JAKARTA – Minister of Finance Sri Mulyani Indrawati stated that the budget needed to fulfill the government’s commitment to reducing carbon emissions could not be fully financed from the state budget. She said Thursday (17/3) that the state was only able to meet 34 percent of the total financing needs of IDR 3,460 trillion.
“The budget needed to meet the target to reduce carbon emissions is not small, around IDR 3,460 trillion or around IDR 266 trillion per year until 2030,” said Indrawati in the S20 Webinar entitled ‘High Level Policy Webinar on Just Energy Transition’ in Jakarta.
She also explained that the budget needed to reduce carbon emissions in the forestry and energy sectors is around 6.5 billion USD and 250 billion USD, respectively. “The participation of the private sector in meeting the budget needs is considered very important and crucial,” she added.
Indrawati also hopes that the private sector and state-owned enterprises (BUMN) will participate in meeting the budget needs. She added that the issue of energy transition cannot be abandoned at this time, given the increasingly real threat of climate change.
Based on the Nationally Determined Contribution (NDC) document, Indonesia is committed to reducing greenhouse gas (GHG) emissions by 29 percent through its own capabilities and 41 percent through international support by 2030.
The government has implemented a number of policies in order to make the energy transition and overcome the impacts of climate change. The first is to apply a carbon tax of IDR 30 per kg. This step is carried out in collaboration with other ministries, so that the government can build a market mechanism.
“Because this is an introduction for the Indonesian economy to get used to this carbon market mechanism. We have also introduced a carbon tax and we have discussed it with PLN,” she said.
The second is to prepare sources of funding. In particular, to prepare a budget for the closure of the Steam Power Plant (PLTU). The government is also intensifying investment in renewable energy.
Third in preparing from the social side, in particular, relating to this transition. Another thing that Indrawati did was actually create instruments such as green bonds as opportunities to invest in Indonesia. (Hartatik)
