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Accelerate Economic Growth with Green Recovery, COVID-19 Aftermath

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Jakarta, 3 December 2020 – “All countries, globally, including the G20 countries, are facing a health emergency and economic crisis due to the Covid-19 pandemic. But the world also has to focus on fighting an enemy with a huger destructive force, namely climate change, “said Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), in his opening remarks opening the online launch of the Climate Transparency Report 2020.

The Climate Transparency Report (previously known as Brown to Green Report) is the world’s most comprehensive annual review of G20 countries’ climate action and their transition to a net-zero emissions economy. Climate Transparency is a global partnership of 14 think tanks and NGOs that brings together experts from the majority of G20 countries supported by the Federal Ministry of Environment, Nature Conservation and Nuclear Security, the German Embassy to Indonesia, or the German BMU.

This year’s report analyzes the performance of the G20 countries across 100 indicators of climate adaptation, mitigation, and the financial sector. This year, the Climate Transparency Report also includes the G20 government’s response to the Covid-19 crisis as well as the latest emission data and projections for 2020.

Furthermore, Fabby said the G20 countries, which represent 75% of global greenhouse gas emissions, must immediately make the right decisions in overcoming the pandemic and climate change. It is to fulfill the Paris Agreement commitment, therefore the global temperatures stay below 1.5-20C, which results in natural disasters, hunger, poverty, and a surge of unemployment.

To sharpen climate mitigation ambitions, by 2020, all countries that signed the Paris Agreement are required to update their Nationally Determined Contributions (NDC) climate targets. However, Indonesia has stated that it will not update or increase its NDC target because it still has to focus on handling Covid-19 and the impact of the economic recession on the Indonesian economy.

The Indonesian economy has indeed experienced a significant contraction. As can be seen from the economic growth has been negative twice in a row in the second quarter (- 5.32%) and the third quarter (- 3.49%). The government has made efforts to revive from the abyss of recession, including by providing social protection stimulus and stimulus for micro, small and medium enterprises (MSMEs) to recover Indonesia’s economic sector, which is mainly supported by the MSME industry.

Besides, In April 2020, Indonesia adjusted the state budget to address the COVID-19 pandemic risks to the economy. Substantial funds have been allocated to fossil fuel companies and not for green investment. Almost IDR 100tn (out of more than IDR 327tn) will support state-owned companies, Pertamina (oil) and PLN (electricity). By mid-July 2020, the government had committed USD 6.49bn to support fossil fuel energy, compared to just USD 237.17m for clean energy through new or amended policies since the beginning of 2020.

 “The right step to recover from the health crisis and economic recession caused by Covid-19 is to invest more heavily in renewable energy and implement green recovery,” said Lisa Wijayani, Green Economy Program Manager, IESR, in her explanation regarding the findings of the Climate Transparency Report. 

Indonesia’s NDC Status is Highly Inadequate 

The 2020 Climate Transparency Report recommends five Principles of Green Economy Recovery, specifically, 1) G20 member governments can direct investment towards sustainable infrastructure. 2) Investment based on nature and the environment. 3) Investing in education, training, and development (R&D) of environmentally friendly industries. 4) Disbursing conditional bailouts that are in line with long-term climate commitments. 5) G20 member countries can strengthen policies, regulations, and incentives to support sustainable transitions. 

“Green recovery can improve public health and welfare. Also able to create jobs and foster local economic value, able to increase biodiversity and the environment, and provide financial security and fiscal benefits. Another advantage is increasing energy access and security, ”explained Lisa. 

Based on the analysis of the Climate Transparency Report, Lisa regrets that Indonesia’s NDC target is still highly insufficient to reduce 26 percent of greenhouse gases in 2025 and 29 percent in 2030.

“The highest emitters come from the industrial sector (37%), followed by the transportation sector (27%) and the energy sector (27%). So far, there are several positive things that the government has done. The Ministry of Energy and Mineral Resources has issued Permen No. 4 of 2020 to strengthen the competitiveness of renewable energy. Meanwhile, currently, the Presidential Decree on renewable energy is waiting for the President’s approval which includes regulation on the fit in tariff for renewable energy with a capacity of below 5 MW, “explained Lisa.

However, the Climate Transparency report still encourages the Indonesian government to immediately take steps to break away from the fossil industry by phasing out the use of coal, limiting public costs for fossil fuels, increasing renewable energy targets, establishing policies to strengthen and improve existing building structures, carbon pricing, and financial sector greening. 

