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Low carbon development: An opportunity to step up on build back better
The summit was a critical milestone on the path to the upcoming United Nations climate conference (COP26) in Glasgow in November, by which point countries are expected to bring forward stronger 2030 climate targets under the Paris Agreement.
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resident Joko “Jokowi” Widodo attended in April the virtual Leaders Climate Summit, which was organized by United States President Joe Biden as part of his administration’s efforts to restore the US climate leadership and encourage countries to act more aggressively to cut their greenhouse gas (GHG) emissions.
The summit was a critical milestone on the path to the upcoming United Nations climate conference (COP26) in Glasgow in November, by which point countries are expected to bring forward stronger 2030 climate targets under the Paris Agreement.
At the summit, Biden announced a new US climate commitment under the Paris Agreement in the form of Nationally Determined Contribution (NDC), including a target to cut GHG emissions by 50-52 percent below 2005 levels by 2030. Japan and Canada also significantly increased their climate targets, while South Korea and China made important announcements on coal.
Together with recent commitments to ambitious 2030 targets by the European and the United Kingdom, these announcements gave a jolt of momentum to global climate ambition, signaled that the US is serious about tackling the global climate crisis in partnership with other countries and laid down the challenge to other major emitters to step up their climate targets this year.
Science tells us that to limit global warming to 1.5 degrees Celsius and avert dangerous levels of climate change, we must halve global carbon emissions by 2030 and reach global net-zero emissions by 2050.
Ambitious climate action is also an opportunity for countries to boost jobs and economic growth, reduce health risks, further equity goals, and build resilience following the COVID-19 pandemic. Research shows that green investments like renewable energy and ecosystem restoration can have an economic benefit that is 2-7 times higher than unsustainable investments, and will often generate double or more the number of jobs as traditional, fossil fuel-based alternatives.
Net-zero targets for around mid-century are rapidly gaining pace with countries, companies and in the finance sector. To date, 59 countries have communicated a net-zero climate target, reflecting more than 54 percent of global emissions. More than 120 global financial institutions have policies to divest or to restrict investments in thermal coal. The new Glasgow Financial Alliance for Net Zero brings together 160 asset managers, asset owners and banks—together responsible for assets in excess of US$70 trillion—committed to align assets and investments to net-zero by 2050 or sooner. Those countries that have set net-zero targets are enhancing their 2030 NDC goals to align with the trajectories to get there.
Countries have an immediate opportunity to kickstart their climate transitions now as part of the economic recovery. So far, about $16 trillion has been allocated to COVID-19 response and stimulus spending globally, and it will have a very mixed environmental impact.
As time goes on, more and more countries are shifting towards a focus on a green recovery as they recognize the potential job opportunities and growth benefits.
The government of Indonesia is taking positive steps in this regard. The National Development Planning Agency (Bappenas) is preparing a green fiscal stimulus program focused on energy, waste management and labor-intensive farming, expected to create jobs, reduce costs, improve productivity, and reduce GHG emissions.
In 2016, Indonesia submitted an unconditional target to reduce GHG emissions by 29 percent below business-as-usual by 2030, or to reduce them by 41 percent with sufficient international support. As with many countries, this initial target is deeply insufficient to put the country on track for contributing to the global climate action goal under the Paris Agreement.
Research by Bappenas and others shows, however, that Indonesia has a huge opportunity to boost its economy, create jobs and improve its air and water with more ambitious climate action. The last decade has seen an unexpectedly fast drop in the cost of renewable energy, and economic modelling suggests that investing in compact, connected, clean and resilient cities in Indonesia could for example provide returns of US$2.7 trillion by 2050.
Low-carbon growth offers a clear pathway to boost Indonesia’s growth immediately and shrink its deficit as it recovers from the COVID-19 crisis, while creating synergies with health, social and business recovery.
Research from Bappenas in 2019 showed that Indonesia can reduce GHG emissions by 43 percent by 2030, exceeding its current climate commitment, while delivering an average gross domestic product (GDP) growth rate of 6 percent per year until 2045.
Net benefits in 2045 also include 40,000 deaths avoided each year due to improved air and water quality and more than 15.3 million new jobs which are greener and better paid. Indonesia could realize these benefits with less carbon-intensive, more efficient energy and transport systems, more productive agriculture, and continued restoration of degraded lands.
The net benefits would start from the first year, and thus could be part of the immediate economic recovery from COVID-19.
Most recently, research from Bappenas has developed scenarios for Indonesia to achieve net-zero emissions by 2045, 2050, 2060, or 2070.
Indonesia can achieve annual GDP growth of up to 2 percent higher than the business-as-usual in the 2021 to 2070 period and increase per capita income by 2.5 times. This is due to higher productivity levels and reduced costs from negative externalities.
This modelling reflects the COVID-19 economic crisis and opportunities for a green recovery, and we are updating the scenarios further in Bappenas based on consultations with other Ministries.
There is still time for the world’s largest emitters, including Indonesia, to set ambitious 2030 goals ahead of COP26. Indonesia has already made significant progress in laying the foundation for stronger climate action. Now, it’s time this year to work with other countries and the private sector to develop partnerships and explore how Indonesia can enhance its 2030 targets and long-term strategy.
The writer is deputy to national development planning minister for maritime and natural resources affairs
