The Concept of Green Budgeting

When observing cars driving on the highway and seeing the smoke coming out of their exhaust pipes, it might be difficult for us to imagine that something as thin as smoke can threaten our survival. However, the reality is that the ice in the North and South poles melts every year due to high carbon emissions, which cause the greenhouse effect that contributes to global warming. The melting ice can raise sea levels and inundate land.

The melting of ice is not the only effect of global warming. Climate and weather also become unstable due to global warming – causing storms out of season or prolonged droughts. Climate and weather-related natural disasters alone account for 90% of total disasters worldwide.

According to UNISDR, Indonesia is the fifth most disaster-prone country in the world. NTB (West Nusa Tenggara) in particular has felt the impact of climate change, such as in 2007 when the dry season was longer, causing farmers to experience crop failure.

Realizing how important human welfare depends on climate, we should pay more attention to climate change. The green economy has now been introduced as an alternative economic system that focuses not only on economic prosperity but also on the environment and social equality.

One way to implement the green economy is through reducing carbon emissions. Indonesia has committed to reducing carbon emissions by 29% from BAU (Business As Usual) by 2030. This plan is detailed in the National Action Plan for Greenhouse Gas Reduction (RAN GRK) at the national level and the Regional Action Plan for Greenhouse Gas Reduction (RAD GRK) at the regional level.

One step in the RAN GRK is the implementation of green budgeting. Green Budgeting itself is an effort to incorporate environmental aspects into government budgeting. So far, when creating budgets, the government has focused more on economic growth and societal welfare. However, by implementing green budgeting, the government must include environmental and social equality aspects in it.

Incorporating environmental aspects into budgeting does not only mean allocating a certain percentage of the budget for environmental purposes, but also by applying green principles to various aspects of the budget and the economy, both in terms of revenue and expenditure.

For example, when setting the budget for the energy sector, the government is expected to prefer the development of renewable energy power plants over subsidizing electricity prices. Another example is when determining infrastructure budgets, the government is expected to prioritize the development and expansion of mass transportation facilities over toll roads.

Green budgeting is important because the budget is a powerful tool to regulate the behavior of economic actors. When the government implements green budgeting, it spends or invests in sectors or industries that support environmental sustainability. This serves as a policy signal to other sectors such as businesses, industries, communities, and individuals.

These economic actors will then be encouraged to contribute to sustainable development. For example, when the government provides more budget and attention to mass transportation facilities, the public will be more enthusiastic about using public transportation rather than private vehicles. This was successfully done by the government of Mexico City, which popularized Bus Rapid Transit (BRT) among its residents, thus reducing emissions from private vehicles.

Another example is when the government removes kerosene subsidies, as done by the Indonesian government during President SBY’s administration, the public can change their energy consumption patterns.

The parties responsible for conducting green budgeting are the government, private sector, and society together. The government lays the policy foundation. Specifically, in green budgeting, the government is interested in monitoring climate finance for the effectiveness of development. The private sector implements its economic activities according to government policies, and society supports by following regulations and actively participating in preserving the environment independently.

Explanation Video