The government of Indonesia has declared its commitment to reducing carbon emissions by 29% with its efforts, 41% with international support in 2030, and sets a Net Zero Emission target in 2060. The green economy has drafted in the 2020-2024 RPJMN with three priority programs; to improve environmental quality, increase disaster resilience and climate change, and low-carbon development.
Significant investment and support from multiple parties are needed to escalate this commitment. In Indonesia’s presidency of G20 this year, the B20 forum creates Finance and Infrastructure Task Force to discuss the financial frameworks for more inclusive growth such as physical infrastructure, digital and social infrastructure, and related financing mechanisms. Similarly, there is a need to rethink green infrastructure financing and associated market mechanisms. Carbon credit markets and other types of green infrastructure require government support and buy-in from the business community to achieve scale and impact.
Infrastructure plays a key role in global growth for emerging markets and developing economies. However, infrastructure construction has a side impact on the environment. The World Bank stated that around 70% of global greenhouse gas (GHG) emissions are produced by infrastructure construction and operations. With the 2050 global ambition of Net Zero Emissions, the green infrastructure concept implementation rises among various stakeholders.
Indonesia estimated the target of green building development up to 20 – 25% by 2025, the green infrastructure potentially appears as an important business model for the future of the sustainable infrastructure agenda in the country. The Ministry of National Development Planning of the Republic of Indonesia (Bappenas) stated several projects such as sustainable toll-road projects, hydropower plants, and solar power plants are being prepared to support the growth of green infrastructure in Indonesia.
There is also the Green Infrastructure Initiative (GII), a collaboration project between the Indonesian-German governments in supporting Indonesia’s efforts to reduce greenhouse gas emissions sustainably as the construction of the GII project will begin in 2023 in four selected provinces, West Java, Central Java, East Java, and Bali.
Recently, the mega project of the new national capital city (IKN) Nusantara in Kalimantan stole the spotlight for its sustainable concept. President Joko Widodo explained that IKN is expected to be a smart city with a forest-based concept. The city will adopt sustainable infrastructure with a target of 60% energy efficiency in all public buildings by 2045.
Based on these projects alone, the future of Indonesia’s green economy and sustainable development is very potential. The commitment of government is hoping to accelerate the realization of achieving the Net-Zero Emission target on time.
Sustainable Development in Steel Industry
The government of Indonesia keeps encouraging the manufacturing industry to transform into sustainable development with the green industry concept. Many challenges need to be overcome by all industry players, but feasible progress is still possible.
The steel industry has a vital role in economic development. The World Steel Association forecasted that steel demand would grow by 0.4% in 2022, and the Indonesian Iron & Steel Industry Association (IISIA) projected that national steel consumption would grow by 5% to become 16.3 million tons in 2022. IIISIA explains further that the continuity of national strategic projects and a demand increment from the automotive sector become market-driven factors. However, steelmaking is highly emission-intensive and contributes around 8% of global C02 emissions.
Collaborative approaches from the industry players, government, and customers should be implemented to achieve global sustainable goals. Several efforts can be adapted to push further the emission production in the steel industry, such as adopting greener technologies, increasing sustainable steel production, and improving ESG implementation.
The green steel method is considered a solution and an investment made by many steel contractors around the world because a good environmental protection program will provide improved performance throughout the supply chain process. Besides having a positive impact on the environment, the green steel method also has an impact on the living standards of the global community and Indonesia.
Gunung Prisma understands the importance of sustainable development and the increasing climate consciousness among clients and end-consumers. With prominent expertise in the steel industry, Gunung Prisma will deliver the best solutions and strategies to our customers who want to participate in this sustainable transition.