In this webinar, Dr Masyita Cristallin discussed Indonesia’s climate governance reform in the financial sector and the prospect of achieving a net-zero emission target by 2060. Meanwhile, Dr Abidah Setyowati highlighted the need to broaden stakeholder participation in the regulatory and institutional reform for the energy transition in Indonesia.
INDONESIA STUDIES PROGRAMME WEBINAR
Monday, 20 September 2021 – The Indonesia Studies Programme organised a webinar on “Indonesia’s Energy Transition and Climate Governance Reform” on Monday, delivered by Dr Masyita Crystallin, Special Advisor to the Minister of Finance on Macroeconomics and Fiscal Policy, and Dr Abidah Setyowati, Senior Research Fellow at the TU Delft. Dr Siwage Dharma Negara, co-coordinator of the Indonesia Studies Programme at ISEAS moderated this session.
Dr Masyita Crystallin explained how the COVID-19 pandemic and climate change had prompted strategic efforts on green recovery in Indonesia. She listed down some challenges towards sustainable development, including fiscal sustainability, mobilisation of the state budget as climate change funding sources, ensuring just and affordable economic transition, financing viability of green projects, and market mechanism in green financing.
Dr Crystallin further elaborated on Indonesia’s commitment to climate change and green recovery. Besides ratifying the Paris Agreement into Law No. 16/2016, Indonesia has stated her commitment to reducing greenhouse gas emission through the National Determined Contribution (NDC) by 2030. Two targets were identified, by 29% through national efforts and by 41% with international support. She highlighted that the energy sector’s emission reduction target was set at a much lower target than the forestry sector; which could generate repercussions in the future due to the low reduction target set for this sector. Therefore, investments from the private sector are required to support a just and affordable transition into green energy. Dr Crystallin also asserted the need to increase financing capacity to achieve the NDC targets, as the current financial capacity of public and private supply are still low.
Dr Crystallin mentioned that the government had prepared various mechanisms to stimulate new renewable energy investment and reduce motor vehicle carbon dioxide emission. These translated into policies such as tax incentives for new and renewable energy, clean technology development, budget tagging, and Energy Transition Mechanism (ETM). She also mentioned that the government is currently working on the carbon pricing policy, manifesting it into a Presidential Decree on Carbon Economic Value. Dr Crystallin said that the country has been putting efforts to create a vibrant domestic carbon market by working on creating climate demand and supply for an active carbon market.
Next, Dr Abidah Setyowati highlighted the importance of the rapid transition to low carbon energy. She argued that the energy transition faced more political hurdles than technological challenges. In her presentation, Dr Setyowati explored the necessary critical factors to push forth a transformational move to revolutionise Indonesia’s energy system, i.e., government action, grassroots activism and citizen participation, and broader coalition of: business and civil society.
Dr Setyowati explained that Indonesia’s energy trilemma had become a challenge for its energy transition, including the struggle to balance energy security, energy access, and environmental concerns. Concerning official energy transition targets, Dr Setyowati asserted that the renewable energy sources currently comprised only 12% of the mixed energy sector. She said the current choice of clean energy technology set by the government needs to be broadened.
Laying out the grassroots activism in pushing the energy governance reform, Dr Setyowati mentioned the importance of activism to ensure consistent policies towards the NZE target. Citizen participation and cooperation, as she argued, were vital in enhancing community initiatives in renewable energy development. The solar rooftop panel initiatives in West Nusa Tenggara was identified as an example of active citizen participation in transitioning toward renewable energy sources. Besides citizen participation, she also explained the challenges for mobilising green finance, including regulatory uncertainties and a monopolised distribution system that prevent the expansion of small-scale green projects. Finally, Dr Setyowati concluded by emphasising that broadening participation of stakeholders is vital in democratizing the energy system for transitioning to low carbon energy. This included having regulatory and institutional reform as well as pushing forth diversification of financial options for small-scale green energy projects.
The webinar concluded with a Q&A session that discussed issues ranging from the G2G technology transfer programs, incentives for private sectors in green economy activities, policy evaluation of Indonesia’s net-zero target, B30 subsidy policy, moratorium of new palm oil’s land expansion permit, the role of banks in funding green energy projects, the country’s sovereign wealth funds for green energy projects, clean technology and reforms in the coal sector, and the role of local governments in energy transitions. The webinar attracted 69 participants from Singapore and abroad.