November 10, 2022
JAKARTA – he United Nations Climate Change Conference (COP27) in Sharm-el-Sheikh, Egypt, is frequently portrayed as a clash between developing and richer nations, as poorer countries argue that wealthier states should pay more in compensation for damage caused by historical greenhouse-gas emissions.
This is a pivotal issue, and a meeting in Germany for the 12th Petersburg Climate Dialogue (PCD12) this summer underlined an enormous rich-poor gulf in which the at-risk climate-sensitive countries, most often developing countries, have a hard time dealing with climate damage.
Yet the gloom is overstated, because COP27 also provides a pivotal opportunity for developing and lower-income nations to help show the way in the transition to clean energy, which is critical for developing states, such as Indonesia, in tackling carbon emissions and meeting UN targets on climate-change issues.
Transitioning to inclusive green economies will be hard for developing countries whose living standards are well below western levels. Therefore, the transition must be fair, not only for the environment but also for economic prosperity, social justice, rights and social protection for all, ensuring no one is left behind. This is called the climate “just transition”.
As we focus on emerging economies, “just transition” provides essential opportunities for a country like Indonesia, a nation of more or less 17,500 islands that faces an existential challenge from rising seas and other catastrophic effects of climate change. Indonesia ranks as the seventh-most vulnerable country to climate-change impact and at the same time ranks eighth in its contribution to the world’s greenhouse-gas emissions.
The climate poses both a risk and an opportunity.
This transition to clean energy will not be painless or risk-free in any country. Still, risks are mitigated in a nation like Indonesia because we are relatively well-positioned for developing renewables with numerous indigenous sources such as geothermal, solar, wind, hydropower and biofuels.
In fact, Indonesia’s projected potential solar-power capacity can reach up to about 190 gigawatts (GW) and is perfect for filling in the supply gaps around Indonesia’s off-grid areas around the archipelago. Nonprofit organizations, governments and private companies have collaborated to install these off-grid solar powers across the country.
Additionally, Indonesia is in a unique position in helping to lead the coal phaseout, a key focus of COP27. Thanks to our reliable geothermal sources, we can replace coal as Indonesia’s baseload power. We are situated in the most-active volcanic fault, the Ring of Fire, with an estimated 28 GW potential, representing about 30 percent of global geothermal resources.
Indonesia also has massive opportunities for Carbon Capture, Utilization and Storage (CCUS) technologies, given the massive indigenous-gas supplies and relatively mature national industries. There are also substantial opportunities in biogas applications given the country’s footprint in agriculture, while Southeast Asian countries are already aiding in facilitating a transition to hydrogen by expanding hydrogen-supply chains; Brunei, for example, has pioneered the supply of liquefied hydrogen to Japan from the port of Muara starting last year.
Yet huge challenges remain. Indonesia still needs to catch up in meeting its governmental target of a 23-percent renewable energy-share mix by 2025, with renewables now accounting for 11 percent of the total. To achieve this improvement in the next three years, around US$44.2 billion of power-generation investment would be needed — and such investment is now held back by stringent local requirements, a monopolized electricity market and a lack of transparency in project procurement.
These are key issues that should be addressed. For many years, developed countries fell $10 billion short on the $100 billion per-annum investment pledge for developing countries as investors struggled to find attractive climate projects with the sufficient return, scale, trust and information.
State-Owned Enterprises such as Pertamina and PLN, private sectors like Medco Energi and Vale, and nonprofit organizations alike have showcased their projects and discussed them with potential financiers at COP27. Additionally, government officials can be seen at COP27, listening to the issues of financing climate projects from investors, and are very open for discussions on mitigating administrative, fiscal and transparency issues.
While these are complex and multifaceted, strong interests in actual-project funding (including blended funding, donors, grants, debt and equity finance) are seen at Sharm El-Sheikh, posing a positive signal for the developing countries’ decarbonization journey. This can mean the beginning of a real solution to developing countries’ crux of fighting climate change: the fulfilment of gaps in funding, primarily by committed, developed countries.
While more applicable-financing instruments are still brewing, the Indonesian youth are not waiting in the back line. Several youth representatives attended the COP27 (e.g., the Society of Renewable Energy, International Youth Forestry Association, Youth for Climate Change). The role of young people is critical to ensure the climate “just transition” over the course of this decade, as these future leaders will be closest to the ground in implementing initiatives amongst all civil societies.
We are convinced that together we can ensure a “just transition” to a more sustainable world, with developing countries like Indonesia driving rather than riding in the back seat — supported by the developed countries. COP27 is a critical junction for launching such an achievement.
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The writers lead the Society of Renewable Energy, a nonprofit organization in Indonesia. They are part of Indonesia’s delegation to the COP27 climate summit.