“It is very important to take action on climate change. This decline (in GDP) could be even higher, reaching three to five percent in 2050 and 2060," Mari Elka noted in a press conference after opening the Indonesia Sustainability Forum event in Jakarta on Friday.
She stated that climate change will be further exacerbated by an increase in air pollution.
According to Mari Elka, this has the potential to reduce life expectancy by 1.2 years and the value of workers' income by 0.6 percent of the GDP.
The condition can occur because pollution has a negative impact on public health, thereby disrupting productivity and limiting outdoor activities.
Mari Elka emphasized that Indonesia needs a clear long-term plan to achieve the emission-free target by 2060. One of the approaches is by making policies and conducting regulatory reform in obtaining investment from the private sector.
"Hence, if there is no clear policy basis for the private sector to carry out the calculations, what are the risks, and what is the profit sharing, then it is very difficult to expect the funds needed," she explained.
She highlighted that Indonesia already has the Energy Transition Mechanism (ETM) Country Platform to accommodate funding from investors that was inaugurated in November 2022.
Based on data from the Ministry of Finance, in the early stages of the Climate Investment Funds (CIF), as one of the world's largest multilateral funds for climate change in developing countries, a concession fund of US$500 million has been allocated for Indonesia through the ETM Country Platform.
The funds are expected to be able to mobilize more than US$4 billion in financing to accelerate the early retirement of several coal-fired power plants (PLTU), with a capacity of two gigawatts.
This step can reduce around 50 million tons of carbon dioxide emissions by 2030 and 160 million tons by 2040.
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Translator: Cahya Sari, Cindy Frishanti Octavia
Editor: Rahmad Nasution
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