Indonesia to cut energy subsidy, carbon emission
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Indonesia has decided to join developed countries'move to reduce huge amount of subsidies on energy, while making efforts to reduce carbon emission as part of global efforts to curb global warming.
The huge amount of energy subsidy has been deemed as a hindrance for Indonesia to convince investors to spur growth. The Southeast Asia's largest economy has struggled to jump to investment grade after Fitch and Moody investor ratings raised the country's risk rating to one notch below the grade earlier this year.
Almost one third of the country's state budget of 1,126 trillion rupiah (some 124.63 billion U.S. dollars) in 2010 is used for subsidy and payment of debt interest. The subsidy for oil and gas reaches over 90 trillion rupiah (some 9.96 billion U.S. dollars) this year.
Indonesia, a country with abundant natural resources, has prepared a policy to lessen dependency on fossil fuel for the coming years despite its oil production is seen to increase in recent years, and would rely more on renewable energy, geothermal energy, coal and gas.
The policy could reduce the amount of subsidy on oil.
The government plans to reduce the dependency on the oil up to 20 percent under the energy master plan for 2010 and 2025, lower than the initial target of 50 percent, Energy and Mineral Resources Minister Darwin Zahedy Saleh said.
For gas, the government plans to boost its use up to 27 percent from the initial plan of 26 percent and for coal to 30 percent from the initial target of 15 percent.
Minister for Development Planning Board Armida Alisjahbana said that the master plan for energy has been adjusted with the efforts to reduce emission and environmental aspects.
Indonesia has pledged to trim its carbon emission by 26 percent by 2020 and to extend it up to 41 percent under the international assistance.
The reduction of fossil fuel use will support Indonesia's efforts to reduce the amount of carbon emission. Wind, gas, waters and solar energy are among those where will rely more which can trim the carbon emission.
The tropical country has the world's largest rain forest after Brazil and Kenya.
So far, Indonesia has got one billion U.S. dollars commitment from Norway to protect its forest under the Reducing Emissions from Deforestation and Forest Degradation (Redd) scheme.
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