Indonesia takes on climate change challenge: Finance Minister emphasises sustainable prosperity

Jakarta – Finance Minister Sri Mulyani Indrawati highlighted a World Bank climate report that Indonesia’s effort to increase its income per capita, also caused the increase of per capita emission of greenhouse gases, in a recent event.

“Emission per capita increases twice fold while per capita income increase four-fold,” she said in an event hosted by the World Bank and Think Policy, titled “Climate Change and Indonesia’s Future: An Intergenerational Dialogue – A discussion on the Indonesia Country Climate and Development Report”, in Jakarta.

Earlier this year, the World Bank released its Country Climate and Development Report (CCDR) for Indonesia. The World Bank developed CCDRs for 25 countries where it operates.

The report’s key findings include “Indonesia’s strong growth and poverty reduction over the past 20 years have moved in parallel with rising greenhouse gas emissions, consistent with its stage of development” and “a strong enabling environment for green investment by the private sector is critical.”

Indrawati acknowledged the delicate balance Indonesia must strike between economic prosperity and environmental stewardship. While the country boasts one of the lowest per capita emission rates among G20 nations, the Finance Minister emphasised that this doesn’t imply a lack of concern for the planet. Rather, the focus is on designing a development process that safeguards the environment.

“Our challenge,” she stated, “is to increase our prosperity without making our planet unlivable because of climate change.” She underscored that climate change is not the only obstacle facing Indonesia, pointing to challenges such as higher interest rates, geopolitical tensions, and digitalisation.

The Finance Minister referred to a shift in global challenges as highlighted by the World Economic Forum, predicting that climate-related issues will become more prominent in the next decade. She stressed the need for collaboration, particularly between generations, as over 50% of Indonesia’s population is under 30 years old and will bear the impacts of today’s decisions.

Minister Indrawati emphasised the crucial role of financing in addressing climate change, stating, “Climate agenda without financing will only be an agenda, will only be a dream.” She revealed that Indonesia recently launched its carbon market within the national capital market to enhance transparency and address emissions.

Indonesia has taken a leading role in global climate initiatives, chairing the Coalition of Finance Ministers for Climate Action for over four years. The coalition, which began with fewer than 50 countries, now includes more than 90 nations. Minister Indrawati highlighted Indonesia’s success in integrating climate considerations into the language of finance ministers, discussing topics such as transition mechanisms and carbon pricing.

While acknowledging the complexity of addressing climate change, Minister Indrawati made it clear that it goes beyond renewable energy. She emphasised the importance of infrastructure, including transmission and distribution, and touched on unexplored issues such as forest management, land use, mass transportation, waste management, and industries.

Minister Indrawati reaffirmed Indonesia’s commitment to climate action, stating that the country is in the early stages of preparing and implementing a range of transactions to create a financing ecosystem. The aim is to strike a balance between economic growth and environmental sustainability, ensuring a prosperous future for Indonesia and the planet. (nsh)

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