Civil Society Recommendations for the Development of Indonesia’s Second NDC

press release

Jakarta, February 2, 2024 – Indonesia, under the coordination of the Ministry of Environment and Forestry (MoEF), has initiated the drafting process for its Second National Determined Contribution (SNDC) aimed at emissions reductions by 2030 and 2035. The MoEF intends to submit the SNDC to the UNFCCC in 2024.

The Institute for Essential Services Reform (IESR) along with several civil society organizations have requested for revisions in the SNDC, proposing updated scenarios and targets aligned with the objective of limiting global warming to below 2 degrees Celsius. They advocate for striving to achieve the ambitious goal of 1.5 degrees Celsius, as set forth by the Paris Agreement and reinforced by the Global Stocktake decision at COP 28.

IESR also urges the government to engage public participation in the preparation process of the SNDC. Furthermore, it is essential for the government to adhere to the principles outlined in Article 4, Line 13 of the Paris Agreement and the provisions of the COP series during SNDC preparation.

Currently, the government continues to utilize the business-as-usual (BAU) scenario for calculating emission reductions. However, civil society deems this scenario irrelevant as a basis for emission calculations. Indonesia must transition to a more accurate calculation system that references relative emissions in a given year, considering a realistic trajectory of global and Indonesian economic growth.

“While the emission reduction target in the Enhanced NDC (ENDC) appears to be increasing, it still does not align with the goal of limiting temperature rise to 1.5 degrees Celsius. Presently, the ENDC target only aims for a 31-43 percent reduction below BAU. If using the BAU calculation method employed thus far for setting emission reduction targets in the NDC, Indonesia’s target should be at least a 60 percent reduction from BAU for unconditional efforts and a 62 percent reduction from BAU for conditional efforts with international assistance. These figures do not include emission reductions from the agriculture, forestry, and land sectors,” remarked IESR Executive Director Fabby Tumiwa.

According to the analysis conducted by IESR, using 2022 emissions as the benchmark for target setting, Indonesia must establish an unconditional emissions reduction goal of 26 percent, equivalent to 859 MtCO2e by 2030, and a conditional reduction target of 28 percent, amounting to 829 MtCO2e with international assistance. These targets are crucial for contributing to the objective of limiting temperature rise to 1.5 degrees Celsius.

In addition to increasing emission reduction targets, Indonesia must also diminish the reliance on fossil energy sources such as coal and gas within its energy system. Based on calculations from the Climate Action Tracker (CAT), the coal component in Indonesia’s electricity system should be reduced to 7 to 16 percent by 2030, with the phasing-out of PLTU operations before 2040. Similarly, gas usage needs to be curtailed to 8 to 10 percent by 2030, with phasing-out operations by 2050.

Deon Arinaldo, IESR’s Energy Transformation Program Manager, emphasized that the reduction in the fossil energy mix should be accompanied by an increase in the share of renewable energy, ranging from 55 to 82 percent by 2030. However, it is worth noting that the target listed in the ENDC pertains to the installed capacity of renewable energy rather than the actual mix. IESR contends that solely focusing on installed capacity does not adequately reflect the relationship with emission reduction objectives.

“With the clarity of the renewable energy mix target in the electricity sector, it becomes possible to anticipate and even calculate the emission intensity of the electricity sector by 2030 to achieve the SDNC target. Furthermore, a significant presence of renewable energy will offer a clearer roadmap for electricity planning, specifying the types of renewable energy that should be prioritized to bridge the existing gap. With only 7 years remaining, it’s evident that solar and wind power plants, known for their shorter construction periods, should take precedence in development efforts to meet the mix target. Additionally, interventions are necessary for fossil fuel power plants, emphasizing the importance of reducing the reliance on fossil energy through various strategies such as terminating the operation of PLTU or reducing its utilization,” stated Deon.

Furthermore, IESR and other civil society organizations criticize the ENDC document for neglecting to incorporate the principle of climate justice. Civil society advocates for the SNDC preparation process to be more inclusive, ensuring climate protection for vulnerable groups and transparency throughout.

