Study asks Indonesia to adopt green economy

Adianto P. Simamora, The Jakarta Post 1 Jul 09;

A study analyzing the impacts of switching to a low-carbon economy has shown that investing more in energy efficiency, reducing the use of coal-based fuels and stopping deforestation, could improve per capita incomes and help ease the level of unemployment.

The joint study was conducted by Padjadjaran University, the Center for Economic and Development Studies (CEDS), Strategic Asia and the office of the State Minister for the Environment.

The study found that these benefits would be gained by increasing energy efficiency by 25 percent, reducing the use of coal-based fuels by 50%, implementing a US$50 per ton tax on carbon production, and reducing the rate of deforestation by 10 percent.

“The environmental and economic benefits of such measures are huge. It would cut 177 million tons of CO2 emissions and increase GDP by 2.7 percent [Rp 133 trillion] per year,” Arief Anshory Yusuf, a researcher from Padjadjaran University told The Jakarta Post.

“Such economic benefits could create new jobs for more than 3 million people, and the number of poor people would be reduced by more than 4 million per year.”

The study also included policy recommendations designed to meet targets by promoting energy-saving policies in 25 percent of wealthy households in urban areas, energy-intensive industries and the transport sector.

Several countries, including the US, China and South Korea have been considering adopting “green economy” policies to cut carbon emissions.

The US has allocated US$80 billion for renewable resources and energy efficient programs.

China has allocated 12 percent of its $586 billion economic stimulus package toward energy efficiency and improving the quality of environment.

The South Korean government has created a “Green New Deal” by investing $28 billion in four years to finance 36 projects focused on improving the environment.

Indonesia has issued a series of regulations aimed at cutting emissions from the energy and forestry sectors, but its implementation record remains poor.

In 2005, the government issued a presidential decree on fuel savings requiring government offices to reduce the use of energy and official trips. The government also issued a decree on energy, setting targets to cut 17 percent of the country’s emissions from the energy sector.

State Minister for the Environment Rachmat Witoelar said the country should take advantage of its enormous stock of low carbon energy sources like geothermal energy to move toward a green economy.

Indonesia has about 33.000 megawatts of the geothermal resources.

Masnellyarti Hilman, the ministry’s deputy for nature conservation enhancement and environment degradation control, said there were alternatives to carbon market mechanisms, which could generate income and produce a green economy that was not reliant on destroying the environment.

“In forests for example, ecotourism could provide an alternative source of income, rather than cutting down trees for timber,” she said.