Indonesia's Commitment to Energy Transition Questioned Albeit High Budget

TEMPO.CO, Jakarta - Concerns linger about Indonesia’s true commitment to the energy transition, albeit the government has allocated a significant amount of money toward climate change policies.

Deputy Minister of Finance Suahasil Nazara said the government has earmarked Rp569.3 trillion from the State Budget (APBN) for climate change policies from 2016 to 2022. He emphasized that Indonesia is committed to accelerating the use of clean energy with this substantial budget allocation.

The funds are allocated as follows: Rp332.8 trillion for mitigation, Rp214.2 trillion for adaptation, and Rp22.3 trillion for co-benefits. However, Suahasil acknowledged the challenges towards a just energy transition and highlighted the importance of a just transition to a green economy.

“It does not mean that Indonesia's intention has decreased or its support for a greener and more sustainable economy has reduced. We will continue to strive to fulfill it. We come up with the logic of a just and affordable transition,” Suahasil said in his speech at the launch of research results on sustainable trade and investment on Monday, July 1.

He underscored the importance of a just transition to a green economy but conceded the time needed to reach these targets. “This may take time, it cannot happen in a short time and we strongly support this,” Suahasil underlined.

However, critics argue that the government's actions contradict its stated goals. Bhima Yudhistira, a researcher from the Center of Economics Law Studies (CELIOS), points out that Indonesia's investment focus remains on coal and nickel until 2030. 

This approach, according to him, undermines the government's target of reducing greenhouse gas emissions by 29% by 2030. “The current problem is the rapid opening of nickel smelters with the main energy source using coal-fired power plants,” Bhima told Tempo on Tuesday, July 2.

Dandy Rafitrandi, an economic researcher at CSIS, warns that the net zero emission target is at risk without immediate improvements to energy transition policies. His latest research reveals a lack of adequate infrastructure for green investment and financing in Indonesia. He acknowledges the challenge of transitioning away from coal dependence but criticizes continued production exceeding targets.

“With the current efforts, net zero emissions by 2060 will likely fail. That's why we need to see the Prabowo government's commitment to the energy transition,” Dandy remarked.

Research by Trend Asia shows a sluggish growth rate for renewable energy at only 0.8% annually. Indonesia currently falls far short of its 2025 target of 23% renewable energy usage, with only 11% achieved so far.

Furthermore, Trend Asia noted that the government continues to provide incentives for the coal sector through Perppu 2/2022 on Job Creation Law.

NANDITO PUTRA

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