How Indonesia can achieve both a COVID-19 recovery and its climate targets.

In May 2021, the International Energy Agency (IEA) (2021) released its flagship report on how to reach net-zero by 2050, concluding that fossil fuel consumption should have peaked by 2020 and start declining as of 2030. It also shows that meeting the 2050 target will require that there be new fossil fuel extraction. The COVID-19 recovery budget presents a unique opportunity to shift public funds and expenditures to meet Indonesia's target of 23% of its energy mix coming from clean and renewable sources while aligning economic recovery with ambitious climate and net-zero targets. COVID-19 created a worldwide economic disruption, and many countries are developing support and recovery packages to help counterbalance the socio-economic effects of the crisis. Being the incoming G20 presidency, Indonesia's vision is to focus on global recovery from the COVID-19 pandemic, as part of other key issues (Iyabu, 2021). Indonesia has a responsibility to lead the agenda diplomatically and walk the talk domestically, bringing climate change mitigation and adaptation as part of the COVID-19 recovery. Rapid action is needed, and COVID-19 recovery packages present a unique opportunity to align economic and social recovery with climate action that no country should miss

Accelerating the economic recovery in Indonesia post Covid-19: justice in the energy transition.

Indonesia is known as the largest economy in South East Asia and as one of the emerging lower-middle-income countries. Before the pandemic Covid-19, Indonesia forecasted its GDP growth to increase to 5.5% in 2020. However, this never happened following the pandemic it decreased to 2.97% in the first quarter of 2020. This paper focuses on the renewable energy role in accelerating the economic recovery in Indonesia by emphasising the role of justice in the transition process. We conduct systematic reviews from different sources, both primary and secondary resources. We qualitatively analyse the energy regulation and energy road map in Indonesia as well as some academic research articles. Indonesia has developed its general energy plan related to the energy mix demand and supply, which includes a long-term plan on developing renewable energy sources and reducing the use of fossil fuels. As the fourth most populated country in the world, Indonesia still focusses on cheap energy supply and energy access to fulfil the energy demand. Therefore the transition process in Indonesia is considered slow compared to the OECD countries. There is a significant role of energy in economic growth, both energy consumption and energy resources. Until now, fossil fuels have dominated the Indonesian energy supply and demand. This paper highlights the role of renewable energy in the economic development of the country. This paper suggests that the pandemic has highlighted the energy transition movement in Indonesia. The Covid-19 has driven more research on the role of renewable energy project to the economic development and demonstrate that a transition to a low-carbon economy could contribute to the economic recovery in a justice way in many sectors. Renewable energy development contributes directly to human resources development, and this development also contribute to health sector improvement. Finally, this renewable energy development could accelerate the economic recovery in Indonesia and reach 5.2 to 5.6% in 2021

Indonesias Energy Support Measures: An inventory of incentives impacting the energy transition

Energy incentives and support measures can help Indonesia influence energy production and consumption in a way that meets its climate and energy targets. As the country has committed to reaching net-zero emissions by 2060, this inventory report of energy support measures in Indonesia explores whether the current fiscal policies are aligned with this goal. The first of its kind, the inventory identifies and quantifies support measures available for various energy types--including coal, oil and gas, renewable energy, biofuels, and electric vehicles--between 2016 and 2020

Mapping India's energy subsidies 2021: time for renewed support to clean energy.

Government support is more important than ever for the energy transition in the wake of COVID-19, as governments around the world take unprecedented measures to help stimulate economic recovery. Shifting government support from fossil to clean energy can ensure that every rupee of public money helps access, affordability, energy security and the shift to a low-carbon economy. This report examines how the Government of India has used subsidies to support different types of energy from FY 2014 until FY 2020, and draws on qualitative data to describe major shifts since the onset of COVID-19. In light of the government commitments to Aatmanirbhar Bharat ("self-reliant India"), it also includes two special thematic chapters. The first explores how subsidy policy can best promote solar photovoltaic (PV) manufacturing as part of the road to 450 GW of renewable energy by 2030. The second examines how investments by public sector undertakings (PSUs) - that is, enterprises where the government is the majority owner - are supporting clean energy. Our data, summarized in Figure ES1, cover all subsidies from production to consumption for coal, oil and gas, electricity transmission and distribution (T&D), renewable energy, and electric vehicles (EVs). Nuclear and hydropower are not included due to a lack of adequate data availability. The underlying data are available online and have been made easier to explore with an accompanying data portal

Just energy transitions and coal bed methane: the case of Indonesia.

