PP 33/2023 Establishes Mandatory Energy Management System for Climate Mitigation
Executive Summary
PP 33/2023 on Energy Conservation replaces PP 70/2009 and establishes comprehensive energy efficiency requirements that directly support Indonesia's greenhouse gas (GHG) emissions reduction commitments. By mandating energy management systems for major energy users across all sectors, this regulation creates enforceable mechanisms for reducing fossil fuel consumption and associated carbon emissions.
Regulatory Context
Regulation: PP 33/2023
Full Title: Peraturan Pemerintah Nomor 33 Tahun 2023 tentang Konservasi Energi
Type: Government Regulation
Year: 2023
Enacted: June 16, 2023
Topic: Energy Conservation & Efficiency
Series: Carbon & Climate
Status: Active
Replaces: PP 70/2009
Key Energy-Climate Linkage Provisions
1. Mandatory Energy Management Obligations (Pasal 29-37)
PP 33/2023 establishes binding energy management requirements for entities exceeding specific consumption thresholds:
| Sector | Threshold | Article |
|---|---|---|
| Energy Providers | ≥ 6,000 TOE/year | Pasal 29(1) |
| Transportation Sector | ≥ 4,000 TOE/year | Pasal 31(1) |
| Industrial Sector | ≥ 4,000 TOE/year | Pasal 32(1) |
| Building Sector | ≥ 500 TOE/year | Pasal 34(1) |
| Central Government | No threshold (mandatory) | Pasal 37(1) |
| Local Government | No threshold (mandatory) | Pasal 37(1) |
TOE = Ton of Oil Equivalent (standardized energy consumption metric)
Climate Impact: These thresholds capture approximately 60-70% of national energy consumption. Energy efficiency improvements in these sectors directly translate to reduced fossil fuel combustion and lower GHG emissions.
2. Energy Management System Components (Pasal 7)
Every obligated entity must implement four core components:
a) Certified Energy Manager Appointment (Pasal 7a, 8)
- Must hold competency certification
- Responsible for overseeing energy efficiency programs
- Required training ensures technical capacity for emissions reduction
b) Energy Efficiency Program Development (Pasal 7b, 9)
Mandatory program elements:
- Planned efficiency measures
- Energy type and consumption baseline
- Energy-efficient equipment specifications
- Efficiency improvement steps
- Production/service output targets
- Energy performance indicators (kWh/unit, GJ/ton, etc.)
c) Periodic Energy Audits (Pasal 7c, 10)
- Conducted by certified internal/external auditors
- Identifies energy waste and reduction opportunities
- Quantifies potential emissions reductions
- Periodic intervals specified in ministerial regulations
d) Audit Recommendation Implementation (Pasal 7d, 11)
- Mandatory reporting on implementation status
- Creates accountability for identified efficiency measures
- Ensures continuous improvement cycle
Climate Benefit: Systematic identification and correction of energy waste prevents unnecessary fossil fuel consumption and associated emissions.
3. Energy Efficiency Standards (Pasal 13-15)
Minimum Energy Performance Standards (MEPS) (Pasal 13(2))
- Applies to energy-using equipment (motors, boilers, HVAC, lighting, appliances)
- Sets minimum efficiency thresholds
- Prohibits sale/use of sub-standard equipment
Energy Efficiency Labeling (Pasal 13(3))
- Mandatory labels showing energy consumption ratings
- Enables informed purchasing decisions
- Drives market toward efficient products
Domestic Content Requirements (Pasal 13(4))
- Efficient technology must meet local content levels
- Supports domestic manufacturing capacity
- Accelerates technology transfer
Climate Impact: MEPS directly reduce grid electricity demand (lowering coal-fired power emissions) and industrial fuel consumption.
4. Sectoral Conservation Requirements
Transportation Sector (Pasal 31-33)
- Energy management for fleets ≥ 4,000 TOE/year
- Fuel economy standards for vehicles
- Operational efficiency measures (route optimization, driver training)
- Emissions Benefit: Reduced petroleum consumption in transport sector
Industrial Sector (Pasal 32-33)
- Energy management for facilities ≥ 4,000 TOE/year
- Process optimization requirements
- Waste heat recovery mandates
- Emissions Benefit: Lower industrial fossil fuel use and grid electricity demand
Building Sector (Pasal 34-36)
- Energy management for buildings ≥ 500 TOE/year
- Efficiency standards for new construction
- Retrofit requirements for existing government buildings
- Emissions Benefit: Reduced building energy demand (primarily electricity and gas)
Government Sector (Pasal 37-38)
- All central and local government entities must implement energy management (no threshold)
- Government buildings must meet efficiency standards
- Procurement prioritizes energy-efficient products
- Exemplary Role: Government demonstrates leadership in efficiency
5. Incentives and Disincentives (Pasal 46-53)
Incentives (Pasal 47-49):
- Fiscal incentives (tax breaks for efficiency investments)
- Non-fiscal incentives (fast-track permits, recognition awards)
- Access to green financing mechanisms
Disincentives (Pasal 50-53):
- Administrative sanctions for non-compliance
- Financial penalties
- Operational restrictions
- Public disclosure of non-compliance
Enforcement Mechanism: Creates economic drivers for energy efficiency adoption and penalties for inaction.
