Press Release
Government Invites Private Sector to Develop Carbon Pricing Scheme
Government Invites Private Sector to Develop Carbon Pricing Scheme
Thursday, 02 December 2021

As a form of the country's commitment to reducing carbon emissions, the Indonesian government and other stakeholders have implemented various efforts for a low emission transition. However, the Climate Action Tracker (CAT) as a whole gives a Highly Insufficient (very insufficient) rating for the Indonesian government's efforts to address the climate change crisis.

In his remarks at the Indonesia Carbon Forum which was held virtually by the ICDX Group (1/12), the Director of the Environment of the Ministry of National Development Planning/BAPPENAS, Ir. Medrilzam explained, “The Indonesian government has prepared three important things in the low emission transition through Low Carbon Development. First, we carry out net-zero emission exercises to support the green economy, secondly, the application of a circular economy in the company's business pattern, and thirdly the transfer of low-carbon technology and human resource development."

On the same occasion, the Coordinating Vice Chairwoman of the Indonesian Chamber of Commerce and Industry, Shinta Widjaja Kamdani added, “The target for reducing greenhouse gas (GHG) emissions is the responsibility of the state, but the private sector plays an important role in realizing the acceleration of the target. Governments at the national level should start collaborating with the private sector, local governments, and other parties to achieve more ambitious climate targets. The involvement of the private sector is crucial. One of them is in the development of solutions and technological innovation.”

As for several steps that have been taken by the government for low-carbon development, as stated by Member of Commission VII DPR RI, Golkar Party Faction, Dyah Roro Esti, "When talking about the energy sector and energy transition, there are several things that we want to encourage starting from the electric car ecosystem, then the construction of the largest PLTS in Southeast Asia, increasing the use of New and Renewable Energy, increasing clean energy-based industries, and increasing the largest green industrial area in the world centered in North Kalimantan.”

Seeing this, the Co-Founder of the Indonesia Research Institute for Decarbonization, Paul Butarbutar said, “In principle, Indonesia is one of the contributors to global GHG emissions. The important point that Indonesia has made is how Indonesia can correct the previous policies, and have an impact on reducing GHG emissions. One of the most influential is the moratorium on forest clearing permits. Reducing deforestation greatly contributes to reducing Indonesia's GHG emissions globally. In principle, Indonesia is ready to achieve a net sink in 2030.”

Apart from the government, a low-emissions transition also needs to be carried out by the private sector as a business actor. One of the efforts that can be done by the private sector to offset the resulting carbon emissions is through carbon trading, which is a trading activity of compensation by parties who reduce carbon emissions, to parties who produce carbon emissions.

“There are three factors why we started buying carbon credits. First, if we don't adapt, then we risk being left out because as the carbon tax continues to increase we will become less competitive. So, the earlier we understand carbon credits, the earlier we will understand what quality carbon offsets look like and will give the company a better position. We carry out carbon offsets as part of our strategy to go green. Second is we want to make sure to maintain the company's competitive period. Lastly, we are strongly encouraged to do business that has a strong purpose, and this goal goes beyond financial returns, where businesses must be able to act for society and the environment,” said Kelvin Fu, Managing Partner of Gunung Capital.

Closing his speech, Ir. Medrilzam added, “We are aware that the various efforts the government has taken will not succeed without the support and commitment of various parties. The role and commitment of business actors are expected to be the driving force for implementing various sustainable business models and green investment, as well as developing carbon pricing schemes that can be applied in Indonesia to accelerate Indonesia's transition to sustainable development and a green economy.”

Rewatch the discussion here: Transition To Low Carbon Emission.

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