesi, but Sulawesi is trying to mix between the hydro power in Poso also wind farm in Sidrap and later on in Jeneponto. So they're trying to combine between those resources.

So again when you ask, ask the investors, yeah, what the price of the wind farm in Sidrap, they're lucky enough because they got it 11 cent per kilowatt hour. But for the new wind farm, it's difficult to reach that number because our government is back around 6 to 7 percent. If you like 7 and 6 percent, then we sign the deal, if it not just go away. I mean, that has become our concern, become our challenge in the future. So I'd like to see the development, but please to help with bit kind of, you know, breakthrough in the future. Thank you.

MR. WANG: Thank you. Professor Shi.

MR. SHI: Yes, for the hydropower, it's because to promote renewable energy, clean energy to reduce the power, this is national strategy to make the clean energy initiative. So hydropower is the one of the very important renewable energy and clean energy from the Chinese perspective. And so now it's hydropower around about 20 percentage of the total, you know, total NGO structure. But when we do the hydropower, but we have to -- we take account as a sustainable goal especially to protect the environment by diversity and to serve the ecosystems value. So this is the one of the very important matters to address the environment construct of the hydropower development. So in China we have two laws

to meet this requirement. One is the environment protection law and the other one is EIA Law, Environment Impact Assessment Law. So it's the law in the national level. So each project, whatever the hydropower or not, you have to follow these two laws. And there is the law, then we have the national technical standard, the (inaudible) and also the regulation, the law regulation technical standard, so this is very internal systematic approach to keep the, you know, this as the sustainable implementation, not only the policy, but also in the planning, also the implementation. So this is very important, I think, the mechanism to take account of how to protect the environment, whatever it is, water, isle, so this is land, so this is very important tools to protect the environment to get the friendship, environmental friendship with hydropower. So this is one of the major issues and the major activities in the hydropower development.

Second part, not only for technological (phonetic) nature, the environment, but also you have to mainly targeting the human being, the social issues. The social issue is very, very important associated with hydropower development. In China we have about more than 96,000 dams. So the dam since last 70 years is surrounded by 220 million people displaced and their asset by the dam, okay. So I'm the top specialist in this area and even one dam is The Three Gorges 1.3 million people dispersed by this dam, okay. So this –- but very important, you have to highlight the people and respect the people. So how to do? The first line is within the constitution there's a land law, you have to formulate for public interest, we can require the land, we can choose those land from the rural through industry for public interest. But at the end you have to have the regulation, how to do is we have national regulation to formulate how to do the reservoir settlement. This is national regulation, okay, just to focus the reservoir settlement, hydro power, water service project with The Three Gorges Dam because this is the largest hydropower in the world, 22,000 megawatt, okay, one project, number one just the one dam. So it's the number installation in the hydropower.

But the first objective with this dam is flood defense, okay. Second objective is hydropower. Third one is navigation. So these are three major objectives. But the induced 1.3 million people, you know, so this is the huge challenge. So the state counsel setup one regulation, specialize The Three Gorges Dam, induced resettlement. This is national regulation, to formulate how to do. This is one of the top priority to keep the sustainable livelihoods of the people. So this is very important. Then it's the development company collaborate with consulting company, local government, local communities to plan how to do the resettlement. So we resettlement action plan, even during the early stage the World Bank engaged this plan 30 years ago, 1988. So this World Bank also gives some support to engage. So them, you know, they start the -- even this project is decision making by the people's congress, the parliament, okay. They have vote, whether or not you support, but only two third representatives supported this one, this goal. They started the construction, so in 1993. So then about 16 years, according to the plan design, its 17 years for construction, for operation. But finally it's the survey, they finish one year before, okay, 16 years for construction of the dam.

But the resettlement also is very important, the state counsel, the prime minister as the chairman of this The Three Gorges Dam construction committee and more than 20 minister as the member. So this is very important, the government take the high risk probability to take care of people. Do the planning, do the implementation, also very important that they have used digital arrangement, each level, national, province, city, district, all of them setup resettlement bureau, full time staff, full budget, take responsibility to implement the resettlement. So this is one of the reason why this is global experience innovated by the China.

