Transition risk analysis of a 20 mw electrical power capacity addition at PT X, a palm oil processing plant
DOI:
https://doi.org/10.61511/enjust.v2i2.2025.4154Keywords:
electrical power, palm oil, risk analysisAbstract
Background: In line with the government's Net Zero Emission (NZE) policy, Indonesia's low-carbon policy creates transition risks for companies. The addition of 20 MW of electrical power at PT X, a palm oil processing plant in South Kalimantan, requires a comprehensive transition risk analysis. This analysis aims to identify and manage the potential risks that may arise during this energy transition process. The objectives of this study are to assess the risks associated with the power addition, identify mitigation measures to reduce adverse impacts, and provide recommendations to ensure a smooth and sustainable transition while safeguarding the company against financial loss. Methods: The risk analysis was conducted to support company management in making decisions regarding the electrical power addition at PT X in 2024. Findings: The findings indicate that Indonesia’s low-carbon policy and carbon-pricing implementation pose a very high transition risk to PT X, with Scenario 4 identified as the most financially favorable option. Implementing mitigation measures, including biomass fuel substitution, carbon-capture technology, energy efficiency, carbon credits, and renewable energy certificates, could reduce the risk level from very high (25) to low (9), thereby minimizing potential operational and financial losses. Conclusion: The 20 MW power addition at PT X using electricity supplied by PLN carries lower risk compared with a power plant expansion. Novelty/Originality of this article: This study highlights the importance of transition risk analysis in supporting PT X's efforts to achieve a smooth and sustainable energy transition while safeguarding the company's financial interests and considering the surrounding environment.
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