The Benefits and Importance of Energy Transition

The Benefits and Importance of Energy Transition

In recent times, the term energy transition has been increasingly discussed in various media. Essentially, energy transition is a change in energy use from one type to another. In this context, the transition from non-renewable energy or fossil energy to renewable energy, especially in terms of the use of electrical energy.

Currently, the majority of the electricity we use still comes from fossil fuels, especially the burning of coal and gas. Data from the International Energy Agency (IEA) shows that in 2025, electricity generation from fossil fuels is still the main source of the energy mix, with coal contributing 10,704 TWh (35.34%), gas 6,777 TWh (22.37%), and nuclear 2,840 TWh (9.38%). The remaining 9,968 TWh (32.91%) will come from renewable energy.  Hence, why it is necessary, to make an energy transition from fossil fuels to renewable energy? There are at least two important reasons for the need to make an energy transition.

The Cons of Fossil Fuel Energy
First, fossil fuel energy is limited in quantity, will run out one day, and in the process supply and prices will fluctuate more. Fossil fuel energy is also very sensitive to various geopolitical issues. For example, during the war between Russia and Ukraine, Russia's energy embargo against the EU has resulted in an energy crisis, sharply increasing prices, and casualties due to winter without affordable and adequate electricity sources. Commodities such as coal and oil are also included in the cyclical category, having boom and bust periods in prices that create uncertainty, and have the potential to increase costs for companies that use them consistently.

Second, fossil fuel energy produces emissions, especially Greenhouse Gases (GHG) emissions that cause many negative impacts on health and the environment. For example, emissions in the form of particulate matter (PM) 2.5 and 10, which are very fine particles, smaller than hair, and cause various respiratory problems when inhaled by humans. Then there are CO2 emissions that trap the sun's heat on earth, making the earth's temperature warmer, and causing climate change. This has also happened continuously since the industrial revolution era, where coal has been used massively. Accumulatively, this has also become a factor in the occurrence of many disasters on earth, such as heat waves, droughts, rising sea levels, and even worsening existing natural phenomena.

These reasons may be refuted by technological developments. For example, increasingly efficient coal burning management, or the use of carbon capture use and storage (CCUS) to reduce emissions. However, the so-called "solution" offered does not address the main problem to the environment and is potentially more expensive in terms of costs. From a cost and benefit analysis perspective, why not use existing resources to make the transition and switch completely to renewable energy?

Benefits of Transition to Renewable Energy
There are many advantages of transitioning to renewable energy.

1. Significantlyreduce emissions. Most renewable energy produces almost no direct GHG emissionsat all. Reducing GHG emissions, possibly to net zero, is the only plausiblesolution in dealing with climate change.
2. Infinitesources, with a little bit fluctuations in availability, such as sunlightcovered by clouds, or wind that doesn't blow. However, this does not reduce itsbenefits significantly, especially since Indonesia has enormous renewableenergy potential with year-round sunshine, many fast-flowing rivers, strongwinds, and large areas of choppy seas.
3. Savingcosts in the long run, since the source is unlimited. With a little investmentat the beginning, the use of renewable energy will be much more efficient andcheap in the long run.
4. Reducingdependence on fossil fuel energy. Dependency on only one source such as coalwill be very vulnerable when there is uncertainty and instability. Such asrolling blackouts in remote areas.
5. BetterESG scores from real positive impact on the environment and society. Thus, openingaccess to wider investor capital and financing, since the corporation will bedeemed credible and has initiative, resulting in rising reputation.

The Conflicting Views, Prices, and Success Stories
This transition is certainly not without challenges. There is a view that renewable energy is more expensive than fossil fuel energy. On paper, in terms of price to price comparison only, this seems to be true. However, there are two things that are often overlooked. First, there will always be a large initial investment cost to prepare infrastructure and adopt new technologies, including the research and development process. The renewable energy industry is still relatively young compared to the fossil fuel industry which has been matured for hundreds of years. It is natural that renewable energy still needs to catch up to optimize production and reduce competitive prices. However, the latest trend shows that the price of renewable energy has fallen by at least 80% over the past decade. This trend is certainly very positive.

Second, it happened because the price of fossil fuel energy does not include the negative externalities it produces, in other words, companies do not bear the side effects or impacts resulting from the continuous use of fossil fuels, such as air pollution. A simple illustration is as follows. Imagine fossil fuel is fast food, while renewable energy is healthy food such as vegetables and fruits. Fast food is very easy to find everywhere, cheap, and delicious. However, there are side effects if consumed excessively, such as increasing cholesterol, fat, and in the long term causing obesity and heart attacks. Are fast food sellers willing to cover our medical expenses? Of course not. This is what it meant by negative externalities, medical expenses that are not reflected in the price of fried food. On the other hand, routinely eating vegetables and fruits may tend to be more expensive, harder to get because you have to go to the market, cook it ourselves, and often not as delicious as fast food. However, in the long term the body will be healthier and free from various diseases. This is the importance of understanding the negative impacts that are not reflected in the price.

Returning to the topic of energy transition, of cours  it is not easy to make a transition quickly. Likewise, for someone who is used to eating fast foods and rarely exercising, it will be difficult to immediately change their lifestyle. This is the importance of a gradual, sustainable, and just transition. Citing several success stories from companies that have successfully made energy transitions, all of them were done in stages with concrete planning and execution based on the agreed timeframe.

For example, the L’Oreal Indonesia factory has used 100% renewable energy in 2024. This transition process has been carried out in stages since 2014 through an MoU with PLN.  Currently L'Oreal has a head start in this field. Another example is MANE Indonesia, a French flavor & fragrance company that has operated a PLTS in its factory facilities and uses 100% renewable energy and has succeeded in reducing direct carbon emissions by 77% in 2024.  Apart from that, there is also Multi Bintang Indonesia which is committed to using 100% renewable energy in 2025,  as well as Uni-Charm Indonesia which has built a solar power plant at its facility.  Lastly, there is also a global initiative RE100 whose members are corporations committed to generating 100% of their energy from renewable sources.

This example shows that a complete transition to renewable energy is possible and can be done in a concrete and sustainable way. It remains to be seen whether other companies will follow this good initiative and have a real impact on the environment while improving their reputation, or stick with the old ways that are increasingly unsustainable and unreliable.

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