A SYSTEM DYNAMIC MODEL FOR INDONESIA UPSTREAM OIL AND GAS INDUSTRY GREENHOUSE GAS EMISSIONS REDUCTION EFFORT

• Main Author: Pradiptaningtyas, Astri
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/55174
• Institution: Institut Teknologi Bandung

The Indonesia oil and gas industry is still expected to be the source of energy in Indonesia. However, fossil fuel utilization has contributed to increasing the amount of greenhouse gas emission. The greenhouse gas can remain in atmosphere for long period and contribute to global warming. Recently, to combat climate change and increase green investment, Paris agreement has been made by 196 parties by implementing the climate change plan. Many oil and gas company are committed to achieve the target. However, there are several factors that might affect their effort to reduce emissions. Literature review and interview with key stakeholders are conducted to find out the contributing factors and how these factors affect the greenhouse gas emission reduction effort in Indonesia upstream oil and gas industry. Those factors are global trend and availability of binding environmental agreement that drive implementation of carbon tax & carbon market mechanism, availability of incentives, availability of advance technology and the industry profitability itself. The system dynamics model then was developed based on those factors to measure it impact to the effort and industry profitability. There were twelve scenarios developed from four group scenarios, i.e major discovery, advance technology, government incentives and carbon tax. The modeling result shows that the implementation of carbon tax mechanism will give significant impact to profitability, while the implementation of advance technology will reduce the profitability but will significantly reduce emission. The model shows that continuous development of fossil fuel-based energy will lead to high emissions and high investment risk in relation with increasingly binding emissions reduction agreement. Government support in providing Paris agreement – aligned emissions requirement such as incentives that will drive the effort to reduce emissions in upstream oil and gas industry will still be the turning point.