So government will take responsibility to take care of the people, then you do the resettlement planning, policy planning, implementation, monetary and compliant assessment. So I was one of the members to take all those procedures. So this is very important to take care of the people. And not only for house displacement or

relocation, very important the livelihoods, okay. Livelihood, sustainable development, this is very important. Also counterpart between –- because the power generation for other defense or beneficiary or (inaudible) China. So then the partnership between the beneficiaries of area, region and the development of the region, so make the partnership. This is a very important finance support, human resource support, then take the successful resettlement. I have some figures that is very interesting. So this is a very big development opportunity not only for the receiving area, but also very important for affected people, community, the beneficiaries, significant change, yeah.

MR. WANG: Thank you Professor Shi and Professor Cao, would you like to answer the question.

MR. CAO: Okay. Time is out, I think that we can answer in brief. As how to cut down the carbon emission, I think that Chinese government abide by the Paris Agreement and we make a plan of 5 or 10 years how to the goal each year I have to –- we have to cut down how much carbon emission. We have this and levels of local government also have its own plan that's separated to the general goal into the government leaders. If the local government account satisfy the requirement, they have to maybe take out of the office or maybe (inaudible) promotion, you see a very competitive for the governors. This is for the governor. And for the enterprises we have make very strict standard. If the enterprise can't satisfy the standards, we can shutdown the enterprises. And this has a lot of example, especially in Beijing. A lot of carbon emission this kind of enterprises shut it and transfer to other place, local place. This is I think that is the main policies on the carbon emission.

As for how to attract the private investment into renewable energy, we have several measures. The first is the access, market access. We know that before, maybe several years ago, only the national enterprises can enter into these areas. But now we're open to all kind of enterprises, all kind of capitals into these areas. This is the first. The second is that the government, national enterprises and the private enterprises have the same

equal treatment, equal treatment. So the small enterprises also can maybe sell and produce the energy, especially gas, especially the hydro power. The third is give the beneficiaries the tariff especially if you pay more attention to the high technology, energy instrument where we may be enjoy very low tariff, especially show off it. So this –- I think this is the three kind of policies. Thank you.

MR. WANG: Okay. Thank you, Professor Cao. Anymore question? I think we still have a few more time, like any more question? No? Okay. Any question from our speaker, any question or any comment you want to make.

UNIDENTIFIED SPEAKER: Regarding about the tax in China, how about the tax for the private sector is coming to the China? There is any incentive for the tax?

UNIDENTIFIED SPEAKER: Yeah, just according to the tax system, the small enterprises, there are just maybe tax not according to the maybe the income of –- just the stable income, stable tax rate is very low, very low than the national enterprises. And if the new technology and others, they adjust the –- also has a very professional advantage -- adventurous of tariffs, is also very low.

UNIDENTIFIED SPEAKER: Renewable energy especially for solar power and also the wind power is because the very important is some subsidy for this –- to this wind farm. Otherwise you cannot have counter the price, cost is too high. So this is very important, the government tax policy to subside this wind power and the solar power. For small hydro, yes, it's 20, 30 years ago they especially this is for rural development is small hydropower is one of the most approach to get access, the electricity supply because 30 years ago China still has very shortage in the rural area. It's not every village can access the electricity supply. So then the national government to carry out some policy, we called the access the electricity to each village. So the state government arranged the public finance to encourage the, you know, the public company and also private company to develop the small hydro. Then to help this rural village to access

the electricity supply. So this is the early stage how to promote the renewable energy in rural China since 1980's.

But now we still face some problem because the small hydropower, yes, it seems it's very easy to access for local villager, local communities, but the problem is that there's some ecological problem, also the frequency of the electricity supply. Yeah, so it's because it's dependent, no storage for some hydro and low storage capacity, it's in low flow, you know, no power. So you cannot use this electricity very good. So we call the low quality. So this is very important to access the power network, electricity network. So this is very important to setup some policy to encourage this small hydropower developer company to develop the small hydropower and integrate with national power system. So this very, very important the policy and also this is also the policy carried out by the government and, but it's very important to encourage the power system company, the national power company to integrate with the local some hydropower into account. So this is very important. Now it's also the wind power, solar power, it's similar issues because you can independent solar power. Yeah, so you have to take account of how to do that.

UNIDENTIFIED SPEAKER: I have some addition. We just say that the Chinese government try to separate their plant and agreed this is the network and plant production, they are separated. So every private enterprises also came entry into network of the electricity, you can save the power through the network. Network is public and production is private.

UNIDENTIFIED SPEAKER: So the price is decided by the government or partnership?

