Divya Karyza, Jakarta – Indonesia needs to invest US$312 billion to reach its target for reducing greenhouse gas (GHG) emissions by 2030, according to Finance Minister Sri Mulyani Indrawati.
The figure is based on the estimated contribution stated in the reworked nationally determined contribution (NDC), Indonesia's pledge made under the Paris Agreement on climate change.
"That's a huge number. [...] The question now is how to finance the implementation," the minister said at the Indonesia Green Summit 2021, which was held online on Tuesday.
As its NDC, Indonesia promises to reduce emissions by 29 percent against a business-as-usual scenario by 2030, or by up to 41 percent with support from the international community.
Indonesia's state budget plan identifies climate change control spending through budget tagging, which shows that the individual items currently add up to 4.1 percent of the total budget.
From 2018 to 2020, Indonesia allocated $7.08 billion, or 4.3 percent of the total state budget, to climate change measures, which is only 34 percent of the annual funding needed, according to Sri Mulyani.
On the national level, the government has issued several fiscal policies, such as a tax holiday and a tax allowance, and issued Government Regulation No. 74/2021 on the luxury vehicle tax, which will take effect on Oct. 16.
The government has also begun marketing so-called green sukuk to retail investors with the aim of financing projects apt to slow climate change. It issued $100.84 million worth of such securities in 2019 and another $374.50 million in 2020.
"Nevertheless, all the initiatives need to be in line with our economic recovery plan," the minister added.