This book discusses how Coal Bed Methane (CBM) could help the acceleration of the energy transition in a ‘just’ way in Indonesia, due to the country's potential CBM reserves (and current dependence on climate damaging coal). Developing countries face multiple challenges in achieving their energy transitions. CBM in Indonesia could potentially be a catalyst for energy transition and subsequently improve access to energy. However, CBM faces numerous challenges and although Indonesia first developed its domestic CBM sector over more than a decade ago, they are still to implement this successfully. This book exposes the challenges and opportunities of CBM, exploring what lessons other countries could learn from Indonesia to improve the industry with a view to achieving energy transition and climate change targets. This book will be an invaluable reference for researchers and practitioners working in this field

Taxing coal to hit the goals: a simple way for Indonesia to reduce carbon emissions.

The Government of Indonesia has pledged to reduce absolute carbon emissions by between 29% and 41% by 2030 compared to "business as usual" (Republic of Indonesia, 2021). To help achieve this, the government is considering options for carbon pricing, including an emissions trading scheme (ETS), a carbon tax, or results-based payments. A pilot ETS is underway in the electricity generation sector, and a draft law has proposed a carbon tax of IDR 75,000 (USD 5.10) per tonne of carbon dioxide (Jiao & Sihombing, 2021). Carbon pricing is an effective and economically efficient way to reduce emissions, but significant details will need to be resolved, including fuel and sectoral coverage, exemptions for vulnerable consumers, and timeframes for implementation. Negotiations to resolve these issues will take time. As an interim and immediate measure, we recommend the government simply increase taxes on coal as a de facto form of carbon taxation. A coal tax is recommended for four reasons: 1) coal is highly polluting; 2) taxes are an effective way to reflect coal's negative impact in its price; 3) a coal tax would be relatively easy to administer; 4) a tax would generate significant revenue

Financing green recovery from fossil fuel taxation and subsidy reform.

The COVID-19 pandemic has had a significant impact on Indonesia's fiscal position. Government debt, normally capped at 3% of GDP, is likely to approach 5% in 2022 due to suppressed revenues, high health costs and stimulus spending (Suroyo & Diela, 2021). The government could partially fill this budget gap by reforming some types of fossil fuel subsidies and taxes. While taxes are the principal means for governments to raise revenues, the Organisation for Economic Co-operation and Development (OECD) (2021) highlights that they should have roles beyond this, such as addressing socio-economic problems that have arisen from the COVID-19 pandemic. Further, G20 members have also stressed the importance of including funds to mitigate and tackle climate change in their recovery budgets and ensure financial flows are consistent with a low-carbon emission pathway (G20, 2021). This brief summarizes the findings from three recent publications by the International Institute for Sustainable Development related to subsidy reform and taxation pertaining to Indonesia. We based our series of briefs on the five principles of achieving a fossil free recovery in the flagship report (Sanchez et al., 2021)

The fossil fuel subsidy hampers green energy initatives

Many international institutions have provided insights about reforming fossil fuel subsidies (FFS) in different countries, a decade after the conversation about FFS started during the Group of 20 Summit in Pittsburgh, the United States in 2009. Scholars agreed that the costs associated with FFS, whether from economic, social or environmental factors, could be avoided by reforming the system. One crucial problem facing Indonesia is heavy dependence on fossil energy sources. Fossil fuel consumption in Indonesia has increased significantly in the past three decades, even after fuel subsidies started to decrease in 2010. Indonesia has tried to reform its FFS, but despite huge renewable energy sources, the country remains dependent on fossil fuels

Just Energy Transition through Unjust Policies

The energy transition involves moving toward a more inclusive, sustainable, affordable and secure energy system that provides solutions to global energy related challenges, while creating value for business and society and without compromising the balance of the energy triangle: energy access and security, environmental sustainability and economic development and growth