In 2021, Indonesia took decisive steps toward decarbonization when, at COP26 in Glasgow, the country affirmed its net zero targets and announced its ambition to accelerate the phase-out of coal in its power sector. Against this backdrop, Indonesia must plan and begin to execute its economic transformation carefully to avoid destabilizing the financial system or slowing economic growth. By assuming the G20 presidency in 2022, Indonesia is playing an increasingly important role in the international agenda and in the implementation of the transition to a low-carbon economy.
The Agence Française de Développement, an inclusive public financial institution and the main actor of France's official development assistance, has been supporting Indonesia in the implementation of its climate policy for several years. It is continuing its support by collaborating with the CMMAI to implement a study to deepen the understanding of the risks associated with a low-carbon transition of the Indonesian economy.
This study will analyze the risks and opportunities associated with the country's transition to a low-carbon economy, as well as the development of methodologies and scenarios of transition-related risks in various major sectors of the Indonesian economy. It will also support the Indonesian government in developing strategies and means to identify and manage climate-related financial risks.
Meanwhile, Deputy Coordinating Minister for Forestry and Environmental Management, Mrs. Nani Hendiarti, welcomed and thanked the signing of the Memorandum of Understanding between Indonesia and AFD. The Glasgow COP26 Climate Pact resulted in, among other things, a commitment to maintain a 1.5 C global temperature rise with a more ambitious NDC by 2022 and a gradual reduction in coal-fired power generation.
“We expect that the study's findings will be beneficial to all stakeholders and input for Indonesia to meet its goal of having Net Zero Emission by 2060. We need to expedite the implementation of the MoU and thus can be recognized in the G20 Presidency and COP 27” said Nani Hendiarti.
This partnership reflects the commitment to continue supporting Indonesia on the way towards low-carbon development. It also aims to go beyond financing by strengthening cooperation between CMMAI, AFD and the implementing agencies supporting the project.
AFD Regional Director for Southeast Asia, Mr. Jean-Pierre Marcelli, said :
"By supporting Indonesian policymakers and regulators to be proactive in integrating climate transition risk into policymaking, this project will directly contribute to a reduction in the cost of achieving Indonesia's net zero target. "
Project Assistant AFD Agence Jakarta
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