Factsheet: Energy Law EL7

In 2007, the government established a specific legal basis for national energy management, with the adoption of Energy Law No. 30/2007 (EL7). The law spells out general principles for the management of energy resources and the government’s basic targets for the future development of the energy mix. This Law recognises energy security as a critical national issue, and sets out to reduce dependence on imported refined oil while boosting the use of other energy sources, including natural gas, biofuels and geothermal resources. It is a comprehensive law that stresses the importance of sustainable development, environmental preservation and energy resilience in national energy management; it laid the foundation for regulations on the development of renewable energy and energy conservation. EL7 codified the institutional structure for energy management, establishing the National Energy Council, and specified the distribution of prerogatives between central government, Parliament, and regional and local authorities. Compared to other sectoral laws, EL7 provided considerable power to Parliament; as approved by government, the National Energy Policy needs consent of Parliament. In addition, it stipulates that the House of Representatives approves international energy agreements and selects the members of the NEC. Regional and local governments are given the power to develop regional master plans and regulations on energy. This includes the granting of licences for coal mining and renewable energy exploitation as well as the supervision of local enterprises, including the regional and local offices of the state-owned electricity company PLN (the State Electricity Company / Perusahaan Listrik Negara, or PLN). The Law includes incentives for private and state companies involved in the distribution and utilization of renewable energies, including biofuels. In terms of supply-side policies, it requires that more attention should be given to new and renewable energy development and that incentives should be developed for energy providers to do this. The Law also requires that energy is provided for under-developed, remote and rural areas by exploiting local energy potential, and renewable energy in particular. Throughout these developments, there should be a prioritisation of environmentally friendly technologies.