CASE STUDIES
Aligning incentives for waste-to-energy in Indonesia

Client: British Embassy Jakarta

THE CHALLENGE

The British Embassy Jakarta wanted to support the Indonesian Ministry of Energy and Mineral Resources to manage the country’s growing waste challenge and its energy supply gap by encouraging waste-to-energy investments.

THE OUTCOME

CLT’s team analysed Indonesia’s waste market and determined that the incentives for waste management were not calibrated in a way that supported waste-to-energy as a technology. The market faced many technical, financial, social, political and institutional barriers. Other waste and energy solutions were found to be higher-value.

The FCO Prosperity Fund aimed to improve health, sanitation and energy production by investigating waste-to-energy (WTE) as a solution to Indonesia’s waste and energy challenges. CLT’s team carried out an extensive literature review and interviewed 22 stakeholders drawn from investors, donor agencies, project developers, academics, and government representatives to determine why the market was stagnant and what could be done to accelerate it.

We identified 15 major barriers across five categories: technical, financial, policy, institutional and social. These included in improperly calibrated feed-in tariff for incineration, uncertainties around revenues from tipping fees and power sales, inconsistent waste quality and quantity, insufficient collection infrastructure, a lack of local capacity to evaluate different WTE technologies and scenarios, and insufficient attention paid to the social impacts of diverting waste from landfill to incinerators, which would disrupt the livelihoods of 1.2 million waste pickers.

CLT’s team carried out an international comparative analysis to see how these barriers had been overcome in other jurisdictions. We looked at the different feed-in tariff approaches in Czech Republic, Germany, Slovenia and Spain; landfill taxes in the UK; alternative approaches to the waste hierarchy taken by the EU; loans and technical assistance offered by the Asian Development Bank to China; waste collection and separation strategies in Finland and China; government coordination in the US, UK, and Australia; and approaches to integrating waste pickers into new management strategies adopted in Brazil.

Across each of the five categories, we made recommendations to the Indonesian Ministry of Energy and Mineral Resources so that it could consider its options and determine the best way to manage its waste and energy challenge.