Climate Mitigation Calculation Framework
Energy Savings = Emissions Reduction
Baseline Emissions:
E_baseline = Energy Consumption × Emission Factor
Post-Efficiency Emissions:
E_actual = (Energy Consumption × (1 - Efficiency Improvement %)) × Emission Factor
Emissions Reduction:
ΔE = E_baseline - E_actual
Example Calculation
Industrial Facility:
- Baseline: 10,000 TOE/year
- Efficiency improvement: 15% (achievable through PP 33/2023 measures)
- Energy saved: 1,500 TOE/year
- Emission factor: 3.0 tCO2e/TOE (typical for industrial fuel mix)
- Annual emissions reduction: 4,500 tCO2e
National Aggregate Potential
If all obligated entities (approximately 5,000+ facilities) achieve average 10% efficiency improvements:
- Total potential energy savings: 5-10 million TOE/year
- Estimated emissions reduction: 15-30 million tCO2e/year
- Contribution to NDC target: Approximately 5-10% of industrial/energy sector reductions
Compliance Requirements
For Energy Providers (≥ 6,000 TOE/year)
Obligations:
1. Appoint certified energy manager
2. Develop energy efficiency program (Pasal 9 requirements)
3. Conduct energy audits every [X] years (ministerial regulation)
4. Submit annual energy management reports
5. Implement audit recommendations within specified timeframes
Reporting: Annual submission to Ministry of Energy and Mineral Resources (ESDM)
For Industrial Facilities (≥ 4,000 TOE/year)
Obligations:
1. Full energy management system implementation
2. Process-specific efficiency targets
3. Waste heat recovery where technically feasible
4. Equipment efficiency standards compliance
5. Energy performance monitoring and reporting
Penalties: Administrative sanctions and potential operational restrictions for non-compliance
For Building Operators (≥ 500 TOE/year)
Obligations:
1. Building energy management plan
2. Installation of energy-efficient HVAC, lighting, and equipment
3. Periodic energy performance certification
4. Compliance with building energy codes (for new construction)
Government Buildings: Mandatory compliance regardless of size, must achieve exemplary performance
For All Obligated Entities
Documentation:
- Energy consumption records (by fuel type, electricity)
- Energy efficiency program documents
- Energy audit reports (including recommendations)
- Implementation status of audit recommendations
- Annual energy performance reports
Data Submission: Integrated into national energy information system (Pasal 54-55)
Practical Implications
For Corporate Environmental Strategy
Integration with Sustainability Programs:
- Energy efficiency actions under PP 33/2023 directly support corporate carbon footprint reduction goals
- Documented energy savings can be used for GHG inventory reporting (ISO 14064)
- Compliance demonstrates environmental responsibility to stakeholders
Co-Benefits:
- Reduced operational costs (energy savings)
- Improved industrial competitiveness
- Enhanced ESG (Environmental, Social, Governance) ratings
For National Climate Policy
NDC Contribution:
- Energy efficiency is a demand-side mitigation measure complementing renewable energy supply
- Achievable with existing technology and moderate investment
- Short payback periods (often 2-5 years) make it economically attractive
Paris Agreement Alignment:
- Contributes to Indonesia's unconditional NDC target (29% reduction by 2030)
- Supports long-term net zero emission pathway (2060 or earlier)
- Demonstrates implementation of climate mitigation policies
For Enforcement and Monitoring
Government Role:
- Ministry of Energy (ESDM) coordinates overall implementation
- Sectoral ministries oversee specific sectors
- Local governments support regional implementation
- Inspections verify compliance with management obligations
Data Transparency:
- National energy conservation information system (Pasal 55)
- Public access to aggregated energy performance data
- Supports evidence-based policy adjustments
Matrix Analysis
| Requirement | Energy Impact | Emissions Benefit | Compliance Deadline |
|---|---|---|---|
| Energy Manager Appointment | Organizational capacity | Enables systematic reductions | 12 months from regulation (June 2024) |
| Energy Efficiency Program | Targets waste identification | Quantifies reduction potential | Ongoing, annual updates |
| Periodic Energy Audits | Technical assessment | 10-30% reduction opportunities | Every 3-5 years (ministerial) |
| Audit Implementation | Actual savings | Direct emissions reductions | Within 2 years of audit |
| Equipment Efficiency Standards | Lower baseline consumption | Prevents inefficient equipment | Immediate for new purchases |
| Reporting Requirements | Data transparency | Enables monitoring and verification | Annual submissions |
Verification and Accountability
Ministerial Oversight (Pasal 56-61):
- Ministry of Energy conducts monitoring and evaluation
- Coordination with Ministry of Environment for emissions tracking
- Sectoral ministries provide technical guidance
Audit Verification:
- Energy audits must be conducted by certified auditors
- Reports subject to government review
- Quality assurance standards applied
Public Accountability:
- Annual reporting requirements create transparency
- Non-compliance subject to public disclosure
- Incentive programs reward exemplary performance
Official Source
Official Text: PP 33/2023
Citation: Peraturan Pemerintah Nomor 33 Tahun 2023 tentang Konservasi Energi
Gazette: Lembaran Negara Tahun 2023 Nomor 83, Tambahan Lembaran Negara Nomor 6879
Status: Active
Effective Date: June 16, 2023
This article is part of CRPG's Carbon & Climate series analyzing Indonesia's regulatory framework for climate change mitigation and carbon management.
Article 79 of 85 | REGPRIMA Protocol | Carbon & Climate Series
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