Setting a just economic value in Indonesia’s biomass program

The Indonesian Government has targeted the new and renewable energy mix to achieve a minimum 23 per cent of the total energy use by 2025. Through its State Electricity Company (PLN) a Cofiring Program has been introduced by mixing 5–15 per cent of the biomass into its coal-fired steam power plants to be implemented in 2021 and 2022. However, the program appears to be unattractive for business due to the gap between the price and the highest purchase price regulated by PLN in procuring biomass despite the provision that the arrangement of energy price should represent the principle of just and economic value. This article aims at examining the application of the principle in the biomass Co-firing Program by employing the Energy Justice Theory by Heffron, the Theory of Justice by John Rawls and the Theory of State Intervention by W. Friedmann. It contributes to the literature on energy law by taking the experience of Indonesia because energy law in the country remains underexplored in the literature. At the practical level, this article proposes the direction through which an energy law reform in Indonesia based on the principle of the just economic value could be pursued. In order to make the biomass energy affordable and accessible but still considering the business’ aspects, the government should provide incentive, both fiscal and non-fiscal, to shift the biomass price closer to its just economic value in the form of public legal instruments.