Myopic versus perfect foresight target setting for Indonesia's net zero electricity transition

Abstract

In the effort to align with Paris goals, decision-makers set targets that usually concern milestones earlier than 2100. These targets can be derived from different considerations of long-term implications of actions. This study investigates the implications of deciding on emissions targets based on myopic vis-à-vis perfect foresight using long-term energy system optimization model. The study reveals cost discrepancies correspond to the gaps between emissions derived from mixed integer linear programming (MILP) solution in perfect foresight scenarios versus exogenous values in myopic scenarios. When considering myopic approach, our study suggests that avoiding drastic emissions reduction can deliver minimum cost discrepancies relative to what can be achieved with perfect foresight. However, this poses a dilemma where less drastic emissions targets may risk increasing fossil power generation under lenient emissions reduction targets. Complementing less drastic emissions reduction targets with more ambitious policies promoting renewables is necessary to avoid the risk of increased reliance on fossil power generation.