Achieving Net Zero Emissions in Indonesia: A Comprehensive Overview

By Riyan Al Fajri

Indonesia and Net Zero Emissions

Net zero emissions mean balancing the amount of greenhouse gases released into the atmosphere with the amount removed, so there is no overall increase in these gases. This idea is crucial for fighting climate change, as it represents a major shift towards a sustainable and resilient global economy. Achieving net zero emissions is essential to keep global warming below 1.5 degrees Celsius compared to pre-industrial levels, as stated by the Intergovernmental Panel on Climate Change (IPCC). The IPCC warns that to avoid severe climate impacts, global carbon dioxide emissions must reach net zero by around 2050. This shift not only tackles urgent environmental issues but also opens up significant economic opportunities, including job creation in renewable energy and the promotion of sustainable development.

Indonesia, as one of the largest countries in Southeast Asia, plays a vital role in global efforts to reduce emissions. With a population of over 270 million, Indonesia is the fourth most populous country and ranks among the top ten greenhouse gas emitters worldwide, mainly due to changes in land use and emissions from the energy sector. Its economic growth has often relied on exploiting natural resources, especially fossil fuels, which has led to high emissions. In 2020, Indonesia reported greenhouse gas emissions of 1,050,413 Gg CO2e, with the energy sector contributing 56%, followed by forest and land use at 16%, and agriculture at 9%.

Electricity generation is currently the largest source of greenhouse gas emissions in the energy sector, accounting for 43% of emissions in 2019. Most of these emissions come from burning coal, while the rest come from natural gas and liquid fuels. In 2021, Indonesia generated 81% of its electricity from fossil fuels, although the share of renewable energy has been slowly increasing, making up about 19% of the power mix that year. The main sources of renewable electricity include hydro (8%), biomass (5%), and geothermal (5%). Despite recent growth, solar and wind energy still play a small role in electricity generation.

Indonesia is also one of the world’s largest emitters of greenhouse gases from the land sector, primarily due to deforestation for agriculture—especially for high-value palm oil—and from peat and forest fires. To stay within the 1.5°C limit, Indonesia must transform its land use and forestry sector into a net sink for emissions. The largest sources of greenhouse gas emissions in agriculture include rice cultivation (43%), digestive processes of cattle (21%), and livestock manure (20%). By implementing alternative irrigation systems, utilizing organic fertilizers, and improving fertilizer application, along with reducing food waste, Indonesia can significantly lower emissions from this sector.

Pathways to Net Zero

In alignment with the Paris Agreement, Indonesia submitted its first Nationally Determined Contribution (NDC) to the UNFCCC in 2016, committing to reduce greenhouse gas emissions by 29% by 2030 through unconditional measures, or up to 41% with conditional measures. Indonesia’s enhanced NDC, submitted in September 2022, outlined specific targets for its unconditional reduction by 2030, including:

1. Additional installed renewable energy capacity of 20,923 Mega Watts (MW)
2. Increased utilization of 18 billion liters of palm methyl ester (FAME) in Biodiesel B40
3. Increased use of electric vehicles (EV) to 15,197,000 units
4. Increased application of organic fertilizers to 1,287,000 metric tons
5. Increased land dedicated to low-emission crops to 902,000 hectares
6. Limiting planned and unplanned deforestation to 0.45 million hectares
7. Expanding planting areas for land rehabilitation to 5.6 million hectares
8. Increasing peatland restoration efforts to 2 million hectares

These ambitious targets reflect Indonesia's commitment to addressing climate change and transitioning towards a more sustainable future. In 2021, during the UN Climate Change Conference (COP26), Indonesia announced its goal of achieving net zero emissions by 2060. This target is articulated in the country's NDCs, which detail the specific actions Indonesia will undertake to reduce emissions and adapt to the impacts of climate change.

To realize its net zero target, Indonesia has developed several strategic plans for financing climate change mitigation and adaptation. A Presidential Regulation on Environmental Economic Instruments, which serves as an umbrella for Public Service Agencies (BLU), was enacted (Presidential Regulation No. 46 of 2017). Additionally, Presidential Decree No. 77/2018 on the Management of Environmental Funds (BLU-BPDLH) has been issued. The BLU-BPDLH will function as a public service agency capable of receiving and managing funds. This agency has the authority to mobilize resources for environmental protection from international, private, and public sector sources. Furthermore, the Government of Indonesia has introduced green Islamic bonds, or “green sukuk,” to support the implementation of its NDCs.

