Looking at the Integration of Corporate Environmental Management Performance Assessment in Sustainable Taxonomy

Farah Vianda

Jakarta, April 25, 2024– Indonesia’s sustainable development requires economic activities that consider environmental and social aspects. To support this, the Government of Indonesia, through the Financial Services Authority (OJK), transformed the Indonesian Green Taxonomy Edition 1.0 into the Taxonomy for Indonesian Sustainable Finance (TKBI) in February 2024. TKBI classifies economic activities that balance economic, environmental, and social aspects. On the other hand, the Ministry of Environment and Forestry (KLHK) has the Company Performance Rating Program in Environmental Management (PROPER) to assess the environmental management performance of companies. PROPER assessments include the highest and lowest levels of environmental management. Companies with the lowest assessment twice can be prosecuted and revoked business licenses.

Farah Vianda, Coordinator of Sustainable Financing at the Institute for Essential Services Reform (IESR), explained that incorporating PROPER requirements into TKBI requirements will hopefully improve the implementation of TKBI at the industry level. This can also motivate business actors who still lack knowledge related to TKBI.

“With many energy and mining sectors involved in PROPER, this can improve the environmental compliance of these companies. PROPER is one of the important indicators in determining whether business activities have entered the green category. In TKBI, it is still done by self-assessment by financial institutions, and KLHK assesses PROPER and has followed certain steps,” said Farah in the Ailesh Beyond Compliance Webinar: Navigating TKBI Through PROPER on Thursday (25/4/2024).

However, Farah added that, in general, the implementation of PROPER has not been binding or mandatory so far. According to Farah, many companies register only to get the highest rating from PROPER to improve their reputation, especially in attracting green funding sources.

“Under these conditions, there is no significant connection between PROPER and TKBI. TKBI only serves as a reference and has not become a compulsory criterion for business classification. Therefore, in this scenario, PROPER has not served as a strong enough incentive to encourage the widespread implementation of TKBI,” said Farah.

Making the Global Stocktaking Process More Relevant to Southeast Asia

Jakarta, 25 April 2024 – Global efforts to halt climate change by reducing emissions are entering a phase of global consolidation. Since 2023, the Independent Global Stocktake (iGST), a consortium of civil society actors gathered to support the first Global Stocktake in order to assess the progress of the Paris Agreement (2015).

In a webinar entitled Navigating the Outcomes of the First Global Stocktake in Southeast Asia, Arief Rosadi, Climate Diplomacy Coordinator of the Institute for Essential Services Reform (IESR) stated that the results of the first GST had not had much influence on the energy transition process in the Southeast Asia region.

“The most important thing about this GST process is that it must be able to be translated into more ambitious climate policies. Energy transition is the low hanging fruit for Southeast Asia, increasing renewable energy targets and climate ambitions will not only contribute to reducing emissions but provide a positive signal to encourage transformation towards a low carbon economy in the region,” said Arief.

Arief emphasized that efforts to double energy efficiency and triple renewable by 2030 (Double Down,Triple Up Initiative) are crucial stages for encouraging the energy transition in the Southeast Asia region. He also added that the next two year period is a crucial moment for Southeast Asia considering that ASEAN is currently preparing ASEAN Post Vision 2025 and the latest APAEC (ASEAN Plan of Action on Energy Cooperation) energy policy document. The first GST point regarding doubling and tripling of renewable energy efficiency needs to be reflected in both documents.

At the planning, implementation and policy evaluation levels, the role of experts or independent research institutions is important to provide alternative views and input for policy makers. It is necessary to ensure that there is meaningful participation by all parties involved and potentially affected by the policy.

Danize Lukban, climate policy analyst at the Institute for Climate and Sustainable Cities (ICSC), reminded the importance of (climate) policies based on scientific data in this transition process.

“In the policy planning process (iGST derivative), the role of climate experts and institutions conducting research is crucial to provide alternative views and input for policy makers,” she said.

ASEAN as a consolidated body of countries in Southeast Asia is expected to become a consolidation forum for its member countries to produce more ambitious and collaborative climate action within the scope of the Southeast Asia region.

IESR: Indonesia’s Second NDC Needs to Reflect Ambitious Emission Reduction Targets

press release

Jakarta, April 25, 2024 – The Indonesian government, through the Ministry of Environment and Forestry (MoEF), is currently drafting the Second Nationally Determined Contribution (SNDC) document. In contrast to the Enhanced NDC document published in 2022, the emission reduction target in the SNDC document is no longer measured based on emission reductions from the base growth scenario (business as usual). The SNDC will compare greenhouse gas (GHG) emission reductions against the 2019 reference year based on GHG inventories. The government believes that this method of determining emissions is more accurate and will contribute to the global GHG emissions reduction target of 43% by 2030, compared to the 2019 emissions.

