Indonesia: GHG Emissions and Climate Change Policy

Indonesia: GHG Emissions and Climate Change Policy

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January 6, 2023
Indonesia: GHG Emissions and Climate Change Policy
Introduction
Sources of Greenhouse Gas Emissions
The Republic of Indonesia faces multiple challenges related
According to the World Resources Institute (WRI), GHG
to addressing the effects of climate change and lowering
emissions from energy production and land use, land-use
greenhouse gas (GHG) emissions while also meeting its
change, and forestry (LULUCF) comprise approximately
economic and development needs. Indonesia, an
82% of Indonesia’s total emissions (Figure 1). Emissions
archipelagic nation of approximately 17,000 islands with a
from energy largely stem from fuel use (approximately
population of approximately 276 million, is the world’s
75%, much of which is from coal-generated energy).
fourth most populous nation. According to Climate Watch,
Indonesia is among the world’s top emitters of GHGs,
The LULUCF contribution to GHG emissions in Indonesia
ranking fourth in 2019 after China, the United States, and
is tied to deforestation. Indonesia lost approximately 28.6
India. Indonesia’s government has expressed concern about
million hectares (mha) of forest cover from 2001 to 2021,
the effects of climate change on its development,
of which 95% is expected to be permanent, according to
biodiversity, population, and national security. For
some scientists. (One hectare equals about 2.5 acres.) The
example, Indonesia’s environment minister opened the
primary driver of forest loss is commodity-driven
2022 G20 Joint Environment and Climate Ministers’
deforestation derived from large-scale timber and oil palm
Meeting by stating that climate change “would not only
plantations, according to the WRI. The annual rate of forest
wipe out all development progress that has been achieved
cover loss in Indonesia decreased from approximately 2.4
over the past decades, particularly in emerging economies,
mha in 2016 to 0.84 mha in 2021 (Figure 2). Scientists
but it would also propel us over an environmental tipping
attribute the lower deforestation rate in part to government
point into uncharted territory where no future will be
policies to prevent deforestation and fires.
sustainable.” Congress has expressed interest in Indonesia’s
commitment and actions to address climate change, which
Figure 2. Indonesia Tree Cover Loss 2001-2021
are largely tied to Indonesia’s GHG emissions from land
and energy use. Congress also may be called upon by some
to appropriate funds and conduct oversight of several new
U.S. initiatives aimed at supporting Indonesia’s efforts to
reduce emissions and mitigate the impacts of climate
change.
Figure 1. Indonesia CO2e Emissions 1990-2019

Source: CRS. Data from World Resources Institute, 2022.
Note: Dotted line is a three-year moving average.
Projected Effects of Climate Change
According to a February 2022 report by the
Intergovernmental Panel on Climate Change (IPCC),
Indonesia is likely to experience increasing temperatures,

