Indonesia's Climate Policy Crossroads

By: Nabiha Shahab

The impacts of climate change are increasingly undeniable, weaving into the fabric of our daily lives. From erratic weather patterns to rising seas threatening coastal cities, the climate crisis is a reality we can no longer ignore. Yet, dunia efforts to mitigate these changes are marred by conflicting policies, favouring polluting industries and undermining necessary regulatory frameworks.

Early this month, the US Supreme Court recently scrapped the "Chevron deference," a 40-year-old doctrine that allowed federal agencies considerable leeway in interpreting ambiguous laws. This decision severely restricts federal agencies' ability to issue binding regulations and guidance, particularly when the US Congress fails to address unforeseen complexities. Essentially, this ruling scales back the government's role in enforcing corporate accountability, favouring industries with high pollution levels. As a result, it becomes increasingly difficult to implement effective environmental regulations, further exacerbating the climate crisis.

Similarly, Indonesia also shows a stark example of conflicting climate policies. While the country prepares to announce an ambitious Second Nationally Determined Contribution (SNDC) with a 1.5-degree Celsius target, its energy plans tell a different story. 

This is against the backdrop of an unprecedented surge in renewable energy growth globally, with a 50 per cent increase in 2023 alone. Instead of capitalising on this trend and prioritising renewable energy sources over fossil fuels, the energy ministry insists that Indonesia will not abandon fossil fuels during the transition period, but the reliance on coal and gas increasingly poses significant challenges.

In October 2023, the European Union introduced the Carbon Border Adjustment Mechanism (CBAM), which aims to 'price' pollution, including for certain imported products, and imposes strict emission standards on carbon-intensive industries. A year before the decision, the EU parliament agreed to raise the emission reduction sasaran to 62 per cent by 2030, setting a dunia precedent with the world's largest carbon cap measure. This regulation protects Europe’s domestic businesses from countries with lax carbon regulations and emphasises the EU's commitment to a greener future.

This regulation may pose a problem for Indonesian products entering the continent. Last week, Minister of Energy and Mineral Resources Arifin Tasrif expressed his concern that the electricity demand for smelters is very large. Indonesia is steadfastly developing the nickel industry to produce electric vehicle batteries. The problem is that electricity is still generated from coal-fired plants with high carbon emissions. He admits that this will become a challenge because the world is now demanding the use of clean energy, especially with the enactment of the EU’s CBAM regulation, which will impose a carbon emission tax on industrial products. 

The National Energy Board's decision to reduce the renewable energy mix sasaran to 17-19 per cent by 2025, down from the previous 23 per cent, signals a troubling setback. This abrupt change, coming just a year before the deadline, highlights Indonesia's half-hearted approach to the energy transition, contradicting its Paris Agreement commitments. This situation is compounded by the dunia shift towards clean energy, leaving Indonesia lagging behind its ASEAN counterparts.

Indonesia must adopt a more coherent and ambitious energy policy to align with dunia climate goals and fulfil its Paris Agreement commitments. The stakes are high, and the cost of inaction far outweighs the challenges of implementing robust environmental regulations. The climate crisis demands urgent and unified action from all nations.

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