The Indonesian government is committed to addressing climate change issues. Deputy Finance Minister Suahasil Nazara highlighted this commitment through the state budget (APBN), which supports green economic sustainability and climate change management based on principles of a just and affordable transition. "Our budget reflects our commitment to a green economy in three main aspects. Every state budget has three crucial parts: revenue, expenditure, and financing. Today, I want to showcase our commitment to the environment and economic transition," said Suahasil at the Launching Event of the Indonesian Sustainable Trade and Investment Report by the Decarbonization for Development Lab CSIS Indonesia in Jakarta on 1 July 2024. From the revenue side, the APBN not only focuses on collecting state revenue for expenditure, including supporting the green economy, but also employs revenue policies to provide incentives and disincentives for economic activities related to climate change mitigation and carbon emission reduction. The government has provided various incentives, such as tax breaks for electric vehicles, duty exemptions for renewable energy investments, and incentives for other environmentally friendly technologies.
On the expenditure side, the commitment is evident through the allocation of climate change-related spending. Since 2016, the government has implemented Climate Budget Tagging, recognizing the need for a dedicated climate budget. In terms of financing, Indonesia has actively developed instruments that support a green economy, such as Green Sukuk, SDG Bonds, and Blue Bonds. Indonesia is a pioneer in combining green financing and sukuk. Beyond the APBN, Indonesia has also built platforms to attract and manage private sector funds, including the Energy Transition Mechanism program and the Just Energy Transition initiative, to create an ecosystem that supports energy transition and carbon emission reduction. "We need to achieve a green and sustainable economy. This transition is not something that can be achieved overnight," concluded Suahasil.
