The G20 Energy Transition is a commitment from various G20 member countries that are trying their best to switch to net zero emissions for the sake of the environment.
This commitment was conveyed by the Chair of Task Force Energy, Sustainability, and Climate B20 Nicke Widyawati. B20 or the business 20 is the international business community in the G20 member countries.
This sector certainly supports the fulfillment of each of the G20 members to achieve a commitment to go towards the net zero emission that has been determined.
Nicke said that Indonesia’s G20 presidency needs full support from all parties. All recommendations and demands from member countries will be prepared by member countries, which will be translated into policy actions and business actions.
“As the President Director of Pertamina, I see that this is very much in line, because Pertamina has a significant contribution to energy in Indonesia. So that the G20 agenda, which is a global agenda to carry out this energy transition, has also become a big agenda for Pertamina,” said Nicke.
Nicke also explained that there are a number of efforts taken from the business sector in the energy, sustainability and climate task force.
The first is the state target that has been set by the government, namely the national grand energy strategy which includes the stages of energy transition in Indonesia. The government also determines the why, what and when of the energy transition targets and how they are implemented in the business sector.
Second, each country has different characteristics and challenges in the energy transition, for which the goal is the same.
The main focus of the business sector in the G20, continued Nicke, is at least three available, namely accelerating the energy transition, funding and global cooperation.
Indonesia, he continued, can carry out the acceleration of energy transition along with three guidelines, namely energy security, accessibility and affordability. In principle, the energy transition must be fair and affordable for all parties. The transition from fossil energy to new and renewable energy should not increase the poverty rate, especially since Indonesia is still dominated by fossil energy sources.
While funding needs attention, because the business sector is aware that energy transitions require large costs. Therefore, the final focus is global cooperation to achieve that goal together.
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What is the G20 Energy Transition?
The Ministry of Energy and Mineral Resources (ESDM) discussed the issue of energy transition from energy security to technology in a discussion and cooperation forum at the G20 Indonesia Summit.
The Energy Transitions Working Group (ETWG) focuses on energy security, energy access and efficiency, and the energy transition by starting to use low-carbon energy systems, including investment and innovation in more efficient and environmentally friendly technologies.
Through the G20 large forum, Indonesia has the opportunity to encourage the world’s collective efforts in realizing policies to accelerate global economic recovery in an inclusive manner. Indonesia also has the opportunity to show the world its full contribution to the global energy transition.
This is because G20 member countries account for about 75% of global energy applications. Therefore, the G20 countries have a big responsibility and strategic role in encouraging the use of clean energy.
The ETWG focuses on energy security, access and efficiency, and the transition to low-carbon energy processes, including investment and innovation in cleaner and more efficient technologies.
G20 Energy Transition
The G20 energy transition was emphasized by the Indonesian side through the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Panjaitan on behalf of President Joko Widodo to carry out health insurance that the energy transition must be carried out fairly and have a negative impact on the socio-economic community.
Luhut said that the paradigm shift will definitely have an impact on various job professions, development scenarios, business orientation, and other sectors. People who have a heavy burden must be helped, if those who are able are then welcome to walk alone while helping those who cannot.
The G20 is an international forum that focuses on policy coordination in the economic and development fields. The G20 represents the world’s economic and political power, and its membership comprises 80% of the world’s GDP, 75% of global exports and 60% of the global population. G20 members consist of 19 countries and 1 region, namely: Argentina, Australia, Brazil, Canada, People’s Republic of China (PRC), France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia , South Africa, Turkey, United Kingdom, United States and European Union.
Indonesia’s G20 in 2022 focuses on the business sector at least three sectors, namely accelerating the G20 energy transition, funding and global cooperation.
Indonesia itself carries out the acceleration of energy transition by using three guidelines, namely energy security, accessibility and affordability.
The point is that this energy transition must be carried out by all people, no one should be burdened, let alone increase the poverty rate.
While funding needs to be considered, the business sector understands the energy transition with high costs.
Therefore, the final focus is global cooperation that can create shared achievements.
“There are business sectors in the world that are still dominated by fossil energy, and some are already 100 percent renewable energy. So interestingly, they each have their own interests. We have to bridge and accommodate into one agreement,” said Luhut.
When is the G20 Energy Transition Launch?
When is the launch of the G20 energy transition?, the G20 energy transition is launched as part of Indonesia’s G20 presidency which will start on December 1, 2021 until the G20 Summit until November 2022.
The presidency is very important for Indonesia, which is part of a global citizen who has an important role in supporting clean energy and the world’s climate.
“The G20 Energy Transition is expected to produce more concrete results from the G20 trial to strengthen a sustainable global energy system, as well as a just energy transition in the context of sustainable recovery,” said Minister of Energy and Mineral Resources, Arifin Tasrif in an interview in Yogyakarta.
Arifin said that the energy transition requires three priority issues, namely access, technology, and funding. With these three issues, it is hoped that a global agreement can be reached in supporting the energy transition.
This forum is also used by Indonesia to be able to gather strong global commitments in order to achieve the global target, namely energy access, which will be targeted by the 2030 agenda as the Sustainable Development Goals.
Arifin said that the main result or Lighthouse Deliverable that was expected by the Indonesian presidency was as a follow-up to the actions after COP26 and the previous G20 presidency, which was to achieve the carbon neutrality that Indonesia had targeted in 2060 or sooner than real support from the international community.
What are the G20 Energy Benefits?
