Jakarta (ANTARA) - Indonesian Finance Minister Sri Mulyani Indrawati underlined the significance of the energy transition to anticipate the impact of global economic turmoil.
During a meeting with UK Special Representative for Climate Rachel Kyte, she highlighted about the energy transition, which is increasingly complex to be implemented amid today’s global dynamics.
“A disrupted supply chain condition has delayed the energy transition process,” Sri Mulyani wrote in her Instagram account.
Energy transition is also a topic that is not frequently discussed anymore in various multilateral forums, she added.
In addition, the weakening condition of the world’s economy greatly affects the energy transition process.
“If the country loses investment in green energy due to weak economic conditions, it means the energy transition process will also slow down and the use of non-renewable energy such as coal, will be longer, while the impact of climate change itself is not inevitable,” she explained.
Therefore, Sri Mulyani emphasized the urgency in addressing issues in implementing energy transition.
The Indonesian government has disbursed funds from the State Budget for climate action amounting to Rp610.12 trillion (almost US$37 billion) throughout 2016 to 2023.
Head of the Center for Climate Change and Multilateral Financing Policy of the Fiscal Policy Agency of the Ministry of Finance, Boby Wahyu Hernawan, detailed the realization of funding for climate at an average of Rp76.3 trillion (US$4.6 billion) per year or 3.2 percent of the State Budget.
"Cumulatively, the total reaches Rp610.12 trillion. This only covers 12.3 percent of the climate financing needs until 2030," he said.
The government continues to optimize public financing and encourage private sector involvement.
The Ministry of Finance has also provided various tax incentives, such as for the renewable power generation sector and electric vehicles.
From 2019 to 2024, the government has provided fiscal incentives worth Rp38.8 trillion (US$2.3 billion) for climate-related sectors, which are estimated to reach Rp51.5 trillion (US$3.1 billion) by the end of 2025.
On the other hand, the government has also prepared innovative financing schemes such as green sukuk, SDG bonds and the implementation of sustainable financial taxonomy.
In addition to the State Budget, the government has implemented blended finance which mixes financing between the public and private sectors.
As for the private sector, the government encourages business actors to be proactive in reducing carbon emissions, implementing sustainable practices, and innovating in environmentally friendly technologies, including energy efficiency, circular economy and reporting product carbon footprints.
The government also encourages business actors to carry out climate budget tagging and supports the implementation of carbon economic value policies, which are now open to domestic and international markets.
