Energy, Climate Change and Economic Development: Indonesia Case

Abstract

Indonesia is the fourth largest population in the world and is the third largest tropical forest in the world after Brazil and Congo. While in global level two third of the emission comes from fossil fuel combustion, in nation scale almost half of the greenhouse gas emission (GHG) comes from deforestation and degradation. To curb with this, Government of Indonesia's pledge in Copenhagen Accord that Indonesia will reduce its emission level in 2020 from 26% based on domestic funding and up to 41% (with international support at 18 billion USD). In 2006, the Indonesian government enacted a new energy policy, which aims to partially shift from fossil fuel to renewable energy sources in particular biofuels. While the main objective of this policy is to secure the domestic energy supply by partially shifting oil demand to biofuels, in particular in the transportation sector, biofuels are also expected to create jobs for poverty alleviation, to generate income for export and to lead to a net reduction in GHG emissions. This paper use analytical framework to measures the implication of the new climate policy and existing energy policy on deforestation in Indonesia. This study provides an analysis for understanding the political context wherein sustainable development might be applied at local and national level. These conflicts are elaborated upon, in particular the problem associated with land allocation, low carbon technology, climate change mitigation and carbon finance, and the result of this study is to provide the 'win-win' solution in optimum way without sacrifice the economic development.