Indonesia Becomes a “Hotspot” for Green Industry Workers 

Responding to the presentation of the results of the Climate Transparency Report, Kuki Soejachmoen, the Founder of the Indonesian Decarbonization Research Institute, realized that this 2020’s carbon emission reduction was mostly due to activity restrictions and mobilization to prevent Covid-19 transmission. However, Kuki emphasized that the problem of climate change is not an unpredictable phenomenon. 

“Efforts to limit global temperature have been going on for about 20 years. We should be better prepared to face it, “she said. 

She hopes that climate change is actualized in the financial system in Indonesia. 

Noor Syaifudin, the Associate Expert Policy Analyst, Center for Climate Change Financing and Multilateral Policy, Fiscal Policy Agency, said that his party has issued policies related to incentives for corporate taxpayers’ income tax leave (PPh) or tax holidays as well as tax allowance for companies, including those engaged in renewable energy. 

“We also continue to encourage the private sector to be involved in funding related to climate change. Now we are discussing policies related to carbon prices and drafting a climate change fiscal framework that includes strategies for meeting the NDC and SDG targets, “he added.

Moreover, Cristina Martinez, International Labor Organization (ILO), Regional Office for Asia and the Pacific, Bangkok, encouraged the Indonesian government to coordinate cross-ministerial policies and provide stimulus support.

“Especially to reform the education system to be more competitive with the development of renewable energy,” said Martinez.

“The ILO projects that in 2030 the Asia Pacific region will be the hottest spot for jobs in the renewable energy sector in the world. Especially China, India, and Indonesia, “she said.

“Job opportunities in environmentally friendly industries or green industries will be very wide open,” continued Dessi Yuliana, Green Investment Specialist at the Global Green Growth Institute (GGGI).

Dessi explained that based on the results of the study she learned from the green industry, there would be 2 to 5 times more jobs than the fossil industry.

“To achieve the target of 23 percent of the renewable energy mix, Indonesia can create 7 million jobs in 2030. Compared with the fossil industry, which is only able to create 3.9 million jobs,” she said.

Indeed, the beneficial impact apart from providing income for workers also addresses environmental problems such as water shortages with peat restoration and mangrove reforestation.

Lucia Karina, Director of Public Affairs, Communications & Sustainability, Coca-Cola Amatil Indonesia, said that investment in environmentally friendly research is also prominent. In the process of distributing the product, the company has also innovated a cooling system, which is two times more energy-efficient. 

Coca Cola Amatil, which employs more than 9500 employees, is targeting the use of 60 percent renewable energy in operating its business with solar power plants. Unfortunately, there are many challenges that companies have to face in the construction of these solar power plants.

“It is a bit complicated to get through the licensing process, long bureaucracy, and a fairly expensive investment. 

“The government should immediately fix this so that the industry will not hesitate in implementing renewable energy as other countries in the world have done,” she said.

In general, the Indonesian government agrees that Indonesia’s economic and social recovery must be placed right within the framework of sustainable development goals with an emphasis that nothing should be left behind (no one left behind). It was conveyed by Agustaviano Sofjan, Director of Development, Economy and Environment, Ministry of Foreign Affairs of the Republic of Indonesia, on the same occasion. 

“At the G20 Summit under the leadership of Saudi Arabia, President Jokowi emphasized that post-pandemic Indonesia aspires to build a more inclusive, sustainable, and resilient economy. The President also highlighted that Indonesia will have to carry out a major transformation with a commitment to a greener and more sustainable economy, ”he said. 

Agustaviano added that in the next few years, Indonesia will play a strategic role in the international arena. It will support inclusive and sustainable national social and economic recovery. 

 “Indonesia’s presidency for the G20 has been accelerated from 2023 to 2022. Starting in 2021, we will also become members of the UN Economic and Social Council. In 2023, Indonesia will be chairman of ASEAN, “said Agustaviano. 

The government hopes that there will be good cooperation between parliament, government, academics, civil society, such as the IESR, and also the media to encourage Indonesia’s economic recovery.

A total of 205 participants joined the online meeting application. This event was divided into two discussion sessions. The first session was themed Just Transition to a Low Carbon Economy: Accelerating Indonesia’s Recovery and Green Economic Growth. Meanwhile, the second session featured Transition to a Green Economy: Opportunities in Deploying Sustainable Jobs. After the discussion, the participants watched the videos created by the Climate Innovation Hack video competition participants. Nine (9)popular online media in Indonesia covered this CT Report launch event.

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