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Low carbon development in Indonesia

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Establishing viable alternatives to carbon-intensive development in Indonesia

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Ed Humphrey

The Indonesian Government has committed to ambitious emissions reduction and renewable energy targets against a backdrop of increasing reliance on energy generation from fossil fuels. We led a consortium providing technical assistance to support the Indonesian Ministry of Finance to implement fiscal policy, and establish appropriate financing mechanisms to support low carbon development.

Work focused around identifying opportunities for the roll-out and scale-up of energy efficiency initiatives and renewable energy schemes, as well as strengthening institutions, and encouraging cross-team working. Sustainability was a central theme of the project with outreach and capacity building activities aimed at ensuring continued support from investors, policy-makers, and other local stakeholders.

Challenges

Indonesia is amongst the top ten emitters of carbon dioxide in the world. Under a ‘business-as-usual’ scenario, emissions are projected to grow to 2.95Gt CO2e by 2020 with the bulk of these being generated from the burning of fossil fuels. In the 2009 UN Conference of the Parties in Copenhagen, the President of Indonesia committed to the country reducing emissions by 26% below business-as-usual projections. The 2011 National Action Plan on Reducing Greenhouse Gas emissions estimates that this target is equivalent to an annual reduction of 0.754GT CO2e. In addition, the government has set the ambitious target of increasing the contribution of renewables in the country’s energy mix from 3% to 17% by 2015.

In April 2011, DFID and the Foreign and Commonwealth Office of the British Government established the UK Climate Change Unit in Indonesia (UKCCU). The UKCCU brings together UK policy, finance and development expertise to help Indonesia meet its national climate change objectives.

This project, commissioned by the UKCCU, worked to support the development of viable alternatives to current carbon-intensive investment patterns, that can provide prosperity and employment and are supported by local and national stakeholders. This included supporting the design and adoption of fiscal policy that moves Indonesia onto a low carbon growth trajectory, and establishing financing mechanisms that create favourable investment environments for renewable energy and sustainable infrastructure schemes.