News Updates 11 August 2022
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Towards Fair and Affordable Energy Availability

The policies of world central banks, especially the Fed, to aggressively raise benchmark interest rates are also predicted to hamper global economic recovery and cause debt distress. With limited fiscal capacity, especially in low and middle income countries, it is predicted that it will affect the achievement of the Sustainable Development Goals (SDGs) in 2030. What about Indonesia? Recently, BPS announced Indonesia's economic growth in the 11/2022 quarter of 5.4496 YoY. In all of 2022, the IMF predicts Indonesia's economic growth will reach 5.3%, much higher than the projected global economic growth in 2022 of 3.2%.

In order to maintain sustainable and inclusive economic growth, the Government of Indonesia has adopted a structural transformation policy, one of which is an effort to overcome the impacts of climate change in order to continue to fulfill its commitment to achieving the SDGs. This commitment is manifested in Indonesia's participation in the Paris Agreement which is confirmed by the National Contribution Document or NDC, in which the target of reducing greenhouse gases (GHG) by 2996 independently and 4196 with international support can be achieved by 2030.

In achieving this target, the Government of Indonesia has identified several sectors that are critical for the implementation of strategic measures to address the impacts of climate change. Some of these sectors include agriculture, forestry or Forestry and Other Land Uses (FOLU), energy, and waste management.

Two of them, FOLU and energy, account for almost all of Indonesia's GHG, amounting to 9016. In the FOLU sector, Indonesia has succeeded in controlling land and forest fires, which decreased by 82% by 2020. Indonesia has also started the rehabilitation of mangrove forests with a target of 600,000 hectares. until 2024, which is the largest in the world. Currently, Indonesia has ambitions to make the FOLU sector a carbon net sink in 2030, so that there will be carbon netTality in the sector.

Energy, especially electricity, is crucial to the Indonesian economy, and the government continues to strive to meet people's needs fairly and affordably.

In the context of the energy transition, the Government of Indonesia is carrying out the initiative to establish an Energy Transition Mechanism (ETM) to ensure a smooth transition process towards a clean, carbon-free energy system.

The government through the Decree of the Minister of Finance No. 275/2022 has officially appointed PT Sarana Multi Infrastruktur (Persero) as Country Platform Manager tasked with managing energy transition funding in the country, which can be sourced from commercial and non-commercial funding on a sustainable basis, such as funding from Indonesia sovereign wealth fund, as well as financing from donor/philanthropic institutions, multilateral/bilateral institutions, and other international institutions. The appointment of PT SMI as the country platform manager is carried out in the context of providing government fiscal support for the funding framework and financing of the national energy transition.

For the energy transition process, there are several focuses that will be carried out by the Government of Indonesia. In the short term, accelerating the termination of coal-fired power plant operation time will be the main focus.

PT SMI realizes the importance of cooperation and collaboration of all parties to carry out commitments and responsibilities as a country platform in supporting the Government of Indonesia to implement a just and affordable energy transition. This year's G20 Presidency is a good momentum for us to be able to show leadership in coordinating and encouraging countries in the world, as well as international financial institutions to support the implementation of the energy transition in order to achieve a strong, sustainable, and inclusive economic recovery.


Bisnis Indonesia, August 11, 2022

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