For the world to be a livable place – indeed for the human race to survive – climate protection and economic development must go hand in hand.
The million-dollar question that needs to be answered now is this: “Is it technically possible for the world’s economic development to continue, leading to increased energy demand and changes in land use, by using clean and sustainable energy sources and technologies and by ensuring a healthy and balanced environment?”
Answering this question is a daunting task. Currently, as reported by Ernst and Young, global infrastructure spending exceeds US$8 trillion per decade, a significant proportion of which is being spent in the Asia-Pacific region but not necessarily in a way that will secure a low-carbon trajectory.
For Indonesia, economic development typically implies larger dependence on climate-sensitive sectors, in particular the energy and land-use sectors.
Energy plays an important role in boosting a country’s economy and social welfare. It supplies the fuels that transform raw materials in production systems for domestic and export commodities. This process has created many job opportunities; in 2008, state revenue from oil and gas was at approximately Rp 211 trillion, or about 22 percent of the total country’s revenue.
Historical data from the Energy and Mineral Resources Ministry show that domestic demand for energy has been increasing faster than the average population growth. From 1990 to 2006, the compound annual growth rate of total final energy consumption (excluding biomass) was about 5.5 percent, or an increase from 245 to 577 million Barrel Oil Equivalent (BOE).
A large amount of this demand was met by fossil fuels. The obvious consequence of the current rate of the use of fossil fuels is high greenhouse gas emissions, especially CO2. From 1990 to 1997, CO2 emissions increased at a rate of 7 percent per year; since 1997, emissions have been increasing at 6 percent per year.
In terms of land use, many of the remaining areas of extensive natural forests in the tropics are under increasing and competing pressures. This has led to deforestation, which is estimated to be responsible for 18 percent of current greenhouse gas emissions.
As a country with large areas of rainforest and peatland, Indonesia is facing a serious rate of deforestation and forest degradation as well as peat fires and degradation.
Pressured by the demand to provide land for agriculture, settlements, infrastructure and mining operations, the country lost around 2.8 million hectares of forest a year from 1995 to 2000, 1.09 million hectares a year from 2000 to 2005, and 0.8 million hectares a year from 2006 to 2008, according to the Forestry Ministry.
The country’s primary forests are estimated to store around 230 tons of carbon per hectare, while secondary forests store around 176 tons of carbon. The current rate of forest cover loss may significantly contribute to the country’s greenhouse gas emissions.
Wetlands International shows that drainage of peatlands – intensified in many areas to establish large scale plantations-results in very rapid peat decomposition causing emissions of 70 to 100 tons of carbon dioxide per year per hectare. In addition to these, more carbon may be released into the atmosphere if fire is used to clear forests and prepare for other land uses.
With economic growth at around 6 percent per year, Indonesia’s projected greenhouse gas emissions – based on the “business as usual” (BAU) development pattern – will definitely make the country one of the largest emitters in the world in the next century.
A study conducted by McKinsey, commissioned by the National Council on Climate Change, estimates that Indonesian greenhouse gas emissions may increase from 2.3 Gt CO2e in 2005 to 3.6 Gt CO2e by 2030. The biggest emitter sectors consecutively are peatland, forestry, energy and transportation.
Nevertheless, decoupling economic development from greenhouse gas emissions is not impossible.
The same report mentions that Indonesia has the potential to reduce its CO2 emissions to 2.3 Gt per year by 2030. There are more than 150 possible ways that can be explored and implemented to achieve this.
A recent study by WWF-Indonesia also demonstrates that there is considerable potential to reduce emissions from the energy and forestry sectors. The potential emission reduction by 2050 from the forestry sector ranges between 55 to 74 percent and from the energy sector around 26 to 38 percent compared to BAU.
This can only be achieved if Indonesia puts its developmental policies and governmental interventions in the direction of low carbon economy.
Immediate interventions can include breaking the link between energy services and primary energy production: large-scale energy efficiency measures (getting more energy services per unit of energy used) are a priority; halting and reversing loss and degradation of forests as well as promoting forest landscape restoration; promoting concurrent growth of low-emissions technologies such as geothermal, solar PV, micro-hydro, wind and bio-energy, but within a set of environmental and social constraints to ensure their sustainability; and displacing high-carbon coal with low-carbon gas as a “bridging fuel”.
To strengthen these, there is an urgent need to promote incentives for forest protection and sustainable forest management as well as financial and technological support for renewable energy and energy efficiency measures.
A low-carbon-economy regime will have positive and significant impacts on the economy and society. This can help secure Indonesia against the threat climate change poses to development and seize the economic opportunity it presents.