Indonesia "Must Promote Low-Carbon Economy"

To develop a low-carbon economy, the Indonesian government should boost efforts to lure more investment in environmentally friendly technology and infrastructure, an internationally renowned energy expert suggests.

The British foreign secretary’s special representative for climate change, John Ashton, said governments worldwide, including Indonesia, should fully back all measures aimed at developing low-carbon economies by creating sound and clear policy frameworks.

“Governments need to figure out a way to channel billions of pounds to low-carbon infrastructure projects,” he said at a seminar, “Climate Finance: Shifting to a Low Carbon Economy”, held by the British Embassy in Jakarta on Thursday.

However, he acknowledged that low-carbon policies might differ from one country to another, as their developmental priorities might differ. The low-carbon policy had to be in line with the whole package of a country’s economic growth strategy, he emphasized.

“We need to make the low-carbon economy feel more like an opportunity and climate change risks feel more threatening,” said Ashton.

The key to gaining success in developing a low-carbon economy was how eagerly governments supported investment in environmentally friendly technologies, said Mark Fulton, the strategic managing director at Deutsche Bank.

“Investors need attractive incentives offered by governments to get involved in developing environmentally friendly technologies,” he said via video conference.

He then criticized many countries, particularly developing ones, for implementing counter-productive policies for investment in greener technologies, such as spending higher subsidies on fossil fuels than renewable energy sources.

Indonesia is among many countries in the world that heavily subsidizes fossil fuels. According to the 2011 State Revenue and Expenditures Budget, the total subsidy for fossil fuels topped Rp 95.5 trillion (US$11 billion), up from Rp 88 trillion in 2010 and Rp 45 trillion in 2009.

As widely reported, the government planned to ban private cars from buying subsidized fuels to reduce the subsidy by around Rp 3.8 trillion. The policy was planned to be implemented in April this year in Greater Jakarta.

However, soaring global oil prices stimulated by political tensions in several major oil-producing countries in the Middle East forced the government to delay the plan indefinitely.

Fulton also predicted that the development of nuclear technology, one of the most environmentally friendly sources of energy, would slow following several nuclear reactor explosions in Japan after an 8.9-magnitude earthquake that hit the country on March 11.

Rangga D. Fadillah, The Jakarta Post, Jakarta | Fri, 03/25/2011