Source: Congressional Research Service (CRS) using data from
increasing frequency and intensity of heavy rainfall events,
World Resources Institute, Climate Watch Data, Indonesia Profile;
and increasing duration of heat waves by the 2050s. Other
and the Indonesian Government’s Enhanced National y Determined
projected conditions in Indonesia include rising sea levels
Contribution (NDC), 2022.
relative to subsiding land, increased salinization of coastal
Note: MtCO2e represents mil ion metric tons of carbon dioxide
aquifers, increased incidence of waterborne disease,
equivalent, which represents the number of metric tons of CO2
decreased marine fish yields, and increased risk of forest
emissions with the same global warming potential as 1 metric ton of
fire. Indonesia has the longest coastline in the world, and
another greenhouse gas. The unconditional NDC target is the
many of Indonesia’s small, low-lying (less than 10 meters
emissions reduction goal Indonesia has committed to reach
regardless of outside assistance. The conditional NDC target is the
above sea level) islands are threatened with land loss from
emission reduction goal Indonesia has committed to reach upon
sea level rise and subsidence by mid-century. Its coastal
receipt of foreign aid. NDC targets include LULUCF (see text) in
population is one of the highest in the world, and coastal
their CO2e emissions values.
communities are at increased exposure to flooding events,
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link to page 1 Indonesia: GHG Emissions and Climate Change Policy
according to the IPCC. Climate change also may affect food
Deforestation and Forest Degradation (REDD+) strategies
production; a 1° Celsius increase in temperature could
to achieve its emission reduction targets. The NDC further
significantly reduce rice production and fish stocks in
identifies specific mitigation efforts in the energy sector.
Indonesia.
Cooperation with the United States
Selected Indonesian Policies on Climate Change
The United States provides development assistance to
Indonesia is planning and implementing actions to address
Indonesia that focuses in part on promoting sustainable
climate change. In the energy sector, roughly 60% of
livelihoods, conserving terrestrial and marine resources, and
Indonesia’s electricity comes from coal. In 2021, Indonesia
reducing emissions from LULUCF. All of these initiatives
pledged not to construct new coal plants; this promise does
address climate change concerns directly or indirectly. For
not affect coal plants already under construction (an
example, the U.S. Agency for International Development
estimated additional 13.8 gigawatts of capacity). President
(USAID) supports the Sustainable Environmental
Widodo pledged to shut all coal plants by 2056; his second
Governance Across Regions program, which aims to
and final term in office is scheduled to end in early 2024.
improve environmental governance and land use practices.
In Indonesia by 2026, USAID aims to bring 7 mha of
At the 2022 G20 Summit, Indonesia, the United States, and
tropical forest and peatland under improved management,
several other countries formed a Just Energy Transition
reduce 55 million metric tons of CO2 emissions, and
Partnership (JETP). The JETP includes a financing package
mobilize up to $45 million in public and private
to help Indonesia transition away from coal, increase
investments.
renewable energy production, and commit to net-zero
emissions in its power sector by 2050. Net-zero means
In addition, USAID is planning a new climate partnership
Indonesia would emit no more GHG into the atmosphere
with Indonesia to support carbon sequestration in forests
than it removes. The JETP is expected to invest an initial
and the conservation of biodiversity, including orangutans,
$20 billion over the next three to five years to accelerate
elephants, tigers, and rhinoceroses in Sumatra and
Indonesia’s energy transition. An October 2022 Planning
Kalimantan. Other countries also are addressing land-use
Ministry study estimates Indonesia would need between
issues in Indonesia; for example, Norway has agreed to pay
$150 billion and $200 billion per year over the next nine
Indonesia for keeping selected forests intact.
years to reach net-zero emissions by 2060. Under JETP,
Indonesia is to reach its peak emissions and increase its
In the energy sector, the United States and Indonesia signed
renewable energy target to 34% of all power generation by
a memorandum of understanding (MOU) to support
2030. As part of the partnership, Indonesia pledged to cap
Indonesia’s plan for low-emissions development. The MOU
carbon dioxide emissions from its power sector at 290
would allow USAID to share information and exchange
MtCO2e by 2030, down from a baseline of 357 MtCO2e.
knowledge, develop and implement projects, and
collaborate on research and activities with Indonesia. (The
Indonesia also signed an agreement with Brazil and the
United States also contributed to the finance deal under the
Democratic Republic of Congo to preserve the three
JETP.) In a public-private partnership, ExxonMobil and
countries’ forests (approximately half of the world’s
Indonesian state-owned energy company Pertamina signed
tropical forests). The agreement calls for a funding
a $2.5 billion agreement to develop a carbon capture and
mechanism to provide payments to reduce deforestation.
sequestration hub in Indonesia.
Nationally Determined Contribution
The Millennium Challenge Corporation (MCC; a U.S.
In September 2022, Indonesia submitted an Enhanced
agency that provides grants to countries to promote
Nationally Determined Contribution (NDC) to the United
economic growth, reduce poverty, and strengthen
Nations Framework Convention on Climate Change
institutions) concluded talks with Indonesia in 2021 to
(UNFCCC). This NDC communicates the country’s
launch a $698 million MCC compact with $649 million
emission reduction targets and other actions intended to
from the United States and the rest from Indonesia. The
contribute to meeting the collective goals of the Paris
MCC implemented an earlier $500 million compact with
Agreement. In its NDC, Indonesia commits to reducing
Indonesia from 2013 to 2018, with over $300 million
GHG emissions by 31.9% (unconditionally) relative to its
allocated for efforts to promote green growth—
business-as-usual (BAU) scenario by 2030 and, conditional
simultaneously fostering economic development and
upon the receipt of foreign aid, commits to reducing GHG
preserving natural resources. The new compact aims to
emissions by 43.2% relative to BAU. Figure 1 illustrates
support climate-conscious transportation infrastructure in
these targets compared with Indonesia’s historical GHG
five provinces, help mobilize international capital in
emissions. (The percentage reductions for unconditional
support of Indonesia’s development goals, support coal
and conditional actions are based on the estimated BAU in
plant decommissioning as part of the JETP, and increase
2030.)
access to finance for Indonesia’s women-owned businesses.
Indonesia’s NDC identifies LULUCF—including peat
Pervaze A. Sheikh, Specialist in Natural Resources Policy
fires—and energy as the two main sectors contributing to
Bruce Vaughn, Specialist in Asian Affairs
its GHG emissions. The NDC specifies a target of restoring
Ben Dolven, Specialist in Asian Affairs
2 mha of peatland and rehabilitating 12 mha of degraded
Elisabeth Lohre, Research Assistant
land by 2030 in an effort to reduce emissions. Indonesia
plans to continue to implement Reducing Emissions from
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Indonesia: GHG Emissions and Climate Change Policy

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