Green Watch: Fuel prices hike is not all bad

Jonathan Wootliff   |  Tue, 06/03/2008 9:48 AM  |  Environment

Not everyone is unhappy with fuel price increases. Environmentalists are certainly pleased to see the government reducing its subsidies of fuel -- the single biggest cause of greenhouse gas emissions.

President Susilo Bambang Yudhoyono and his government are brave in taking this unpopular step. Logic and common sense prove that it was the right thing to do.

As tough as it may be on people's pockets, it is vital that a long view is taken on fuel pricing. Indonesia cannot afford to continue subsidizing our growing thirst for oil. The cost to the nation's budget and the environment is far too high.

It must certainly be the role of government to solve the current crisis. But imaginative remedies must surely be found to the problem of rapidly accelerating fuel and energy costs, not short-term fixes.

It was SBY's impassioned public plea and skillful backroom diplomacy at last December's UN climate change summit in Bali that significantly helped to ensure its successful outcome. Arguably, without the President's 11th hour intervention, efforts to allay the prospect of irreversible global warming would have been severely derailed.

Following desperate last-minute efforts to avert failure, it was Indonesia that emerged as a true hero. The country's reputation on the world stage was appreciably enhanced.

Indonesia received many accolades for helping to save the day. I was there, and I heard many paying tribute to the nation for its outstanding leadership.

It would be nothing but hypocritical for the government to continue to make such big subsidies on fossil fuels, which are doing such harm to our climate.

Last week's decision to reduce fuel subsidies was another act of admirable leadership. Jakarta sent a positive message to the developing world that populist policies are not the only option. It is developing countries that are the biggest subsidizers of fuel. And yet it is the developing countries that will suffer the greatest consequences of climate change.

Already prone to very high temperatures, drought and crop failure, it is the poorer countries that lack the resources to deal with widespread increases in temperature. We have been reminded on countless occasions as to Indonesia's vulnerability to climate change. Global warming is far more responsible for food price rises that the price of gasoline.

The cost of using more oil is unaffordable to our environment. The planet cannot afford for us to continue burning fossil fuels. The consequences of climate change will be devastating if action is not taken. Environmentalists have been saying for many years that the world must learn to wean itself off oil.

A positive outcome from the current crisis is that rising fuel costs will inevitably speed up efforts to find alternative and financially viable sources of energy.

Of course it is the rich countries that must be at the forefront of technological efforts to make renewable feasible in our modern, fast growing world.

If you think gasoline is expensive in Indonesia, spare a thought for the Netherlands, where prices at the pump are the highest in the world. Dutch drivers are paying more than Rp 16,000 for a liter of gasoline.

And most of the developed world is paying almost as much, where taxation accounts for more than 75 percent of the price. Over the months ahead, we will see which Western governments are brave enough to maintain this taxation, and put it to good use in speeding up the search for and implementation of environmentally sound substitutes.

The world cannot expect a country like Indonesia to slow down it economic progress or pioneer research in to renewable solutions.

But this country can use the money saved on reducing fuel subsidies on improving public transportation and in changing people's behavior and laissez-faire attitudes toward fuel.

Jakarta has to be one of the best examples going of a vast metropolis with a dysfunctional transportation infrastructure.

It's high time that more public funding was expended on improvements aimed at reducing the dependency on cars, cutting down journey times, improving the environment and helping human health.

"The city itself is a major health hazard," says Budi Hartanyo, professor of public health at the University of Indonesia.

"Jakarta is responsible for 70 percent of the nitrogen oxide and particulate matter in the city's air. Respiratory inflammation accounts for 12.6 percent of deaths in Jakarta, twice that in proportion to the rest of the country," he reports.

Rising fuel costs will inevitably make the government unpopular in the short term. Complaints and protests are bound to increase. But SBY needs to stand firm if this nation is to survive and prosper during these difficult times.

Indonesia is privileged to have a politician with conviction as its leader. He has shown himself to be strong and not tempted by populist measures.

In 2006 he told the House that oil prices remained a threat and that, while he expected continued economic growth, that would not be enough to reduce unemployment or poverty.

It is that kind of honesty that has helped generate optimism among foreign investors and analysts about Indonesia, despite its many problems.

Now is the opportunity for Indonesia to play a leading role in the developing world. If SBY stands by his guns, history will show him to be a great statesman.

Jonathan Wootliff is an independent sustainable development consultant specializing in the building of productive relationships between companies and NGOs. He can be contacted at jonathan@wootliff.com.

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