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PECC: Carbon-pricing to attract cleaner, more sustainable energy

Carbon-pricing is the most effective approach to shift energy production from fossil fuels to more sustainable alternatives following the signing of the landmark Paris Agreement, experts have said

Tama Salim and Dylan Amirio (The Jakarta Post)
Jakarta
Tue, April 26, 2016

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PECC: Carbon-pricing to attract cleaner, more sustainable energy

C

arbon-pricing is the most effective approach to shift energy production from fossil fuels to more sustainable alternatives following the signing of the landmark Paris Agreement, experts have said.

“If we raise the price of carbon, then fossil fuels become expensive and producers have to change production processes in favor [of] less carbon-intensive energies,” Soogil Young said during his keynote speech at a seminar jointly held by the Pacific Economic Cooperation Council and The Jakarta Post on Monday.

Young, former chair of South Korea’s Presidential Committee on Green Growth, pointed out that this was a political decision to be made by Paris Agreement signatories to challenge any short-term vested interests of any businesses still relying on the old fossil fuel paradigm.

Under the Paris Agreement, signatories must comply with the target of keeping the global temperature rise below 2 degrees Celsius from pre-industrial levels. It also calls for a strengthening of efforts to further limit the temperature increase to 1.5o C.

After signing, countries must formally approve the Paris Agreement in their respective parliaments, and have relatively free reign over setting carbon emission-reduction targets that must be updated every five years.

All signatories also agreed to aim for net-zero emissions in the second half of the century, requiring nations to submit their Nationally Determined Contribution (NDC) every five years post-2020 and set more ambitious goals for every submission.

Young also said that developing countries and those in the Asia Pacific region, which were among the most vulnerable to climate change, should take advantage of the agreement, making use of NDCs and carbon financing, as well as technology transfers as a means to achieve green growth and transition to low-carbon growth models.

Ross Garnaut of the University of Melbourne applauded the Paris Agreement as a “huge political achievement” despite the lack of simple implementation guidelines.

However, he expressed optimism that the transition to zero emissions could be reached without considerable cost to economic growth, which has been one of the main concerns of governments across the globe.

Building on Young’s idea, Garnaut suggested that the world’s four biggest coal producers — Australia, India, China and Indonesia — agree on the same level of carbon-pricing to increase the strength of the initiative.

“If Indonesia, China and India agree to apply taxes on coal, that would have very large effect on the direction of carbon-pricing. It would go a long way to resolving budget problems,” said Garnaut

In another session, there were calls to properly assimilate online technology into the day-to-day operation and business practices in Indonesia’s rigid, traditional economic system.

Former chairman of the Indonesian Investment Coordinating Board (BKPM) Mahendra Siregar said the new climate of technological innovation was pushing industries to focus more on added value rather than profit as a way to stay competitive in the new economy.

Using old-school business methods, a business could only achieve growth if it had a healthy bottom line, while in the new mobile-led era, profit is not necessarily a requirement for growth, at least in the short run, he said.

Increasing valuation, Mahendra underlined, was the focus of the new economy, which explained why such ventures as AirBnB and Uber were able to survive despite experiencing big losses in their early days of operation.

“Virtual economies do not have borders. You survive by having the best practice in the business,” he said.

Indosat Ooredoo CEO Alexander Rusli said the ever constant shifts in technological innovation had forced industries to quickly embrace changes. The telecommunications sector is increasingly dominated by mobile phone usage, which offers unique challenges to the traditional economy.

By accommodating innovations into regular practice, Alex agreed that it would allow telecom companies to utilize and further focus on improving digital infrastructure that hosts vital mobile applications such as Go-Jek and Uber.

He also described a changing business core in the telecom industry due to mobile vitality.

“The basic infrastructure of the internet, voice and SMS messaging is becoming something that people don’t want to pay for because they feel it has become a key part in their daily lives. As a telecom company, the feeling will be different in terms of the profitability,” he said.

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