UAE deal should lead to more sustainable energy investment (Jakarta Post, 20 Januari 2020)

President Joko Widodo recent visit to The United Arab Emirates (UAE) in 2020, succeeded taken a deal of investment worth US$22,8 billion worth of development projects across the archipelago. (Jakarta Post 14/01/2020) According to Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, this is one of the biggest deals in Indonesia's history. Further, most of the investment would focus on certain fields such as agriculture, education and most importantly sustainable energy by pledged to invest US$129 million in Indonesia's biggest solar power plant in Cirata, West Java. The deal also includes the development of Pertamina and Inalum refineries.

Non-Backsliding Commitment in Paris Agreement

Kyoto Protocol and Paris Agreement have a different approach to fulfill the reduction emission needed to keep the level of global warming below 2°C above pre-industrial levels. Unlike Kyoto Protocol where the treaty decided each countries’ target (top-down approach), target reduction emission in Paris Agreement sets by the state parties through NDC (bottom-up approach). This different implementation resulted in the shift of way of thinking especially for Non-Annex I countries. The idea that grew out of concerns that developed countries will pledge less in the NDC Paris Agreement than those targeted through the Kyoto Protocol arise in the negotiations in COP20 in Lima, Peru.

This concept is known as “non-backsliding” written in the lead-up to Lima Decisions. This notion will drive the Annex I countries to commit beyond their Kyoto Target and even far more for the countries that fulfilled the Kyoto Target. For example, Switzerland’s Kyoto Target sets by the Annex B Kyoto Protocol 8% for the first period and 15.8% for the second period below 1990. Meanwhile, in the Paris Agreement Switzerland submitted its ambition unconditional target of 50% reduction below 1990 by 2030.

The negotiations then resulted in the principle of progression and highest possible ambition written in article 4 (3) of the Paris Agreement where state parties were asked to provide NDC progressively while still considering the capabilities of their countries through the principle Common but Differentiated Responsibilities (CBDR). Implementation of CBDR also gives a chance to developing countries to sets a conditional target that only can be achieved if there is international support involved. Unlike Switzerland, Indonesia as a Non-Annex I party which does not have any Kyoto Targets struggles to put progressive ambition for Paris Agreement due to shortcomings such as financial issues, access to technology, and other challenges to fight against climate change.

Consequently, Indonesia has access to international funds mostly funded from Annex I countries as part of the pledge to continue pioneering climate action which can be accessed through the Green Climate Fund (GCF). Another privilege that is given to developing countries also includes cooperative approaches as part of the contribution mechanism provided by the Paris Agreement such as direct government-to-government collaboration to achieve its conditional target sets by Non-Annex I parties.

This implementation of differentiated responsibilities for developing countries allowed flexibility to the states thus participation rate far higher in Paris Agreement. 187 parties including European Union has submitted their ambition, compared to Kyoto Protocol which limited to 37 countries. This shows that Paris Agreement has a better commitment in terms of numbers although if all the NDC marked up, it will not fulfill the objective of Paris Agreement.

Recent Conference of Parties for the United Nations Framework Convention on Climate Change (COP25 - UNFCCC) in Madrid ended neither resulting in a deal with carbon markets nor establishing any significant climate action. Despite the shortcomings, this year marks an important year for the future of Paris Agreement. Based on article 4 (9) Paris Agreement, state parties should update their NDC and submit to the UNFCCC secretariat.

Indonesia’s Climate Commitment

In 2016, Indonesia sets ambitious targets at 26% unconditional target and 41% conditional target reduction of greenhouse gases against the business-as-usual scenario by 2030. In the first period, Indonesia has boosted its budget for mitigation to 47% as well as establishing the Environmental Fund Management Agency (Badan Pengelola Dana Lingkungan Hidup / BPDLH). Further, Indonesia also initiated its mitigation projects with Green Climate Fund (GCF) financial assistance which both expected to avoid the emission up to 165.9 MtCO2e. However, these efforts are still rated as highly insufficient by Climate Action Tracker (CAT) to meet its NDC.

Jokowi’s recent speech in Abu Dhabi Sustainability Week (ADSW), shows Indonesia’s intention to figure out a way to mutually benefit for development and solutions to climate change along with UAE investment deals in sustainable energy. Despite the growing issue of Jokowi's plan to install 27 GW coal-fired power generation by 2028. This statement strengthening the fact that the second term of Jokowi's tried to move away from coal-fired energy. The trend of green growth investment specifically in sustainable energy would balance out the presence of large coal-based power generation and eventually will boost the countries capability to keep up with its ambition.

The second-period pledge would be a challenge for Indonesia to achieve its NDC which needs to be higher from the previous one, as referred to article 4 (3) Paris Agreement if the current efforts still yet to fulfill the first period NDC. To date, the Indonesian government has yet to clarify whether Indonesia would enhance the Paris targets. Nevertheless, it has announced the plan for NDC adjustment within its National Medium-Term Development Plan (RPJMN) 2020-2024. According to the World Resource Institute (WRI), Indonesia’s energy sector is likely to become the highest contributor to carbon dioxide emissions. Therefore, Indonesia shall prioritize more climate change abatement actions in the energy sector through renewable energy. Current Renewable Energy Policy sets the target for New Renewable Energy at 23 % of the national energy mix by 2025 and it becomes an important cause to open up to more sustainable energy-related investment in Indonesia.

The Indonesian government should take into consideration to utilize the deal of investment to build Geothermal Power Plants in Indonesia. As the second biggest geothermal energy producer country, Indonesia needs to take advantage of its natural resources as it previously has succeeded to reduce emissions for the Netherlands, Great Britain and Switzerland Kyoto Target under Clean Development Mechanism (CDM). Namely, Gunung Rajabasa Geothermal Power Plant and Wayang Windu Phase 2 Geothermal Power Project which avoided emissions up to 1.105 MtCO2e/year and 794.832 tonnes CO2e/year respectively.

This could be a lesson learned for Indonesia’s strategy to initiate its sustainable power plant specifically Geothermal which Indonesia has vast potential according to World Bank. As the energy sector remained one of the highest-emitting sectors besides forestry since 2010, this deal looks like a silver lining in the amid of desperation of climate action to fulfill Indonesia's Nationally Determined Contribution (NDC). Therefore, utilization of the UAE or other countries' investment in sustainable energy will lead up to the ability to boost the current efforts to fulfill Paris ambition and enhance the target for the second period.