JAKARTA, Jan. 27 (UPI) -- Indonesia plans to set up a $1 billion green investment fund to reduce carbon emissions by at least 26 percent by 2020.
Indonesia, the world's third-largest greenhouse gas emitter, will invest in renewable energy projects and water treatment to address the effects of climate change as part of the project. The country relies on fossil fuels as its main source of energy.
Jakarta will contribute $100 million to the Indonesia Green Investment Fund, to be managed by the government, said Edward Gustely, a senior adviser to the Ministry of Finance, Bloomberg reports.
Indonesia aims to raise the remaining $900 million from governments that have expressed interest in the fund as well as institutional investors, he said. So far the United States, Australia, Japan, the United Kingdom, France, Norway and other EU nations have indicated interest.
Gustely said about 52 percent of Indonesia's population of 248 million has access to electricity. About 30 percent of Indonesians have access to potable water. The country is turning to low-carbon strategies and tapping domestic resources to meet growing demand for energy, food and water.
"Other countries are doing it because they want to be good stewards of the environment," Gustely told Bloomberg. "Indonesia's immediate focus is less on inventing the technology, but rather on ways to scale greater investment and market deployment of it for supporting these new economic growth poles in a sustainable fashion."
The size of Indonesia's green fund may be raised to $5 billion over the next five years through "expanded public-private partnerships" and co-investment opportunities, he said.
With 120 million hectares of rainforest, Indonesia ranks among the world's largest in terms of its forests.
It also has the second-highest deforestation rate, with more than 1 million hectares cleared every year, mostly through illegal logging.
Forest fires, often set deliberately to clear land, are also common during Indonesia's dry season and are largely responsible for the country's high levels of carbon emissions.
According to the World Wildlife Fund, deforestation and forest degradation account for more than 83 percent of Indonesia's carbon emissions.
Conservation groups have raised doubts over the success of Indonesia's green fund announced by President Susilo Bambang Yudhoyono to mark the first 100 days of his second term in office, Australia Network News reported Wednesday.
"What are you going to do about the political (aspect) -- how to stop deforestation, and worse industrial activities," said Teguh Surya of the Indonesian Forum for the Environment. "If we get one billion, two billion or three billion dollars, it's nothing if Indonesians still want to continue to cut the timber or forests in several areas in Indonesia," he said.
