The 2016 Paris Climate Agreement was an impressive milestone for the continued future of humanity on earth. In total, 195 countries pledged in a collective manner to remain committed in reducing emissions that would ultimately limit global warming to “well below” 2 degrees Celsius, compared to pre-industrial levels.
Within this agreement, signatories are required to set a specific target for their countries to achieve in a specific amount of time.
Among the signatories, is Indonesia, a country that holds tremendous amount of potential to lead in green energy production in the Asia Pacific region. The country currently is perfectly situated geographically to unleash its potential, it is situated in the middle of the equator.
Thus, receiving constant sunlight throughout the year, perfect for solar power production. Other than the potential that Indonesia has on the surface, the country also has potential underneath, this archipelago is the world’s second biggest geothermal production.
Moreover, there is also the impressive potential that Indonesia has for hydroelectric power plant as the country holds the world’s second longest coastline reaching 99,083 km long.
With these potentials, reaching its Paris Climate Agreement of reducing the country’s emission by 29 percent by 2030 is more than attainable. However, according to the Lowy Institute, Indonesia has been struggling to reach its target.
The archipelago’s green energy capacity of 9 GW is only a third to the country’s neighbor, Vietnam. Furthermore, Indonesia’s increase in green energy capacity is lagging comparing to its neighbor, with only 17%, comparing to Vietnam’s 50%.
Recently, Indonesia have faced hurdles as with other countries, in their efforts to undergo their energy transition policy, as COVID-19 have had a profound effect on the country’s economy and way of living.
However, this article would argue that the country could take advantage of the country’s enormous potential in green energy to further support economic growth towards a pre pandemic recovery.
With the rise of demand in green energy in the economy, Indonesia should make continual efforts to attract green foreign direct investments (FDI) into the country.
More private companies are pledging to produce their services using green sustainable energy, firms that has significant presence in Indonesia’s manufacturing industry such as Nike, Ajinomoto, and Coca-Cola are already pledging to be part of RE100.
RE100 is a group of global companies committed using 100% renewable energy. Without the proper growth in the country’s green energy capacity, Indonesia would struggle to accommodate their demand for renewables.
Establishing regulations that ease green energy investment in the country would help to sustain FDI for renewables. As of this article is written, Indonesia ranks 73 globally in the World Bank’s Ease of Doing Business, behind Vietnam (70) Thailand (21) and Malaysia (12).
Other than shifting towards effective regulations, the Indonesian government also needs to provide significant investment in green energy infrastructure.
However, it seems that the government has not done enough, according to a report by the Climate Action Tracker, the recent Indonesia’s USD 48 billion COVID-19 economic recovery plan failed to address the importance of the country’s energy transition into renewables.
Other than economic benefits, Indonesia can also address its social inequality problem through the energy transition. The archipelago has been trying to address inequality, with the current president, Joko Widodo, ran his second term campaign pledging to close the gap of inequality in Indonesia.
Indonesia's GINI ratio (an economic ratio to represent the income inequality in a country) have consistently been dropping since 2015, albeit in a slow rate.
However, UNDP predicts that the COVID-19 economic recession would only widen Indonesia’s wealth inequalities, as the disproportionate nature of the recession’s impact on women and the poorest of the country.
Through a shift towards renewables, with green energy being labor intensive in nature, it is hoped that these new green infrastructure project would open up new employment opportunities for Indonesians and would in turn boost the economy towards recovery.
Furthermore, renewables will boost the reach of electrification in the archipelago, as renewables would require smaller operating cost comparing to oil or coal powered energy. This would eventually provide a stable and affordable electricity across the archipelago, hopefully closing the gap on social inequalities.
Not to mention the potential effects on sustaining Indonesia’s emission would reduce the destructive natural disasters that is connected to global warming, such as flash floods and droughts.
This would be incredibly beneficial as the country was suffering from big floods and droughts as recent as last year in Borneo, where a big flood cost a dozen life and forced thousands to evacuate.
With the effects of global warming become increasingly devastating, it is time for countries that hold significant potential for green energy such as Indonesia, to step up and lead the charge towards a sustainable society, and assert its influence geopolitically. It would be a shame if the archipelago waste this major opportunity.