Wira Swadana, IESR Green Economy Program Manager, emphasized that the government must ensure fair distribution of the burden of emission reduction.

“Entities responsible for the highest emissions must shoulder a larger portion of the emission reduction efforts. Furthermore, the formulation of the SNDC should prioritize the principle of climate justice, which aims to mitigate both short-term and long-term risks while ensuring fair distribution of benefits, burdens, and risks, particularly for marginalized communities,” remarked Wira.

IESR and other civil society groups have outlined six recommendations for the preparation of the SNDC. First, the government should adhere to the principles of the Paris Agreement as outlined in Article 4, Line 13, and the guidelines set forth by the COP. Second, there should be a focus on integrating measurement, reporting, and verification (MRV) systems tailored for developing country parties. Third, the government should abandon the use of the BAU scenario as the basis for emission reduction calculations and instead adopt a method based on relative emissions in a given year, which takes into account more precise global and Indonesian economic growth projections. Fourth, climate targets should be established in alignment with the Paris Agreement. Fifth, there should be transparent and publicly accessible monitoring and evaluation mechanisms put in place. Sixth, principles of climate justice should be incorporated and implemented throughout the process. These recommendations for the preparation of the Second NDC have been submitted to relevant ministries and institutions.

Three Principles of Equity in Indonesia’s Energy Transformation

Marlistya Citraningrum, Manajer Program Akses Energi Berkelanjutan dalam Sustainability Media Academy pada Kamis (30/11).

Jakarta, November 30, 2023 – Indonesia, like many other countries, faces a critical turning point amid the global climate crisis. As a nation with abundant energy resources, the transition towards renewable energy is urgently necessary. However, this shift must prioritize fairness and equality for all. The energy transition must not solely focus on technical aspects but also consider the social, economic, and moral impacts on the affected communities. In Indonesia, this transition is not just a technical step, but also a moral obligation to ensure that every individual has equal rights in this change.

“We must examine three principles to achieve justice in the energy transition. The first principle is justice at the local level, where we need to take a closer look at which parties directly benefit from and are affected by the energy transition at the local level. For example, we need to assess whether the community around the mine is reaping any benefits from the energy transition,” said Marlistya Citraningrum,  Program Manager of Sustainable Energy Access, at the Sustainability Media Academy on Thursday (30/11).

Furthermore, Marlistya Citraningrum mentioned another principle from the authority perspective. This means that the community needs to see how the local government authority manages the transition. This includes the policies and regulations implemented to ensure fairness for all parties involved. Long-term justice must also be considered, which consists of the community’s participation in managing the future once the mining industry ends. During this time, the community’s welfare must be considered while ensuring the continuity of the economy.

During the energy transition process, it’s crucial to consider the availability of affordable, sustainable, and reliable energy. The instability in energy supply can hinder the achievement of sustainable development goals. Hence, it’s essential to establish a dependable energy system by investing in energy storage technologies, reliable distribution networks, and diversification of energy resources.

“To achieve a successful energy transition, it is crucial for the government, private sector, and communities to work together collaboratively. Education and community engagement programs can enhance people’s understanding of the significance of affordable, sustainable, and dependable energy. By enabling communities to participate in this transformation actively, positive outcomes can be experienced locally,” Marlistya said. 

Marlistya also emphasized that the government must involve more stakeholders, including indigenous peoples, women, youth, and other marginalized groups, in the planning and decision-making processes. This will ensure that all groups are treated equally and included in the opportunities created by the just transition. Social inclusion is also important to ensure that vulnerable groups have fair access to these opportunities.

“In addition to evidence-based policies, equitable energy principles should be applied through the GEDSI approach that emphasizes empathy and involvement in decision-making,” said Marlistya.

Integrating the social dimensions in energy transition financing to achieve a just transition

Changing our energy sources requires a massive transformation of systems. It is not only developing new technologies or building more infrastructures, but it also concerns the people, both as the decision-maker and the most affected by the transition. The discourses on energy transition are heavily dominated by the technical aspect that other elements, such as the social, economical, and environmental aspects are easily overlooked. When talking about the amount of finance needed to build renewable energy infrastructures, for example, the social costs often escape the calculation. If just energy transition is what we truly aim for, it is time to start considering its social dimensions.

