Paving the Road to a More Sustainable Future: Indonesia's Green Transition during Pandemic

Due to the impacts of COVID-19 pandemic until this far, most governments in the world are now trying their best to provide various policies to limit the disease's spread. In anticipation of prolonged infection, Indonesia's government initiated a fiscal stimulus to address the economic impact of COVID-19. In addition to that, according to Carbon Brief (2020), the crisis also affects global CO2 emissions in which the carbon emissions in China have dropped by 25% during the pandemic, and the issues of economic recovery and green transition are integrated one with another. The question that may arise is, how green is Indonesia's post-COVID-19 recovery strategies?

The reduction of greenhouse gas emissions during the pandemic, as reported by the Carbon Brief (2020), might give a sense of false hope to society since the emissions most likely will rebound immediately after the crises, as history proves. The graphic below shows numerous historical global crises such as the Spanish Flu and the Great Depression that demonstrated a significant reduction of greenhouse gas emissions due to decreased industrial-related activities. Many might celebrate it as a good sign for the planet, only to find that the emissions rose again right after the crises were over.

Global crises have contributed to emissions reduction

Source: Global Carbon Project via Washington Post

Having the issues of economic recovery and clean energy transitions in hand, policymakers must have a joint approach to address both problems by first acknowledging the impacts of economic activities on the environment and then acting on fiscal tools and policies to generate an integrated government system build back better.

A green stimulus is highly recommended for all possible economic stimulus measures and is proven to be sufficient to be applied in crises and post-crisis conditions. The International Energy Agency (2020) emphasizes the importance of green stimulus programs in restoring economic conditions in some countries after the 2008-2009 global financial crash. Several governments attempted to attract more investors in the energy sector by creating economic stimulus in the clean energy investment. As predicted, the post-financial crisis was followed by the rise of greenhouse gas emissions since 2009, which eventually brought a global awareness towards climate science.

In the context of Indonesia; deforestation, peatland fires, and the burning of fossil fuels mainly contribute to the GHG emissions (Carbon Brief, 2019); nevertheless, the country’s fossil fuel sector has been hit hard by the mixture of COVID-19 pandemic and the drop in global energy prices in which actually can be perceived as a chance for Indonesia to create stimulus plans and packages to support the shift from fossil fuels to a more sustainable solution, namely renewable energy sources, to secure domestic energy supply.

Indonesia’s Nationally Determined Contributions (NDCs), plans to have new and renewable sources accounted for 23% of the total of energy sources by 2025 and the figure is targeted to be at least 31% of the sum of national energy mix before 2050 (Climate Policy Tracker, 2020) as the core of the Paris Agreement to reduce the GHG emissions globally. The target seems to be ambitious since the portion of renewable energy sources only reached 8.8% in 2019 (Chandra, 2020). However, in April 2020, Indonesia has responded to the shrunken demand and low exports in its oil and coal sectors by putting them in the list of eligible areas to receive fiscal incentives via stimulus packages. Even though it is true that coal is still dominating the country’s energy mix, the stimulus packages would only trap Indonesia in the status of a coal-dependent country.

Thankfully, through the Ministry of Energy and Mineral Resources (MEMR), the government also recognized that the renewable energy sector is equally affected by the pandemic situation. In support of the industry, the government initiated to provide tax incentives, stimulus, acceleration of some renewable energy projects (Kementerian Energi dan Sumber Daya Mineral, 2020), which is the risk of investing in renewable energy projects in Indonesia would be minimized. Another initiative to be thankful for in this challenging time is that the government had just issued a regulation that supports the use of renewable energy sources just before the spread of COVID-19 in Indonesia. In February 2020, the MEMR enacted the Regulation No. 4/2020 on the Second Amendment to MEMR Regulation No.50/2007 on the Utilization of Renewable Energy Resources for Electricity Procurement to diminish several regulatory hindrances regarding the development of renewable energy projects such as the removal of Build, Own, Operate, Transfer (BOOT) scheme, the regulation also accentuates that PLN must prioritize the electricity purchase from the renewable energy projects that built under the system of independent power producers (Draps, Modjo and Yuliandhini 2020).

Blessed with an abundance of sunlight, Indonesia should consider broadening the solar power projects if the country is to add more renewable sources contribute to the national energy mix, not to mention that by opting for more sustainable sources in time of crisis would benefit the country in many ways, such as: fulfilling the NDCs and national targets, reducing the national GHG emissions, achieving low electricity prices especially in the middle of the crises, creating more green jobs, and as a form of support for green technology investment. In line with this idea, MEMR, along with a local think tank are working on a solar project that worth US$1.07 per annum (Harsono, 2020) for at least the next four until five years. Starting with the first 100-200 megawatt solar panels of the total combined capacity of 1 gigawatt-peak are expected to be installed in Nusa Tenggara and Bali—the provinces whose electricity supply costs are the highest—in the first year. To make the project more sustainable, training more human resources in installation and reparation skills is already on the government’s priority list. The local think tank also estimated the project that would commence next year can generate up to 22,000 jobs and cut back national electricity subsidies, which means the government has taken one step forward to help the country from the national economic downturn due to the pandemic without sacrificing the environment. The economic impacts of COVID-19 are inevitable and undeniable. However, to see this as an opportunity to build back better is an optimistic perspective for us to cultivate.

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REFERENCES

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Climate Policy Tracker, 2020, viewed 6 August 2020, <https://climatepolicytracker.org/countries/indonesia/>

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Kementerian Energi dan Sumber Daya Mineral, 2020, ‘Dampak COVID-19 pada pengembangan energi terbarukan di Indonesia’ [PowerPoint Presentation]. Available at http://iesr.or.id/wp-content/uploads/2020/04/Bahan-Vidcon-DJEBTKE-dengan-IESR-21-April-2020dek.pdf , accessed 7 August 2020

Mooney, C, Dennis, B & Muyskens, J 2020, ‘The coronavirus could halt the world’s emissions growth. Not that we should feel good about that.’, The Washington Post, 6 March 2020, viewed 5 August 2020, https://www.washingtonpost.com/climate-environment/2020/03/06/coronavirus-could-halt-worlds-emissions-growth-not-that-we-should-feel-good-about-that/?arc404=true

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Aini Utami Rahayu. (2020). Paving the Road to a More Sustainable Future: Indonesia's Green Transition during Pandemic. SMI Institute, PT Sarana Multi Infrastruktur (Persero). Diakses , dari