UNIDENTIFIED SPEAKER: Yeah, they can, everyone can -- enterprise and private can enter into the private network to sell your electricity. And maybe private enterprises also can buy the oil and gas from foreign countries, but before we come to the --

UNIDENTIFIED SPEAKER: Liberalize.

UNIDENTIFIED SPEAKER: Yeah, yeah, liberalize, yeah, yeah.

MR. WANG: Yeah, I see we have other question. Please?

ANNIE: Yes, I have a short question. I'm from Indonesia. My name is Annie. I would like to ask about the policy of the government, China government regarding the usage of electricity for cars and for motorcycle. How is the roadmap for the Chinese government regarding the electricity, electrical car and motorcycle? Thank you.

UNIDENTIFIED SPEAKER: Okay. Thank you. Let me maybe take the other one. Please.

UNIDENTIFIED SPEAKER: Yeah, this slightly falls outside the main topic of the panel, but if you could maybe speak a bit on the Belt and Road initiative and how renewable energy sort of –- there has been some discussion about greening the Belt and Road, whether that figures into these sort of discussions that are happening domestically in China as well? Thank you.

MR. WANG: Okay, thank you. Anymore? No. Okay. Please.

UNIDENTIFIED SPEAKER: For automatic electric car and motor –- motorcycle, it's also subsidy for this production. So the -- for company who produce this car or motor, they get subsidy when they sell. Say one car gets some subsidy because otherwise, you know, this is not competitive price. So this is very important, the government has setup the policy and also finance, finances, does subsidy through this way to encourage the company to get more, you know, production of the car. For green Belt and Road initiative and this is also the Belt and Road, this one we call new globalization and especially to link through this Belt and Road initiative. In general they have energy is one of the priority area and also trade investment and so this is generally -- this is very last five years a lot of activities associated. So we have –- initially they have six hurdle, okay, we call the six economic hurdle. So this is –- Indonesia is

we have this as middle and (inaudible) islands country. Asia is one of the hurdle and China and Pakistan, China, Mongolia and Russia and also -- and China Europe and Central Asia, so this is six economic hurdle. So the last year the national planning and reform committee and also ministry of finance and the ministry of (inaudible) and ministry of environment, so they setup one policy, they called the green road policy. So this is very important to how to address, how to promote those green road and the green finance. So this is one of the national policy is issued in one year before. Also my team also engaged this kind of research, so we have to identify how about those countries. So initially its 65 countries include Belt and Road. But now it's -- we can see all even in the South American, it's also engaged this initiative.

So I think this is globalization approach. So very important to take account how to address the environment and the social issues, this is green, from my perspective I call the blue. Blue means also not only include the environment, but also the social, so it's blue road. So this is very important because this initiative to benefit for the region, for the country and for the people. So this is also for nature. So I think it's very important initiative and also take account some merits, but, you know, this is global collaboration. So we need public awareness, all of the partners. So it include the country, government, include the society, include the investor, include the financing institution, also international organization. So this is very important how to setup all the partnership and to address the investment and also other countries like the environment and the social issues.

UNIDENTIFIED SPEAKER: I have an addition. We just say that in the big city of China, motorcycle is prohibited. But electricity motorbike is okay, but you have to get the license.

UNIDENTIFIED SPEAKER: Okay. Thank you. Just a little bit, you know, intrigued, you know, with the statement of my colleague from China with regard to the Belt and Road because Indonesia is not far from here. My minister is not discussing about Indo-Pacific. So we are

in the middle of, you know, looking at from two perspective, you know, in the pacific in the other hand and also Belt and Road in the other hand. So Indonesia is a potential country in the regions. It should play also in both sides. So we'd like to see because you're not Chinese government, Chinese government we'll be asking to give really stress and benefit for the Asian country, therefore you to promote the Belt and Roads because we also see there is a new development in the Indo-Pacific.

So we'd like to create peace and become the non- permanent member in the security council, we'd like to really creating peace in this region and try to attract, you know, between those two initiative become beneficial for everyone.

MR. WANG: Thank you.

(Applause)

MR. WANG: So any -- no more question. Okay. So let's finish it. So I represent Air Quality Asia and the Global China Research Foundation. Thanks all the audience and all the speaker again. And we finish here and be free to have good lunch and see you around. Okay. Bye.

(Applause)

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