Finance Minister: Financing Is 'Stumbling Block' to Conversations on Sustainability

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati stated that financing is a stumbling block to sustainability dialogues. The statement was relayed during the gala dinner of Indonesia Sustainability Forum 2023 with the theme of "Indonesia Welcomes Further International Collaboration for a Better Tomorrow" virtually observed in Jakarta on Thursday, September 7, 2023.

"While talking about sustainability, we are all faced with a critical stumbling block, financing. Many have assumed what is needed to rescue the world from climate change threats. Sustainable financings the one of them, and we all know the need to mobilize financing is important," she said.

For example, she added, as Indonesia continues to grow, it triggers a significantly higher energy demand elasticity. To avoid the increase of carbon emissions as the result of the demand, an increased renewable energy investment is necessitated to sustain economic growth,

According to the United Nations Framework Convention on Climate Change (UNFCCC) COP26 discussion in Glasgow, Indonesia is estimated to require US$280 billion to reach its Nationally Determined Contribution of reduced CO2 level by more than 42% in 2030.

However, she said, the discussion no longer lies on how to realize blended finance in a partnership scheme, and instead about how to create scalability to test ways to reduce carbon emissions on specific projects. 

Currently, the government is planning to stop coal-fired power plants. She believes this measure will affect the balance of PT PLN, Indonesia's electricity company. Because, she said, with no coal-fired power plants, the commodity becomes an abandoned asset. "This becomes an identifiable problem and no longer about the US$280 billion," she said.

The minister gave an example of a coal-fired power plant in Cirebon which will reduce 4.4 million tonnes of CO2 in seven years with US$330 financing needs. Thus, a blend of equity and loans is needed to finance the company. 

The minister stressed that the government has to seriously develop new progress to reduce carbon emissions. "If not, we will continue to convene and talk about sustainability from different places, everyone flies [on planes] which renders reducing CO2 useless. Thus, at every meeting, we must have ambition for a targeted achievement and to resolve issues that need solving," she concluded.

ANTARA

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