The data also reveals a significant shift in the primary contributor to GHG emissions. Historically, the energy sector has been the top contributor, but in 2022, the manufacturing sector overtook it as the leading source of emissions.
While Indonesia’s GHG emissions have increased, the emission growth rate is lower than that projected in the business-as-usual (BAU) scenario outlined in the Nationally Determined Contributions (NDC) document.
The BAU scenario is a hypothetical one where no additional climate policies are implemented beyond the base year.
In the NDC document, Indonesia has committed to achieving net-zero emissions (NZE) by 2060.
It is crucial for each country to fulfill its NDC targets to limit a global temperature increase to 2°C above pre-industrial levels, or ideally, to 1.5°C.
For Indonesia, reaching NZE within 35 years will be challenging and require significant reforms.
The reforms include transitioning away from fossil fuels, adopting a sustainable lifestyle, transforming infrastructure and economic activities, halting deforestation, and developing and implementing environmentally friendly technologies.
To achieve the goal of limiting the increase in global temperatures, humans have heavily relied on nature’s ability to absorb carbon dioxide.
The role of nature in controlling GHG emissions is explicitly stated in Presidential Decree (Perpres) No. 98 of 2021, Article 3 (4), which emphasizes the importance of forestry in carbon storage and sequestration.
The Intergovernmental Panel on Climate Change’s Sixth Assessment Report indicates that terrestrial and marine ecosystems have absorbed approximately half of human-induced carbon dioxide emissions over the past six decades.
In various climate models, nature’s ability to absorb carbon dioxide emissions is often assumed to be relatively constant.
However, recent research suggests that this assumption may be overly optimistic since factors like deforestation, land-use change, and ocean acidification could impact nature’s capacity to absorb carbon dioxide in the future.
Studies by Pan et al. (2024) published in Nature and Li et al. (2024) in the Journal of Sea Research indicate that factors such as forest aging, deforestation, and rising sea temperatures can diminish the absorption capacity of both terrestrial and marine ecosystems.
This raises concerns about nature’s ability to continue absorbing carbon dioxide at current rates, potentially limiting its role in mitigating climate change.
Therefore, while nature’s role in mitigating climate change is invaluable, it is essential to consider its limitations.
As nature’s ability to absorb carbon dioxide may reach its limits, reliance on technology-based solutions to control GHG emissions will become increasingly important.
Indonesia’s Perpres No. 98 of 2021 introduced the concept of carbon pricing through Nilai Ekonomi Karbon (NEK), which assigns a monetary value to each ton of GHG emissions.
By implementing the NEK, Indonesia aims to push emission reduction, discourage emission-intensive activities, and promote sustainable development, particularly in sectors like manufacturing and energy.
To ensure the effectiveness of carbon pricing, Indonesia needs to develop detailed derivative regulations, such as mandatory carbon disclosure, emission caps, and carbon tax.
Given the significant contribution of the manufacturing sector to national GHG emissions, as indicated by BPS data, substantial efforts are needed to reduce emissions in this sector through the implementation of the NEK.
The NEK mechanism utilizes both incentives (such as carbon credits) and disincentives (such as carbon taxes) to encourage emission reduction and discourage emission-intensive activities in specific sectors.
One way to discourage carbon emissions is imposing a price on each ton of GHG emissions released into the atmosphere.
This carbon pricing mechanism could effectively reduce emissions by incentivizing businesses to prioritize emission reduction and energy efficiency measures in their operations.
The potential limitations of natural carbon sinks necessitate the development and deployment of environmentally friendly technologies.
A significant challenge in this area is securing adequate financing for these technologies.
However, incentives such as carbon credits can help overcome these financial barriers.
For example, in the energy sector, which is a major contributor to carbon emissions, geothermal power plants offer a sustainable alternative.
Financial hindrances often make geothermal projects unfeasible. Geothermal developments can be hindered by substantial upfront costs and regulatory hurdles, such as price caps on electricity, which make the projects’ internal rate of return (IRR) unattractive.
In this space, carbon credits can play a crucial role. Carbon credit issuance can enhance the financial viability of geothermal projects by increasing their IRR.
In conclusion, to effectively reduce carbon emissions and mitigate climate change, it is imperative to rigorously implement the NEK framework outlined in Perpres No. 98 of 2021.
This is particularly crucial as the Earth’s natural carbon sinks are reaching their limit.
*) Dewa Putra Krishna Mahardika is a faculty member of Telkom University.
The views and opinions expressed on this page are those of the author and do not necessarily reflect the official policy or position of the ANTARA News Agency.
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