Efforts to Reduce Carbon Emissions Require a Lot of Investment, Sri Mulyani Tackles with Global Cooperation

Ilustrasi (Foto: Dok. Kemenkeu)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said the Indonesian government was committed to continuing to make efforts to reduce carbon emissions in accordance with the spirit of the Paris Agreement on climate change.

The Minister of Finance stated that the Republic of Indonesia targets to reduce carbon emissions by 29 percent with its own efforts, and 41 percent with international cooperation.

“To realize this goal, we cannot rely solely on good regulations, but funding and access to technology are needed. These two things are very important in realizing prosperity that is in line with environmental principles," she said on the CNBC International channel on Tuesday, October 19.

According to the Minister of Finance, it will take at least US$365 billion to achieve a 29 percent carbon reduction. Meanwhile, the 41 percent target is believed to cost no less than USD 495 billion.

"From there we can see that public funding is not sufficient to support this commitment, so the private sector is another party that is quite crucial to be involved," she said.

Furthermore, the state treasurer also explained that the fossil energy sector has an important role in the Indonesian economy. However, on the other hand, the government is also pushing for a transition to the use of energy that is more environmentally friendly.

“For us, this is one of the challenges. But Indonesia has made a big step by passing a carbon tax (through the Law on Harmonization of Tax Regulations / HPP Law)," she said.

According to VOI records, Indonesia has issued Government Bonds (SUN) in the type of Sustainable Development Goals (SDG) in Euro foreign currency with an estimated total absorption of funds of 500 million euros or equivalent to Rp. 8.42 trillion (exchange rate of IDR 16.851).

"This transaction is the first conventional SDG bond issuance in Asia which reflects Indonesia's leadership in sustainable financing and a significant step in achieving the SDGs," the Ministry of Finance said in a press statement on Tuesday, September 14.

Just so you know, SDG SUN is a development of the Green Bond and Green Sukuk Framework issued in 2018. This step is an active state effort in deepening the financial market by releasing debt securities in accordance with green economy principles.