Pertamina to expand geothermal capacity by using ESG

Pertamina has planned to expand its installed geothermal power plant capacity in order to provide greater contribution to the reduction of greenhouse gas emissions in Indonesia, and support achieving the sustainable development goals (SDGs) on climate action, through implementing Environmental, Social, & Governance (ESG) based programs.

"Our expansive plan will help Indonesia to achieve a net zero emissions target by 2060," said the Chief Financial Officer (CFO) of Pertamina Geothermal Energy, Nelwin Aldriansyah, during a discussion session at the UN Global Compact on responsible business conduct and climate ambition, held virtually on Wednesday, Nov 10.

The UN Global Compact is a "voluntary initiative based on CEO commitments to implementing universal sustainability principles, and taking steps to supporting UN goals. Pertamina reiterates its commitment to achieving SDGs through the implementation of Environmental, Social, and Governance (ESG) based programs in their operational areas."

According to Aldriansyah, PGE is planning to issue its own wind green bonds in the first half of next year (2022) in addition to PT, Pertamina's plan to issue green bonds in 2022. "Proceedings of green bonds will be used to refinance our existing conventional loans and also to finance our capex (capital expenditure) plan in developing new geothermal projects in Indonesia," he said.

With such an initiative, PGE would be expected to gain an additional 375 megawatts (MW) over the next four years, from the current installed capacity at its geothermal power plant of 672 MW.

"We are aiming to have a total installed capacity to 1,500 megawatts by 2030," Aldriansyah remarked. He expressed optimism that with such an additional capacity, PGE would contribute significantly to Pertamina's plan to decarbonise its assets and reduce emissions by 30 percent by 2030.

"At our current capacity, we currently reduce emissions by about 3.5 million tonnes of carbon dioxide (CO2) per annum. And with the additional capacity, we expect to reduce the emissions further, to six million tonnes annually over the next four years, and to 12 million tonnes by year 2030," he stated.

Aldriansyah stated that the government of Indonesia aims to improve its energy mix with the use of renewable energy sources from the current 12 percent to 23 percent by 2025. He expressed confidence that the increased use of energy mix would provide ample room for renewable energy companies such as Pertamina Geothermal Energy to expand installed capacity and provide higher contributions to emissions reduction.

The CFO believes that financing plans, including the issuance of green bonds next year, can support the capacity growth in the future, which will contribute significantly to Pertamina's objective to decarbonise its asset portfolio. "It is also aligned with the Indonesian Government's commitment to Paris Agreement," added Aldriansyah, "And with goal No.13 of the sustainable development goals (SDGs) on climate action."