The Institute for Essential Services Reform (IESR) believes that updating scenarios that are no longer based on business as usual and instead use scenarios that reference historical emission reductions as a basis for setting targets is a positive development. This approach aligns with the recommendations made by IESR in the previous year.

“The emission reduction target in Indonesia’s SNDC must be aligned with the Paris Agreement target. The findings of the first Global Stocktake at COP 28 revealed that there is still a gap in the global emission reduction target of 20.3-23.9 gigatons of carbon dioxide equivalent. Therefore, it is crucial to consider this to set a more ambitious emission reduction target in 2030,” said Fabby Tumiwa, Executive Director of IESR.

Fabby added that expanding the renewable energy mix is one of the mitigation actions that can increase the emission reduction target in the SNDC. To align with the 1.5 degree Celsius pathway, the renewable energy mix in primary energy needs to reach 55 per cent by 2030. Unfortunately, the Draft Government Regulation (RPP) of the National Energy Policy (KEN), which was drafted by the National Energy Council (DEN), only aims for a renewable energy mix target of 19-21 per cent by 2030. Not only that but in terms of emission reduction targets for the energy sector, the KEN RPP suggests a target level of emissions in the energy sector that is still large, namely 1,074-1,233 million tons of carbon dioxide equivalent in 2030.

Deon Arinaldo, Program Manager of Energy Transformation, IESR, mentioned that if the energy sector emission reduction target in the SNDC refers to the KEN RPP, then it is certain that the target is still not in line with the Paris Agreement. In fact, according to him, the energy sector, particularly the electricity sector, can play a pivotal role in enhancing Indonesia’s emission mitigation ambition with the wide availability of renewable energy options and competitive economics.

“There are less than seven years left until the year 2030, which means that action to mitigate emissions in the energy sector needs to focus on strategies that can be rapidly implemented and accelerated. Renewable energy needs to be massively built in the electricity sector to optimize emission reduction through electrification of the transportation sector through electric vehicles and electric boilers and heat pumps in the industrial sector. All of the above options are commercially available and cost-competitive. The government should not be complacent with other options such as nuclear and CCS that can only be operational after 2030 so that strategies that can reduce emissions are stalled in their implementation,” Deon explained.

Delima Ramadhani, Coordinator of Climate Policy, IESR, said that the latest emission projection by Climate Action Tracker (CAT) reveals that the Enhanced NDC is expected to increase emissions to 1.7-1.8 Giga tons of carbon dioxide equivalent by 2030, which is 70-80% higher than the emissions recorded in 2019. It is important to note that this projection does not include emissions from the forestry and land sectors. To align with the 1.5 degrees Celsius target, Indonesia must reduce emissions between 829-859 million tons of carbon dioxide equivalent by 2030. Alternatively, for a target below 2 degrees Celsius, Indonesia should aim to reduce emissions between 970-1060 million tons of carbon dioxide equivalent, excluding forestry and land sector emissions.

“The government needs to include aspects of fairness and explain why the emission reduction targets listed in the SNDC are considered a fair share of Indonesia’s contribution to global climate mitigation efforts. Thus, it can be seen if the SNDC already reflects the “highest possible ambition” in emission reduction,” Delima added.

On the other hand, IESR highlights that the SNDC document must prioritize justice and good governance. These aspects of fairness and transparency need to be reflected in the SNDC drafting process, which includes promising practices, relevance to national circumstances, involvement of domestic institutions, and public participation.

Renewable Energy Festival: Encouraging Real Action to Lower Emissions

press release
Fabby Tumiwa, The Executive Director of IESR on Renewable Energy Festival

Jakarta, April 21, 2024 – The increase in global temperature due to increased greenhouse gas emissions has an impact on the climate crisis which triggers an increase in the intensity of hydrometeorological disasters. Based on data from the World Meteorological Organization (WMO), the earth’s average temperature in 2014-2023 has been at 1.2 -1.3 degrees Celsius above the average of 1850-1900. Efforts to limit the earth’s temperature so as not to cross the threshold of 1.5 degrees Celsius need to be seriously encouraged by actions and policies to reduce greenhouse gas emissions.

As part of commemorating Earth Day and increasing public understanding for action to reduce emissions, the Institute for Essential Services Reform (IESR), a think tank in the field of renewable energy and the environment, held a Renewable Energy Festival on Sunday, April 21, 2024. Through this festival, IESR invites the public to contribute to personal emission reduction actions and encourage the use of renewable energy to mitigate global temperature rise. The festival included three events consisting of a low-emission fun walk, a seminar and a presentation on renewable energy. Around 108 participants were involved in this event.

