However, it is estimated that the financial source will be unable to cover the whole demand for sustainable financing.
Jakarta (ANTARA) - The Finance Ministry's Fiscal Policy Agency (BKF) said that in the last five years the government had used an average of 4.1 percent of state spending to mitigate the impact of climate change.

"Meanwhile, in financing, the government has issued green sukuks (sharia-based bonds) since 2018," acting head of BKF, Pande Putu Oka Kusumawardani, stated in an online discussion monitored here on Friday.

The sukuks are used to fund the establishment of sustainable transportation, natural disasters mitigation, waste management, energy efficiency, and development of renewable energy, she informed.

Furthermore, the government is going to establish a climate change fiscal framework to strengthen Indonesia’s sustainable financing as it is pursuing a zero carbon emissions target by 2060, she said.

"However, it is estimated that the financial source will be unable to cover the whole demand for sustainable financing," she remarked.

Hence, the government has proposed the Tax Harmonization Law (UU HPP), which also regulates the carbon tax.

In addition to supporting sustainable development, the rule shows that Indonesian people are starting to favor green energy, the BKF acting head noted.

“The carbon tax is going to be applied starting on April 1, 2022 to the coal-fired power plant sector first," she informed.

According to her, the tax rate will be quite cheap at Rp30 per kilogram of carbon dioxide equivalent.

"Still, the government will consider several factors for the future implementation of the policy,” Kusumawardani said.

The factors comprise business sector readiness, national economic conditions, and the progress of the Nationally Determined Contribution (NDC) targets' fulfillment, she added.

In addition, the government will attempt to harmonize them with the development of the carbon market in Indonesia, she said.

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Translator: Sanya Susanti, Uyu Liman
Editor: Sri Haryati
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