The year of 2020 was a challenging year for all of us. Early in the year we were shocked by the flood in Jabodetabek and Banten which recorded as the highest rainfall in 150 years, with high fatalities. Then, while we hadn’t had the time to move on from the disaster, the global world was startled by the advent of COVID-19 pandemic that changed the very way of living that we know.
COVID-19 pandemic is a health crisis that has dragged countries into economic recession. Recently, at the Fourth G20 Finance Ministers and Central Bank Governors Meeting (14/10/2020), Minister of Finance Sri Mulyani revealed that 2020 economic growth is only estimated to be minus 1.7% to minus 0.6%. Additionally, the contraction caused poverty rate to increase 9.78% and it is estimated that 5.23 million people will lose their jobs due to the pandemic.
Although we’ve had a very tough year, in fact we carried on moving forward. This is reflected in the fact that currently, almost all countries including Indonesia are focusing on two things. First, certainly to stop the spread of the virus. Secondly, putting together an economic recovery program and identifying multidimensional challenges, including the threat of climate change and deteriorating environmental quality and carrying capacity. The Government of Indonesia is aware of the threat and ensures integration of climate and environmentally friendly activities in existing stimulus policies.
Amidst the pandemic and economic uncertainties of 2020, the Government remains strong in its climate commitment. Prior to the pandemic, the Government had laid green economic foundation and developed several strategic climate policies. Climate change is integrated in the National Medium-Term Development Plan 2020-2024 in a broader Low Carbon Development Indonesia strategy.Low Carbon Development Indonesia/LCDI) yang lebih luas.
To deal with the pandemic, the Government has allocated a fiscal stimulus amounted to Rp 695.2 trillion, used to fund various labor-intensive programs including green programs such as the 15,000 hectares of mangrove restoration project, creating jobs for around 25,000 people along Indonesia’s coastline.
The COVID-19 pandemic has not dampened the government's commitment to funding climate and environment-related programs and activities. Based on the Climate-related Budget Marking Report (Climate Budget Tagging) Kemenkeu, In the last five years (2016-2020), the average budget allocation for handling climate change was IDR89.6 trillion per year or an average of 3.9% allocation from the state budget per year. This figure is still far from the projected funding needs of IDR 266.25 trillion per year during 2018-2030 to achieve Indonesia's emission reduction target as set out in Nationally Determined Contribution (NDC).
Furthermore, the Government has issued Sovereign Global Green Sukuk every year since 2018 totaling US$ 2.75 billion. The funds raised are allocated to finance sustainable transportation, flood mitigation in vulnerable areas, renewable energy access, waste management, and energy efficiency projects across Indonesia. With these green projects, employment opportunities are also expected to widen and help post-pandemic economic recovery.
Cooperation and partnership have become two of the most significant aspects of addressing climate change, including financing. To finance it, the government needs private sector and international contributions.
The government has issued policies to encourage the involvement of the private sector and local governments to support the achievement of the NDC targets. For the private sector, among others, there is a tax holiday facility (tax holiday) untuk industri pionir, pengurang penghasilan (tax allowanceAs for local governments, the Government launched the Regional Incentive Fund (DID) which has indicators of waste management capability and an ecology-based budget transfer mechanism that is currently being developed.
To attract other private funds, in October 2019 the Government also officially launched the Environmental Fund Management Agency (BPDLH) as a centralized fund manager, which was previously spread across various Ministry and Agency programs. BPDLH is expected to support the acceleration of environmental management implementation with a flexible, transparent and accountable distribution scheme.
Apart from the government and private sector, the international community also plays a key role in climate action. One of them is the Green Climate Fund (GCF) which has shown its commitment to help developing countries, including Indonesia, in tackling climate change.
In August 2020, Indonesia received a US$103.78 million Reducing Emissions from Deforestation and Forest Degradation (REDD+) results-based payment facility from the GCF for reducing emissions by 20.25 million tonsCO2eq. This funding was provided for Indonesia's success in reducing emissions in the 2014-2016 period.
.
Climate Finance Issues in 2021
Looking ahead to 2021, the Government is stepping up its commitment to climate action. The Government is currently drafting a Presidential Regulation on Carbon Economic Value Instrument for NDC Achievement and Carbon Emission Control in Development, which will be issued in the near future. Previously, this carbon pricing scheme has been identified in Presidential Regulation No. 77 of 2018 as one of the ways to raise environmental funds. The regulation is expected to help achieve the 2030 emission reduction target.
To set the strategy and fiscal policy framework for achieving emission reduction targets and resilience to climate change, the Ministry of Finance is also developing the following Climate Change Fiscal Framework (CCFF). This policy framework will be the foundation for the development of various fiscal incentives from the government and collaboration with other parties, including the private sector.. The development of strategic government policies is expected to further encourage the mobilization of climate finance from the private sector.
The G20 presidency to be held by Indonesia in 2022 will be an opportunity to affirm Indonesia's commitment to climate and environment. The government will implement a green and sustainable economy in restoring the national economy. Therefore, a more comprehensive synergy between economic, environmental and social aspects is needed.
We learned a lot from 2020, which will affect the direction of our lives going forward. One of them is our vulnerability to pandemics, as well as the impact of climate change. Therefore, it is important to maintain the quality and carrying capacity of the environment in order to drive the economy forward. For governments, economic recovery through green projects and job creation is the path that will lead us to the end of the dark tunnel we are currently in.
__________
Photo by: Mika Baumeister/Unsplash
EN 
ID