Fabby Tumiwa, the Executive Director of IESR, said that the Renewable Energy Festival is an effort to mobilize concrete actions to support the energy transition in Indonesia in order to achieve the zero-emission target in 2060 or sooner.

“The community plays a big role as a pioneer of the use of renewable energy and an ambassador who voices the importance of Indonesia’s renewable energy. Thus, it can encourage policies that support the development of renewable energy. In addition, public awareness of emission reduction will also make people more responsible in using energy through energy savings,” said Fabby.

Fabby added that proper public understanding of renewable energy will encourage greater public involvement in reducing personal and national scale emissions.

Real individual actions in reducing emissions encouraged in this event include using energy sparingly, relying on public transportation or electric vehicles that have minimal emissions and using renewable energy such as solar energy.

Marlistya Citraningrum, Program Manager of Sustainable Energy Access, said that collaboration between the government, civil society communities, academics and stakeholders will strengthen joint efforts to reduce emissions more quickly and massively.

“With collaboration, we can reach out to a wider community in Indonesia and spread the spirit to play a role in creating momentum to accelerate the energy transition and realize a zero-emission Indonesia,” said Marlistya.

Building Low-Emission Cities in Indonesia

Jakarta, April 2 2024 – Urban areas are centers of carbon-intensive activities. High population, dense buildings and intensive energy use contribute to increased greenhouse gas emissions. Climate Transparency 2022 noted that direct and indirect emissions from the building sector in Indonesia accounted for 4.6 per cent and 24.5 per cent of total energy-related carbon dioxide emissions in 2021, respectively. For this reason, the decarbonization of urban areas is one of the crucial efforts to reduce carbon emissions and create sustainable areas, by the Paris Agreement to achieve zero carbon emission targets.

The Government of Indonesia through the Ministry of Energy and Mineral Resources (MEMR) in collaboration with the German Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz/BMWK) and supported by various other ministries by the recommendations of the Ministry of Energy and Mineral Resources agreed to support urban decarbonization efforts through the Sustainable Energy Transition in Indonesia (SETI) program. This program involves consortium members consisting of Gesellschaft für Internationale Zusammenarbeit (GIZ) in Indonesia, Yayasan Indonesia Cerah, Institute for Essential Services Reform (IESR), and WRI Indonesia.

Malindo Wardana, Program Manager of Sustainable Energy Transition in Indonesia (SETI), Institute for Essential Services Reform (IESR), explained that one of the important initiatives of SETI is the Urban Energy Lab. The Urban Energy Lab aims to develop a sustainable local energy ecosystem in urban areas, especially in selected cities. It aims to support a better and more sustainable built environment.

“The selection criteria for the cities that will become SETI projects include the potential for renewable energy in the region, existing sustainability programs, and the willingness of the cities to implement energy decarbonization in the building sector,” Malindo said.

Malindo in the SETI Urban Energy Lab Focus Group Discussion event held on Tuesday (2/4/2024) said, the process of determining the pilot city for the SETI program through the stage of forming a network of potential cities. Cities that are members of the potential city network will then be selected by the Directorate General of New Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources & the SETI consortium as pilot cities. These pilot cities will receive additional support in the form of matchmaking activities between building owners/managers and energy service companies, capacity building such as energy manager/energy auditor certification, integrated energy planning modeling, and energy conservation.

Coordinator of the Energy Conservation Technical Guidance and Cooperation Group, Ministry of Energy and Mineral Resources, Hendro Gunawan said that the government has revised Government Regulation (PP) No. 70 of 2009 into Government Regulation (PP) No. 33 of 2023 concerning Energy Conservation which is a concrete step by the government to regulate the use of energy that is economical, rational and wise. In this regulation, the building sector with an energy use limit of more than or equal to 500 TOE (Ton Oil Equivalent) per year is obliged to carry out energy management. 

 

“Local governments also should implement energy management in buildings that are owned, managed and financed through the state revenue and expenditure budget (APBN) or regional revenue and expenditure budget (APBD),” Hendro said. 

Hendro also mentioned the existence of rules that strengthen the authority of provincial regions in utilizing renewable energy in the regions through Presidential Regulation (Perpres) Number 11 of 2023 concerning Additional Concurrent Government Affairs in the Energy and Mineral Resources (ESDM) Sector in the New Renewable Energy Sub-Sector. 

He hopes that the existence of these regulations and the implementation of the SETI program will be able to support local governments in implementing energy efficiency in buildings, as well as efforts to increase the use of renewable energy in buildings, to reduce the impact of climate change and build a sustainable environment.