By Stefanno Sulaiman and Gayatri Suroyo
JAKARTA (Reuters) – Indonesian presidential candidate Anies Baswedan will set up an endowment fund using revenue from a planned carbon tax to finance the development of renewable energy if he wins the Feb. 14 elections, his lead economist told Reuters.
Former Jakarta governor Anies is one of three candidates hoping to take over from President Joko Widodo, whose second and final term is due to end next year.
Anies will levy a carbon tax on greenhouse gas emitted by polluting industries and place the revenue on what he will call the Resource Endowment Fund, said Wijayanto Samirin from Anies’ team.
With a 10 trillion rupiah ($645.6 million) seed capital from the state budget, the fund is expected to finance geothermal exploration and renewables research, he said.
“The endowment fund is to guarantee that the money will really be allocated on efforts to cut carbon emissions. It will not go into the government’s pocket and be used for other purposes,” Wijayanto said.
Jokowi, as the incumbent is popularly known, passed a law in 2021 to serve as a legal basis for his government to impose a carbon tax, but the levy has been delayed indefinitely to protect economic growth.
Sitting on the Pacific Ring of Fire, Indonesia has around 24 gigawatts of geothermal potential, the world’s second-largest, but has only utilised around 10% of this, according to state energy company Pertamina.
Geothermal exploration is expensive and risky, deterring investment, said Wijayanto. If the government could compile reliable data on proven reserves, it would reduce investment risks.
Anies aims to increase the proportion of renewables in Indonesia’s energy mix to 22%-25% by 2029, from around 12% now.
Jokowi had targeted 23% by 2025, but he recently conceded that would be missed.
Over half of Indonesia’s electricity is currently powered by coal.
Recent opinion surveys have put Anies last in the presidential race, behind Defence Minister Prabowo Subianto and former Central Java governor Ganjar Pranowo.
Prabowo and Ganjar have both considered pushing to end the state power utility’s monopoly as part of efforts to speed up the transition to greener energy, their teams told Reuters.
($1 = 15,490.0000 rupiah)
(Reporting by Stefanno Sulaiman and Gayatri Suroyo; Editing by Stephen Coates)
