Government Prepares New Geothermal Energy Regulations, Covering Hydrogen to Carbon Economic Value

The Ministry of Energy and Mineral Resources (“ESDM”) is in the process of finalizing a series of regulatory amendments aimed at accelerating the utilization of geothermal resources. The Director General of New, Renewable Energy and Energy Conservation (“EBTKE”) of the Ministry of ESDM, Eniya Listiani Dewi, stated that the revision of Regulation of the Government No. 7 of 2017 on Geothermal Energy for Indirect Utilization (“PP 7/2017”) has now entered the initial stage of the harmonization process.

“We will see how the harmonization process proceeds, as there will be further stages of harmonization,” said Eniya.

According to Eniya, the Draft Regulation of the Government (Rancangan Peraturan Pemerintah - “RPP”) will introduce a number of changes to the governance framework, including the licensing process through a digital system. These changes include streamlining the tender process into a single stage, facilitating technical and social aspects to support the sustainable development of geothermal resources, and facilitating both direct and indirect utilization of geothermal energy in line with technological developments.

In addition, the new RPP will regulate the optimization and diversification of geothermal utilization. These provisions will include the direct utilization of geothermal energy to promote local economic development, the utilization of geothermal resources for the production of hydrogen and ammonia as new sources of revenue, and the extraction of associated minerals from geothermal fluids.

The RPP will also accommodate the implementation of the Carbon Economic Value (“NEK”). Under this provision, geothermal companies may be entitled to the NEK generated from geothermal utilization activities.