To achieve its Nationally Determined Contribution (NDC) targets, Indonesia aims to install an additional 20,923 MW of renewable energy capacity. This ambitious goal requires significant investments and the development of various renewable sources, including solar and wind, to diversify the country's energy mix and reduce greenhouse gas emissions. In 2019, fossil fuels accounted for 89% of Indonesia's primary energy supply, with renewable energy making up the remaining 11%. Substantial efforts are needed over the next five years to meet the government’s renewable energy target of 23% by 2025. Despite Indonesia's abundant renewable energy resources, several challenges hinder their utilization, such as the geographical mismatch between energy resource locations and energy demand centers. Additionally, in some cases, the investment costs for renewable energy technologies remain higher than those for fossil fuel systems. These challenges highlight the need for effective policies and regulations to promote the use of renewable energy.

In addition to energy production, Indonesia's tropical rainforests, which are the third largest in the world and nearly half classified as primary forests, play a crucial role in carbon sequestration. The total area of mangrove forest in Indonesia is estimated at 3.2 million hectares, accounting for about 20% of the world’s total mangrove area. Unfortunately, the rate of primary forest loss is among the highest in the tropics. Between 2015 and 2020, Indonesia lost approximately 579,000 hectares of forest annually. The rapid conversion of forests for agriculture, particularly for palm oil plantations, has led to significant carbon release and the loss of critical habitats. In response, the Indonesian government has initiated various reforestation and conservation efforts aimed at reversing the trend of deforestation. Programs such as the One Map Policy seek to improve land-use planning and reduce conflicts over land, while initiatives like the Forest Carbon Partnership Facility promote sustainable forest management practices. These efforts not only aim to restore degraded lands but also enhance carbon sequestration, thereby contributing to Indonesia's climate goals and supporting the livelihoods of local communities dependent on forest resources.

Technological innovations are also vital in Indonesia's efforts to achieve net zero emissions and transition to a low-carbon economy. One promising technology is carbon capture and storage (CCS), which captures carbon dioxide emissions from industrial processes and stores them underground to prevent their release into the atmosphere. Indonesia has begun exploring the potential for CCS in its energy and industrial sectors, recognizing its importance in mitigating emissions from fossil fuel use. Additionally, the development of green technologies, such as renewable energy systems, energy-efficient appliances, and sustainable transportation solutions, is essential for reducing the carbon intensity of the economy. The government is actively supporting research and development in these areas, fostering partnerships with private sector stakeholders and academic institutions to drive innovation. By investing in technological advancements, Indonesia aims to enhance its capacity for emission reduction while promoting sustainable economic growth.

Indonesia's commitment to renewable energy is further demonstrated through several successful projects that highlight the country's proactive approach to sustainable energy development. One notable example is the Cirata Floating Solar Power Plant, which, upon completion, is expected to generate approximately 145 MW of electricity. This innovative project not only utilizes the vast surface area of reservoirs but also minimizes land use conflicts, serving as a model for future renewable energy initiatives in the country.

In addition to this, the government has launched the 10,000 Solar Rooftop program, encouraging households and businesses to install solar panels on their rooftops. This initiative aims to generate 1,000 MW of solar power by 2025, promoting energy independence and reducing reliance on fossil fuels. Furthermore, Indonesia's commitment to geothermal energy is evident, as it possesses one of the largest geothermal reserves in the world, with a potential capacity of around 29,000 MW. The government has set a target to increase geothermal energy production to 7,200 MW by 2025, leveraging this abundant resource to meet its renewable energy goals.

These initiatives not only reflect Indonesia's dedication to harnessing renewable energy sources but also demonstrate the immense potential for sustainable energy development in the country. Complementing these efforts is the Forest Management Unit (KPH) program, which actively involves local communities in sustainable forest management practices. Under this program, communities are granted rights to manage forest areas, allowing them to benefit economically from sustainable logging, non-timber forest products, and ecotourism. This approach helps reduce deforestation rates while enhancing biodiversity conservation and improving the resilience of local ecosystems.

Additionally, the Mangrove Restoration Program engages coastal communities in the restoration and protection of mangrove forests. Mangroves are vital for coastal protection, carbon sequestration, and supporting marine biodiversity. By involving local communities in these conservation efforts, Indonesia aims to enhance ecosystem services while providing alternative livelihoods that alleviate pressure on natural resources. These community-based projects exemplify the importance of integrating local knowledge and participation in conservation strategies, ultimately contributing to Indonesia's climate resilience and sustainable development goals.

Potential Pathways and Cooperations

To achieve net zero emissions by 2060, Indonesia must explore several potential pathways that encompass a range of strategies across various sectors. Building on its commitment to renewable energy, one of the most critical pathways is the transition to a diverse energy mix that significantly increases the share of solar, wind, geothermal, and hydropower. By investing in renewable energy infrastructure and technology, Indonesia can reduce its reliance on fossil fuels, which currently dominate its energy landscape. For instance, the government aims to install an additional 20,923 MW of renewable energy capacity, a pivotal step in meeting its Nationally Determined Contributions (NDCs) and reducing greenhouse gas emissions.

