What should Indonesia do?

1

Enhance its NDC to be 1.5 degree aligned by COP27

  • Clear regulation to implement effective carbon pricing with real net emission reduction.
  • Indonesia must have a just energy transition to shift-out from coal.
  • Indonesia needs to have roadmap to achieve its target for net sink of FOLU in 2030 (as stated in its LTS).
  • Renewable energy plays key role in achieving Indonesia’s target to reach net zero by 2060 or earlier. Enabling policies are needed to ensure renewabe energy implementation, including on energy pricing (by internalizing the externalities) as well as power purchase agreement (including implementation of feed-in-tariff).
  • Implementation of renewable energy, especially the decentralized and using local resources ones, will also address the issue of access to energy in remote areas and most of small islands in Indonesia. Indonesia needs to use this opportunity to address both energy and climate issues.
  • Indonesia must set GHG emission limit for different economy sectors to ensure real reduction and to help achieving both its NDC target as well as its net zero emission target. Without such limit, GHG emission reduction will not be seen as an obligation and will be difficult to achieve those targets.
1

Develop climate resilience development plan

  • Map of climate vulnerability and climate resilience
  • Strategy and planning for climate resilience development
2

Develop climate resilience development plan

  • Map of climate vulnerability and climate resilience
  • Strategy and planning for climate resilience development

What you need to know about Indonesia?

  • The Ministry of Environment and Forestry is tasked to be responsible on overall climate related policies and negotiation. However, during the last years they are less progressive.
  • The Ministry of Energy and Mineral Resources is responsible for all issues related to energy and has to balance the role of both fossil and renewables. The Ministry in consultation with stakeholders has produced a roadmap for energy transition and net-zero with a focus on power generation. Carbon pricing in form of cap-trade-tax is to be implemented starting on 1 April 2022 to coal-fired power plants based on the Law no. 7/2021 on Harmonization of Taxation Regulation.
  • The Ministry of Finance has worked in climate finance, including by introducing climate budget tagging for both domestic and international resources. In October 2021, Law no. 7/2021 on Harmonization of Taxation Regulation was issued, which includes a dedicated article on carbon tax with the first implementation on 1 April 2022 for coal-fired power plants.
  • The Coordinating Ministry for Maritime and Investment Affairs has a role to coordinate a number of ministries including MoEF and MEMR. The Minister has tasked MEMR to work on energy transition and NZE in the energy sector.
  • The Ministry of National Development Planning (Bappenas) has worked on Indonesia’s Low Carbon Development Initiative (LCDI). One of the outcome is the inclusion of GHG emission reduction target in the national midterm development plan of 2020-2024 to be 27.3% compared to baseline in 2024.
Recovery Measures to Highlight:

Recent developments, threats and levers for action

  • Presidential Regulation no. 98/2021 on Carbon Pricing was issued in October 2021 which focuses more on domestic carbon pricing as part of the efforts to achieve Indonesia’s NDC. The implementation regulations are expected to be ready in Q1 of 2022
  • The Ministry of Energy and Mineral Resources announced the roadmap of energy transition towards NZE by 2060. There will be no new coal power plants from 2021 except those that currently in construction and those already signed agreement with PLN (National Electricity Company). The target of renewable energy share in national energy mix 2030 will be 23% and to be come 57% in 2035. The share is expected to reach 87% in 2050 and 100% in 2060.
  • The latest Electricity Supply Business Plan 2021-2030 includes of 51.6% new installed capacity based on renewable energy (equal to 20.9 GW).
  • The Ministry of Environment and Forestry claimed that the deforestation in 2020 decreased significantly (around 75%) compared to those in 2019. Reasons claimed include the culmination of a number of policies aimed at protecting the country’s forests (such as a permanent ban on issuing new permits to clear primary forests and peatlands; a moratorium on new oil palm plantation licenses; forest fire mitigation; a social forestry program; land rehabilitation; and increased enforcement against environmental violations). However, activists said other factors, e.g., economy and weather, may have contributed to the drop. 2020 was among the wettest years in the past four decades, thanks to the La Niña event.
  • A carbon tax has been recently approved as part of the Law on Harmonization of Taxation Regulation (HPP). The Ministry of Finance announced that carbon tax (under the cap and tax mechanism) will be applied to fossil-based power plants starting on 1 April 2022.
  • Indonesia foresees to reach the peaking of national GHGs emissions in 2030 with net sink in forestry and land uses (FOLU); further exploring opportunity to rapidly progress towards net-zero emission in 2060 or sooner. [as stated in Indonesia’s LTS-LCCR Document]

Strengths

  • Private sector started to eagerly be involved in net zero emission effort
  • Indonesia has abundant source of renewable energy including those in remote areas and small islands
  • Current international support for shaping a energy transition strategy in Indonesia
  • Strong commitment from both Minister of Energy and Mineral Resources and the Coordinating Minister of Maritime and Investment Affairs for energy transition and NZE in the power generation and overall energy sector

Opportunities

  • G20 Presidency in 2022 can be an opportunity for Indonesia to show leadership in climate actions (in line with Leading by Example tagline used by Indonesia) and as part of Recover Together, Recover Stronger
  • International support towards energy transition; currently there is FIRE (Friends of Indonesia for Renewable Energy) Dialogue to meet the country’s needs with support (from and amongst international players)

Weaknesses

  • Inconsistency of inter-ministerial policies regulations
  • Lack of consistency and certainty on long-term policies and regulations
  • Ministry and sectoral ego
  • Relatively less capacities (both institutions and human resources) related to climate issues in all administrative levels

Threats

  • Political changes as the next parliament and presidential elections will be in 2024
  • Politics at sub-national levels that may change the policies and strategies at that level
  • Fossil industries’ lobbies and close relationship with most (if not all) political parties

About Climate Diplomacy Snapshots

The data is clear. Accelerated and enhanced action is needed now to build resilience and avoid the worst impacts of climate change. As they seek to address the ongoing health, economic and social impacts of COVID-19, governments should seize opportunities to invest in a recovery that will build social, economic and climate resilience on the long-term.The Climate Diplomacy Snapshots aim to provide the climate community with a clear overview of what each country should do, on climate and recovery, to pursue these joint objectives and keep the global average temperature increase to 1.5°C. Each has been prepared with the help of national experts, and will be regularly updated. The snapshots aim to support climate advocacy in the lead up to COP26.

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