News - 13 Januari 2022

Indonesia's commitment to the Clean Energy Transition

Jakarta, 13/10/2021 MoF - Ministry of Finance (Finance) Sri Mulyani Indrawati said Indonesia is committed to prioritizing clean energy transition. There are three things needed in the energy transition mechanism. First, financing for the faster termination of coal power plant operations in order to switch to renewable energy sources. For this matter, the Minister of Finance revealed that he had discussed with the entire business world, both miners and coal-based power plant entrepreneurs.

“We have had conversations with all coal-based power plants. So far, I think the discussion has gone well in providing an understanding as well as how we will design a common policy,” said the Minister of Finance at the World Bank Group Event, Tuesday (12/10).

Second, funding is needed to build new renewable energy because demand will continue to grow. The Minister of Finance emphasized the need for funding, both domestic and global, to help the APBN achieve this target.

"Funding is important because the Energy Transition Mechanism (ETM) to accelerate the transition of the high-carbon energy toward cleaner energy," said the minister.

Third, the energy transition mechanism needs to pay attention to the workforce involved because it will have an impact on loss of income. That way, the clean energy transition will be enjoyed by all levels of society.

“If we don't pay attention to human resources, then this transition is not inclusive and does not support them. The workforce will be the population most affected by the direct loss of income from this transition,” said the Minister of Finance.

Finance Minister explained that the Government of Indonesia and the Parliament has just agreed on the draft RUU Harmonisasi Peraturan Perpajakan (RUU HPP) into law. The policy regulates the imposition of a carbon tax that aims to fully support international commitments in tackling climate change.

“The carbon market is one thing that we are now also asking the power company, State Owned Enterprises (BUMN), to start doing which is called cap and trade. So, they have limits for certain CO2 production for coal-based and then they are facilitated to carry out trade among these actors,” said the Minister of Finance. (dep / mr / hpy)