Sri Mulyani Emphasizes The Importance Of Anticipating The Impact Of The Global Economy On The Energy Transition

Minister of Finance Sri Mulyani (Instagram @smindrawati)

Minister of Finance (Menkeu) Sri Mulyani Indrawati emphasized the importance of anticipating the impact of global economic turmoil on the implementation of the energy transition.

When discussing with the British Special Representative for Climate Rachel Kyte, Sri Mulyani highlighted the issue of climate change, especially the energy transition, which is increasingly complex in the midst of global dynamics. This is because the disruption of supply chain conditions has hampered the energy transition process.

"If the state loses investment in green energy due to weak economic conditions, it means that the energy transition process will also slow down and the use of renewable energy such as coal will be longer, while the impact of climate change itself will not be avoided," said Sri Mulyani, quoted from the Instagram account @smindrawati in Jakarta, Sunday as confiscated by Antara.

Therefore, Sri Mulyani underlined that this problem is an urgency that must be addressed immediately.

The Ministry of Finance noted that the State Revenue and Expenditure Budget (APBN) has disbursed funds for climate action of IDR 610.12 trillion from 2016 to 2023.

Head of the Center for Climate and Multilateral Change Financing Policy of the Fiscal Policy Agency (BKF) of the Ministry of Finance Boby Wahyu Hernawan detailed the realization of APBN funding for climate on an average of IDR 76.3 trillion per year or 3.2 percent of the APBN.

Cumulatively, the total is IDR 610.12 trillion. This only covers 12.3 percent of climate financing needs by 2030," said Boby.

The government continues to optimize public financing and encourage the involvement of the private sector.

From the government side, the Ministry of Finance has provided various tax incentives, such as for the renewable power generation sector and electric vehicles. From 2019 to 2024, the government has provided fiscal incentives worth IDR 38.8 trillion for climate-related sectors, which are estimated to reach IDR 51.5 trillion by the end of 2025.

On the other hand, the government is also preparing innovative financing schemes such as green sukuk, SDG bonds, and the implementation of sustainable financial taxonomy.

Outside the state budget, the government implements blended finance that mixes financing between the public and the private sector.

As for the private sector, the government encourages business actors to proactively reduce carbon emissions, implement sustainable practices, and innovate in environmentally friendly technology, including energy efficiency, circular economy, and product carbon footprint reporting.

The government also encourages business actors to climate budget tagging and support the implementation of carbon economic value policies, which are now open to domestic and international markets.