Green Economy Index Becomes Measuring Instrument for Green Economic Performance in Indonesia

TEMPO.CO, Jakarta - The Ministry of National Development Planning/National Development Planning Agency (abbreviated in Indonesian: Kementerian PPN/Bappenas) launched the Green Economy Index at the 3rd G20 Development Working Group (DWG) Side Event: Towards Implementation and Beyond: Measuring the Progress of Low Carbon and Green Economy in Bali, on Tuesday, August 9th 2022. 

The Green Economy Index is a measuring tool to evaluate the achievement and effectiveness of Indonesia's economic transformation towards a green economy. 

"The principle of the Green Economy is to create high economic growth along with social welfare and maintain the quality and carrying capacity of the environment," The Minister of National Development Planning Suharso Monoarfa said.

The focus of the Green Economy Index is to increase green investment in the economic pillars; managing sustainable assets and infrastructure as well as ensuring a fair and affordable transition (environmental pillar), and empowering human resources (social pillar). 

The Green Economy Index consists of 15 indicators covering the three pillars of sustainability. The following are the details of these indicators: 

A. Environment Pillar with five indicators

Percentage of land cover of Indonesia's land area

New renewable energy (EBT) mix from primary energy sources

Percentage of managed waste

Percentage of cumulative emission reduction from baseline

Decreased peatland cover 

B. Economic Pillar with six indicators 

Emission intensity

Final energy intensity

Gross national income per capita

Agricultural productivity

Labor productivity in the industrial sector

Labor productivity in the service sector 

C. Social Pillar with four indicators 

Average length of school

Life expectancy 

Poverty rate

Open unemployment rate

Suharso Monoarfa said the implementation of the Green Economy Index could provide various benefits for Indonesia, including growth in average Gross Domestic Product (GDP) at 6.1-6.5 percent per year until 2050, 87-96 billion tons of greenhouse gas emissions salvaged in the 2021-2060 range. There is also a reduction in emission intensity of up to 68 percent in 2045 and a higher Gross National Income (GNP) in the range of 25-34 percent or the equivalent of US$ 13,890-14,975 per capita in 2045.

Green economic practices will also generate an additional 1.8 million workers in the green jobs sector by 2030 across the energy, electric vehicle, land restoration and waste management sectors. In the environmental sector, as many as 40 thousand lives will be saved by reducing air pollution in 2045, restoration of ecosystem services is worth US$ 4.75 trillion per year in 2060, and an area of 3.2 million hectares of protected primary forest in 2060. Also, an additional forest cover of 4 .1 million hectares in 2060, increasing the area of mangrove forests to 3.6 million hectares in 2060, and increasing climate resilience in the economic sector.

In line with the Green Economy Index, an instrument is needed to bridge the funding gap for the Sustainable Development Goals (SDGs) to accelerate their achievement in 2030, namely the Integrated National Financing Framework (INFF). Suharso said that around US$ 1 trillion was needed for Indonesia to realize the SDGs goals for the next eight years. Especially because of the Covid-19 pandemic, there is an annual global SDGs funding gap of US$ 2.5 trillion.

Indonesia is one of 86 countries developing INFF and one of 40 countries that will implement an integrated financing strategy within the next year.  

"Indonesia has the tools and resources, but the challenge lies in bringing all stakeholders together to align business processes with the SDGs," said Monoarfa. 

INFF is a facilitator that connects ministerial institutions with various sources of funding in mapping the landscape of sustainable development financing. INFF is tasked with identifying innovative financing mechanisms, such as blended finance, impact investment, aligning philanthropic groups, to weight-based financing that is in line with the SDGs content. 

"INFF is an umbrella for covering all financing initiatives towards achieving the SDGs agenda on time," he said. 

Indonesia has taken steps towards developing a sustainable financing strategy by prioritizing the SDGs. Among other things, taking into account the SDGs aspects in the BUMN framework as well as other investment and business policies, including in the stock market. 

This green economy practice is in line with the big theme of the 2022 SDGs Annual Conference which will take place at the Sultan Hotel Jakarta on 30 November-2 December 2022. This year, the 2022 SDGs Annual Conference has the theme "Encouraging Real Green Economic Action to Achieve the SDGs". The annual agenda aims to echo and encourage community participation in accelerating the achievement of SDGs in Indonesia. The Sustainable Regional Competitiveness Index or IDSDB will also be launched at this event, the result of the collaboration between the Ministry of National Development Planning/Bappenas with the Monitoring Committee for the Implementation of Regional Autonomy (KPPOD) and the Association of Indonesian District Governments (APKASI). 

Furthermore, in the first session of the SDGs Annual Conference 2022 with a focus on "Green Economy for Sustainable and Inclusive Development", the Minister of National Development Planning, who is also the Head of Bappenas, Suharso Monoarfa, will convey green economic strategies to accelerate the achievement of SDGs in Indonesia. Also present was the United Nations Resident Coordinator in Indonesia, Valerie Julliand, who would talk about global partnerships and the UN System's strategy in encouraging the implementation of a green economy. The public can take part in the 2022 SDGs Annual Conference agenda by registering here. (*)