Jakarta – The House of Representatives has enacted a new Energy Law that is aimed at securing sustainable energy supplies, and promoting energy conservation and the use of renewable energy resources.

In a plenary session Tuesday, all 10 House factions agreed by acclamation to enact the new law. The legislation was initiated by the House, and had been under discussion by the House's energy commission with the government, the private sector and other stakeholders since 2006.

"A review and revitalization of our national energy policy must be the first priority, as energy is a vital public need whose provision is the responsibility of the state," commission chairman Agusman Effendi said of the law.

The new legislation sets out the broad policies for the development of the energy sector, and will be complementary to other energy-related laws, including the 2003 Geothermal Law, the 2001 Oil and Gas Law, the 1997 Nuclear Energy Law, and the bills currently being deliberated to replace the 1985 Electricity Law and the 1967 Mining Law.

The policies set out in the bill include the maintaining of a strategic energy reserve to ensure the nation's energy security, consisting of not only conventional fossil fuels (oil, gas and coal), but also renewable energy resources, such as biofuels, hydropower, and geothermal energy.

In addition, the law envisages the development of renewable energy resources through pricing mechanisms and incentives, with the latter also being employed to promote efficient energy use.

Under the law, both the central government and local administrations are required to actively participate in ensuring the success of the new policies by providing tax breaks and financial incentives to industries that avail of renewable energy and engage in energy conservation. Energy subsidies for the poor will also be maintained.

A National Energy Board must be set up within six months after the law's enactment to serve as the highest-level policy maker in all energy sector development programs. The board will be chaired by the President and have the energy and mineral resources minister as a member.

Energy and Mineral Resources Minister Purnomo Yusgiantoro, who attended the plenary session, said the government would first work on drafting the government regulations establishing the board, and then the other ancillary regulations required to give effect to the legislation.

"With this new law, and with the board directly chaired by the President, we expect sustainable energy policies in the future to be more effective and better enforced," he said.

The ministry is currently discussing possible fiscal incentives with the tax service in connection with the law.

Prior to the enactment of the new law, President Susilo Bambang Yudhoyono issued a presidential decree on national energy policy, which envisages renewable energy accounting for 17 percent of the nation's energy consumption by 2025, with oil's share being reduced to 20 percent.

Oil currently accounts for 54 percent of the energy mix for the country's 220 million people, with the growing demand for energy posing the threat of an energy crisis in the future in the absence of sustainable energy policies.