Jakarta—The Indonesian government has allocated IDR 569.3 trillion from the State Budget (APBN) from 2016 to 2022 to support climate change and energy transition policies, said Deputy Minister of Finance Suahasil Nazara at the launch of research on sustainable trade and investment on Tuesday, July 2.
“It does not mean that Indonesia has less intention or support for a greener and more sustainable economy. We will continue to strive to fulfil. We come up with a fair and affordable transition logic,” he said.
Several parties question the government’s commitment because, on the other hand, the policies issued still favour fossil energy, especially coal.
Bhima Yudhistira, a researcher from the Center of Economics Law Studies (CELIOS), said that “until 2030, Indonesia’s investment orientation will still rely on coal and nickel”. According to him, this is exacerbated by the incessant opening of nickel smelters that use coal as the main energy source.
Dandy Rafitrandi, a Center for Strategic and International Studies (CSIS) researcher, expressed the same concern. He believes that the net zero emission target in 2060 will fail if the energy transition policy is not improved immediately.
“With the current efforts, net zero emission by 2060 is likely to fail,” said Dandy.
One of the main obstacles to Indonesia’s energy transition is the country’s economic dependence on the coal sector. Abruptly phasing out coal is impossible, yet the country’s current coal production continues to balloon beyond targets. “The government needs to review its commitment to the energy transition,” said Dandy.
The slowdown in the energy transition is also exacerbated by the government’s incentives for the coal sector, such as through Perppu No.2/2022 on the Job Creation Law.
Amidst these challenges, the realisation of the energy transition in Indonesia is still lagging. Trend Asia research shows that renewable energy growth in Indonesia is only 0.8 per cent per year. The current renewable energy achievement is still around 11 per cent of the target of 23 per cent by 2025. (Hartatik)