The G20 energy transition in Indonesia has indeed brought more positive changes. The benefits of this Presidency are felt from various sectors, both socio-cultural and economic. And even, in total, the economic benefits are estimated to be 1.5 to 2 times greater than the IMF World Bank Group Annual Meetings in Bali in 2018.
Haryo Limanseto, Head of the Bureau of Communication, Information Services, and Sessions, Coordinating Ministry for Economic Affairs said, “If the meeting is held physically, there will be an increase in domestic consumption of up to Rp. and employment of as many as 33 thousand in various sectors”.
There are various benefits of the Indonesian G20 Presidency that can be felt in Indonesia today, including:
International Branding Indonesia
As a developing country, Indonesia is in dire need of investors for many people abroad. Therefore, of course, we need the best branding for Indonesia so that many entrepreneurs in the world see Indonesia as a good place to invest.
Haryo said, “In the long term, Indonesia’s branding in the eyes of the world will increase the confidence of other countries towards Indonesia, and Indonesia can become the central stage in the world. The G20 Forum is also expected to encourage investment commitments from G20 members and international organizations.”
G20 Energy Increases Community Insight
As you know, Indonesia is a large country whose existence is highly considered by other countries, both in terms of economy, geographical location, and political stance. Of course, this will foster pride if people in Indonesia know more about their country and increase the pride of their people with the country where they live.Reaching Remote Areas
The G20 Forum is not only discussing economics and politics, but now discussing the Sherpa Track. This one agenda is thought to be in line with national interests.
The Sherpa Track is part of the Engagement Groups represented by Civil Society Organizations, so that the strategic outcome of the Sherpa Track is not limited to a top-down approach, but also opens up opportunities for various stakeholders.
“The Working Group and Engagement Group will work together to achieve the agendas of the Sherpa Track forum at the G20 Indonesia Presidency which will emphasize the importance of various accesses and alignments with communities in remote areas and outer islands, such as access to education, access to vaccines, access to health facilities, and access to affordable energy availability,” explained Haryo.
Sherpa Track not only reaches these facilities, but there are other things, namely the empowerment of MSMEs. Empowerment of MSMEs is a strategic step in improving and strengthening the basic economic life of the majority of the Indonesian people, especially by providing employment opportunities and reducing inequality and reducing poverty levels.
The empowerment carried out here is by encouraging the digitization of MSMEs, training in the context of upskilling MSMEs, encouraging various pro-UMKM policies such as ultra-micro financing, and others.
Impact of the G20 Energy Transition on the Business Sector
The world is facing increasing environmental stresses, including increasing water and water pollution, climate change, loss of biodiversity, and waste generation. many policies and initiatives have emerged at the international level to respond to these challenges, but more needs to be done to ensure a rapid green transition and a cleaner global environment.
These changes need to occur in the context of other major structural transformations, including economic convergence between developed and developing countries, increasing urbanization, and the diffusion of automation and digitalization.
The green transition depends on the development and dissemination of new technological, economic, social, behavioral and business model innovations. This includes the production, distribution and storage of electricity; agriculture and forestry; exploitation of natural resources; building; transport; water supply and treatment; waste management; and environmental improvement.
Many of the innovations needed in each of these sectors already exist and now need to be disseminated and scaled up. This process can be made easier thanks to the development of enabling innovations such as artificial intelligence, internet of things, and blockchain technology. At least in the technology domain, the pace of innovation for a green transition has accelerated rapidly since the mid-2000s.
The green transition covers various sectors of the economy. It is therefore difficult to measure the size of the business opportunity associated with the transition. However, recent estimates suggest that the green economy is growing fast, and could represent 10% of the global market capitalization by 2030, roughly as large as the healthcare or banking sectors.
The transition to a green economy has also been shown to provide co-benefits, from high knowledge transfer from green innovations to improved health and worker productivity from lower air and water pollution.
Transition to a Greener Economy
While the transition to a greener economy is an obvious business opportunity given the scale of the transformation required, it will also lead to reallocations both between and within economic sectors. However, evidence suggests that this reallocation is small compared to other trends in the economy, such as automation. Public policy can effectively mitigate these consequences.
There are a number of barriers that limit the development and deployment of cleaner technologies, and thus prevent the business opportunities associated with the green transition from being realized.
These include skills shortages, innovation capacity, lack of business competition, lack of public acceptance of new technologies, infrastructure shortages, policy misalignments such as inefficient fossil fuel subsidies that encourage wasteful consumption, policy uncertainty, and financial constraints.
The Creation of New, More Advanced Innovations
The creation and dissemination of new ideas, products, processes and methods is the basis for the transition to a cleaner global environment. Innovation does not only mean technological innovation but also innovation in economic and social systems as well as changes in lifestyle. The mix of technologies used for production and consumption will need to change radically in various sectors, and technological breakthroughs may be required in some.
Institutional and organizational changes, new services and business models, new ways of consuming, living and moving are also needed to drive systemic changes in production and consumption patterns, habits and behaviour.
A green transition hinges on the development and dissemination of new technological, economic, social, behavioral and business model innovations in many, if not all, sectors of the economy. This section provides an overview of the many innovations required, distinguishing between new technologies and new business models caused by new modes of production and consumption.
It discusses green technologies themselves and enabling technologies, which are not “green” but can contribute to the transition, such as artificial intelligence as a catalyst for intelligent network management and intelligent transportation systems, among others. A green transition requires not only incremental innovation through small and incremental improvements, but also disruptive or breakthrough innovations that are little known about policy settings and enabling frameworks.