Another essential pathway involves implementing sustainable land-use practices, particularly in the forestry and agriculture sectors. Indonesia can enhance carbon sequestration through reforestation and afforestation initiatives, as well as by promoting sustainable agricultural practices that minimize emissions. Agroforestry, which integrates trees with crops and livestock, can improve soil health, increase biodiversity, and provide additional income for farmers while sequestering carbon. Furthermore, adopting advanced technologies, such as carbon capture and storage (CCS), can help mitigate emissions from industrial processes and power generation. By investing in research and development of green technologies, Indonesia can foster innovation and create a more sustainable economy. Collectively, these pathways not only contribute to achieving net zero emissions but also promote economic growth, job creation, and environmental sustainability.

A vital component of this strategy is the implementation of a carbon tax. This financial charge is imposed on companies based on the amount of carbon dioxide (CO2) emissions they produce. The carbon tax aims to incentivize businesses to reduce their greenhouse gas emissions by making fossil fuel consumption more expensive and promoting the adoption of cleaner energy sources. In Indonesia, where the energy sector heavily relies on coal and other fossil fuels, a carbon tax could play a crucial role in driving the transition to renewable energy and enhancing energy efficiency. In 2021, the Ministry of Finance announced plans to introduce a carbon tax as part of the 2022 budget, initially targeting emissions from the power generation sector. The proposed tax is expected to start at a relatively low rate, with plans for gradual increases over time to give businesses the necessary time to adapt and invest in cleaner technologies.

By establishing a clear price on carbon, the government aims to create a financial incentive for industries to innovate and reduce their carbon footprints. This approach not only aligns with Indonesia's Nationally Determined Contributions (NDCs) but also encourages investments in renewable energy projects, energy efficiency measures, and sustainable practices across various sectors. The revenue generated from the carbon tax can be reinvested into climate-related initiatives, such as renewable energy development, public transportation improvements, and climate adaptation projects. This reinvestment can help mitigate the social and economic impacts of the transition to a low-carbon economy, particularly for vulnerable communities that may be disproportionately affected by rising energy costs. Additionally, implementing a carbon tax can enhance Indonesia's credibility in international climate negotiations, demonstrating its commitment to addressing climate change and contributing to global emission reduction efforts. Overall, the introduction of a carbon tax in Indonesia is a pivotal measure that can facilitate the country's transition to a sustainable, low-carbon future while supporting its goals for net zero emissions.

As a developing country, Indonesia faces significant challenges in financing and implementing the necessary measures to transition to a low-carbon economy. International cooperation and support are essential for Indonesia to successfully achieve its net zero emissions target. For instance, partnerships with multilateral organizations such as the United Nations Development Programme (UNDP) and the World Bank can facilitate access to climate finance, enabling Indonesia to invest in renewable energy projects, sustainable land management, and climate resilience initiatives.

Global initiatives like the Green Climate Fund (GCF) play a crucial role in providing financial support for climate projects in developing nations, helping to bridge the funding gap that often hinders progress. In 2023, the GCF approved funding of USD 2.1 billion for 34 new projects. By the end of the year, the Fund expanded its portfolio to a total of USD 13.5 billion (or USD 51.8 billion with co-financing) across 243 projects in 129 developing countries. Of this funding, Indonesia accessed USD 623.1 million for 19 projects.

By leveraging these international partnerships and financial resources, Indonesia can enhance its commitment to achieving net zero emissions. This effort will not only benefit the environment but also foster economic growth, create jobs, and strengthen the resilience of communities across the nation. With the backing of the global community, Indonesia can turn its climate ambitions into reality, paving the way for a brighter and more sustainable future for all.

 

Reference:

1. Climate Transparency. (2022). Climate Transparency report 2022: Indonesia. Retrieved from https://www.climate-transparency.org/wp-content/uploads/2022/10/CT2022-Indonesia-Web.pdf
2. International Energy Agency. (2021). An energy sector roadmap to net zero emissions in Indonesia: Executive summary. Retrieved from https://www.iea.org/reports/an-energy-sector-roadmap-to-net-zero-emissions-in-indonesia/executive-summary
3. U.S. Department of Agriculture, Foreign Agricultural Service. (2023). Indonesia climate change report.Retrieved from https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Indonesia%20Climate%20Change%20Report_Jakarta_Indonesia_ID2023-0014
4. United Nations Framework Convention on Climate Change. (2021). Indonesia's third biennial update report to the UNFCCC. Retrieved from https://www4.unfccc.int/sites/SubmissionsStaging/NationalReports/Documents/94208361_Indonesia-BUR3-1-IndonesiaBUR%203_FINAL%20REPORT_2.pdf
5. Green Climate Fund. (n.d.). Indonesia. https://www.greenclimate.fund/countries/indonesia