6. Climate Change Policies in Indonesia: Challenges and Economic Consequences

This chapter reviews the development of climate change policies in Indonesia from the mid-2000s to the early 2020s. In the first part, we discuss Indonesia’s involvement in climate change initiatives at the global level that include ratification of the 2015 Paris Agreement and subsequent publication of a Nationally Determined Contribution (NDC) to reduce emissions through domestic efforts by 2030 from 29 to 41%. We aim to shed light both on complications with respect to implementation of these policies and reasons why they did not develop quite as planned. The next part of the chapter consists of simulations to model what would be the economic consequences if Indonesia progressed with its 2022 NDC and other key climate change policies. We highlight lessons based on Indonesia’s experience that could help other developing countries to put in place better climate change policies. Our lessons include an assessment of what could be done towards the dual objective of eradicating poverty and tackling the risks of climate change.