Indonesia Ignores Climate Considerations in Its Initial COVID-19 Economic Recovery Policies

Indonesia Ignores Climate Considerations in Its Initial COVID-19 Economic Recovery Policies

Indonesia declared a state of public health emergency on March 2, 2020. The president created Government Regulation No. 21/2020 on large-scale social distancing as an implementation regulation of the 2018 Health Quarantine Law to restrict economic and social activity on March 31st. The regulation includes home, hospital, and regional quarantining. Regional quarantine involves border restrictions in the area of high disease burden. Differing implementation of the order by cities and provinces are causing some concern. Experts warn that highly inter-regional areas, such as Jakarta, are likely to erupt in a large number of cases of COVID-19. Failure to coordinate similar policies between provinces and cities will erode their effectiveness. The Quarantine Law has also come under some scrutiny for its use of police enforcement. Some argue that Indonesia should provide more economic incentives so people can more easily work from home rather than relying on harsh measures to ensure compliance.

Indonesia’s death toll stands at 1,000 as of May 12 and 14,797 cases. Indonesia has the most cases in Asia outside of China. The true number of deaths and cases is much greater. The government has only tested 0.02% of the population. Some journalists, citing data from cemeteries, medical records, and governor’s death tallies estimate that 2,200 patients died while waiting to receive tests alone. COVID-19 data quality and utilization is poor. There are 213,000 untested, suspected cases. The government projects there to be 95,000 confirmed cases by the end of May. The University of Indonesia projects 1.7 million infections.

In March, the Indonesian government pledged $8 billion in stimulus and some tax breaks for manufacturers. Indonesia does not plan to account for climate change mitigation or adaptation in any of its economic policy or spending. In fact, plummeting global oil prices led the government to revoke the price for unsubsidized gasoline and diesel. This allows distributors to reduce prices as low as possible as supplies run-up amid sharply decreased demand. Indonesia plans for its state oil company, Pertamina, to buy as much oil as it can, ideally with long-term purchasing contracts while prices worldwide are at a low. Meanwhile, Indonesia’s most promising renewable, geothermal, is hurt as the rupiah falls against the US dollar. Geothermal generators sell energy to the state electricity company (PLN) in USD. PLN sells energy to Indonesian consumers in rupiah. The falling rupiah decreases the attractiveness of investing in the geothermal generation, particularly when oil prices are also falling. 

Another industry shocked by COVID-19 economic disruptions is mining. Many scientists warn of increased disease spillover, zoonosis, from wild area encroachment. As wild areas diminish and human interactions with their peripheries increase, zoonosis from other species becomes more likely. The decrease in mining and coal extraction activity may also decrease the risk of spillover if the coronavirus-led economic downturn cripples these industries in the long run. 

Activity Rating:  *** short-lived, temporary negative impact
(positive or negative)

Take Action:  

The government’s plan to buy oil during this period shows short-term, climate-dumb thinking. Now, the government should step in to shield renewables from the economic fallout of COVID-19 or at the very least improve the PLN pricing scheme so generators can build expectations for their profits. Despite the government’s prioritization of gas over other cleaner energy sources, coal is taking a second hit during the crisis. The industry was already shocked by the falling demand in China. This is an opportunity for Indonesia to reshape its energy landscape. 

Contact Information:  

Contact Pertamina and urge them to decrease investment in oil and gas:

Contact PLN and urge them to improve protections for geothermal:

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