Capability and Funding Needs for Mitigation of Climate Change Unequal

Every year, the average government only allocates 3.5 percent of the state budget for climate change mitigation and adaptation activities. In addition to optimizing the APBN, mobilization of funding sources outside the APBN is also needed.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI.

KOMPAS/WAWAN H PRABOWO (WAK)

A row of wind turbines of the wind power plant (PLTB) decorates the peak of a hill in Kamanggih Village, Kahaungu Eti District, East Sumba, East Nusa Tenggara on Tuesday (2/2/2021). The PLTB, which began construction in 2013, is currently unable to meet the electricity needs of the local community. Although it can still be operational, its battery performance is not optimal.

JAKARTA, KOMPAS — Indonesia's funding capabilities and needs for climate change mitigation and adaptation are lame. Therefore, the government's policy direction is on two things, namely optimizing the state revenue and expenditure budget or APBN and encouraging the mobilization of funding sources outside the APBN.

Based on the enhanced nationally determined contribution (ENDC), in 2030, Indonesia is targeted to reduce greenhouse gas emissions by 31.89 percent on its own and 43.20 percent with international support. Funding will be needed, among others, for the forestry, energy and transportation sectors, industrial process and production use (IPPU), as well as waste(waste).

Young Expert Policy Analyst at the Ministry of Finance's Center for Climate Change and Multilateral Funding Policy Ferike Indah Arika, said, based on the Third Biennial Update Report (BUR) in 2021, the accumulated funding for climate change mitigation in 2018-2030 is IDR 4,002 trillion. Meanwhile, according to the nationally determined contribution (NDC) roadmap, up to IDR 3,779 trillion is needed in 2020-2030.

Meanwhile, every year, the government only allocates an average of 3.5 percent of the state budget for climate change mitigation and adaptation activities. However, this only applies to allocations in ministries/agencies. This means that it does not include allocations for subsidies or state capital injections (PMN).

"From the APBN allocation that we monitored, the allocation related to climate change adaptation and mitigation activities is significantly different from what we have and what we need," he said in the seminar "Bridging Cross-Sectoral Gaps in Pursuing More Ambitious Climate Targets" hosted by the Institute for Essential Services Reform (IESR) in Jakarta on Thursday (10/8/2023)."

Therefore, added Ferike, the government's policy is directed towards two things. Firstly, optimizing what is owned (by the APBN). The second strategy is to encourage the mobilization of funding sources outside the APBN.

Also read: Even though it's slow, Indonesia is able to carry out the targeted energy transition

The latest policy that can support funding related to climate change mitigation and adaptation is the application of carbon economy values. In addition, energy transition mechanism (ETM), and just energy transition partnership (JETP) which were both initiated at the G20 Summit (Summit) in Bali in November 2022 .

Associate Expert Policy Analyst of the Ministry of Energy and Mineral Resources (ESDM) Nur Cahyanto said, one of the decarbonization efforts is to end the operation of the steam power plant (PLTU). Based on Presidential Regulation (Perpres) Number 112 of 2022 concerning the Acceleration of Renewable Energy Development for the Provision of Electricity, in 2050, no more PLTUs are allowed to operate.

The Ministry of Energy and Mineral Resources is currently preparing a roadmap to end the operation of coal-fired power plants. "There will be two ministerial decrees (Kepmen) in the future. The first one is the roadmap and the second one is its determination in accordance with Presidential Regulation No. 112/2022. Discussions are still ongoing because this needs to be approved by the Ministry of Energy and Mineral Resources, Ministry of Finance, and Ministry of State-Owned Enterprises," he said.

Apart from that, there is also a Business Plan for the Supply of Electricity (RUPTL) of PT Perusahaan Listrik Negara (Persero) for 2021-2030. In the RUPTL, renewable energy generation capacity is targeted to reach 29 gigawatts by 2030.

Also read: Energy Transition Becomes a Momentum for Equitable Development

KOMPAS/TOTOK WIJAYANTO (TOK)

Technicians maintain the solar panels installed on the roof of the Directorate General of Electricity Ministry of Energy and Mineral Resources (ESDM) building in Jakarta on Friday (5/5/2023). Based on data from the Ministry of Energy and Mineral Resources (ESDM), Indonesia's potential for new and renewable energy reaches 3,686 gigawatts, and the portion that has been utilized is 10,889 megawatts.

Concrete action needed

Executive Director of IESR, Fabby Tumiwa, evaluated that the intersectoral planning of climate change mitigation and anticipation in Indonesia is still not aligned. He exemplified that from the existing draft, the national general plan for electricity for 20 years (RUKN) is not in line with the target of zero net emissions (NZE) for the generation sector in 2050.

Meanwhile, in the transportation sector, there has not yet been any clarity regarding when emissions will reach their peak or the strategy to limit them. According to Fabby, low-quality fuel still dominates the consumption of fuel, and fuel subsidies continue to increase.

"If we talk about economic growth related to (the country's) middle income trap, then this should be done in line with the reduction of greenhouse gas emissions. New innovations and strategies are needed for greener growth. Need more ambitious targets. Also commitment is accompanied by concrete action, "said Fabby.