Brian Motherway from the International Energy Agency remarked during the G20 Forum on International Policy Levers for Sustainable Investment that while investment is important—due to the high initial capital costs for renewable energy projects, we cannot deny that people-centered sustainable energy transitions are just as important. As the shift toward renewables is happening, societies are also transforming. Whether this transformation is disruptive or empowering largely depends on the choice of policy measures to mitigate the risks entailed in the transition process. The costs to safeguard these risks must also be accounted for in renewable energy project financing, as a way to ensure that everyone can enjoy the benefits from low-carbon development, rather than being the expenses of such projects.

However, some challenges persist in quantifying the social risks and their required costs. As the idea of a just energy transition has only gained traction recently, so does the idea of accounting for the costs of non-project financing. The first challenge is defining what are the social costs of the energy transition. As each energy transition project is traversed at different scales and complexities, these projects would have a different understanding of what includes as the social costs. The most common interpretation of these social costs is usually related to employment and safety nets, while others put more emphasis on energy justice which concerns the fair distribution of cost and benefits to the communities impacted by the change in the energy systems. Without neglecting the diversity of local or regional contexts in energy system planning, establishing a regulatory framework to provide uniform definition of social costs can help private enterprises or financial institutions in designing the budget allocation for non-project financing. 

Secondly, there is a scarcity of data that can depict the amount of socio-economic risks posed by energy transition projects. For example, the Indonesian National Planning Agency (Bappenas) estimated that there will be around 1.8 to 2.2 million jobs in the renewable energy sector by 2060 if the government can provide adequate intervention in this sector. On the other hand, an IESR report on Ensuring Just Energy Transition in Indonesia mentioned that the Indonesian coal industry has provided around 1 million employment, both directly and indirectly. At a glance, this data informed us that there will be more jobs created than the jobs displaced. However, it only represents the macroeconomic outlook of the job transitions, while in reality, the process takes place at the regional or local level. Data that is able to illustrate the impact of shifting modes of employment at the regional or local scale, particularly in coal-dependent areas, can better inform financial institutions in assessing the cost of job transitions for issues such as safety nets, job reskilling, or providing alternative modes of employment. Taking the energy transition as an inevitability, the government must be ready to respond to the risks of unemployment, especially in the carbon-intensive sectors.

Other than the employment sector, the lack of information for the local communities on the planning of energy system transformation also poses a challenge to deploy the necessary amount of money in offsetting the impact. Especially in fossil fuel-dependent regions, this lack of information or knowledge about energy transition policy could render the communities vulnerable when their primary source of economic activity, such as coal mines, are being retired early due to the declining demands in the future. Again, data is crucial to visualize how the economic turnover in fossil fuel-dependent regions are disrupted by the transformation. With comprehensive data, redirecting the main source of regional income away from the fossil fuel industry to the alternatives can be done more comfortably and equitably. 

The G20 governments have the homework to answer these challenges. Undoubtedly, financing is a crucial part of the energy transition, but less attention has been given to the financing of social costs accrued from the systemic change. Financing instruments must be mobilized to accommodate the needs of affected areas and people to provide safeguards and strengthen their economic capacity, not only for the technologies and infrastructures. Well-informed and data-driven policy actions–especially at the regional level–are important to mitigate the adverse impacts related to the energy transition. At the end of the day, just transition is a concept that assimilates both climate and economic objectives. It is time to start unraveling the ‘just’ element of just transition by promoting more inclusive financing mechanisms. 

G20 Parallel Event: High-Level Dialogue on Mobilizing Finance for Indonesia’s Just Energy Transition

The high-level dialogue intends to bring various key stakeholders to have a better understanding of the pathway for just the energy transition of Indonesia and identify the financial needs to enable such a rapid transition. This dialogue intends to support the Indonesia Just Energy Transition platform and contribute to the outcome of the Indonesia G20 Presidency agenda.  

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