Standardized National Emissions Factor as The Building Blocks of Indonesia’s Industrial Decarbonization Journey

The industrial sector plays a major role in speeding up climate change, with its cross-sector emission. More frequent climate catastrophic events, that can lead to irreversible biodiversity destruction, signify the urgency of industrial decarbonization. Reliable and impactful industrial decarbonization requires four important longitudinal steps; (1) comprehensive GHG inventory, (2) clear GHG emission reduction target, (3) emission reduction strategy making and planning, and (4) emission reduction strategies implementation, monitoring, and verification. Despite every step having its own process, most of them involve GHG emission calculation where corporations can measure their GHG baseline, assess the impact of emission reduction strategies selection, and monitor and evaluate the emission reduction strategies implementation. 

These various emission accounting applications underline the importance of credible emission accounting in ensuring the reliability and effectiveness of industrial decarbonization. More importantly, corporations with accurate GHG accounting data can set realistic emission reduction targets, identify emission hotspots, and implement effective strategies to minimize their environmental footprint. On the other hand, reliable GHG accounting data is also useful for the Indonesian Government in assessing the impact of industrial decarbonization on their National Determined Contribution (NDC) targets and various industrial national and global emission-based incentives policies (i.e., carbon trading, green products, etc.). The latter underscores the importance to make standardized GHG emission accounting that can make calculations among industrial sectors comparable in an appropriate manner. 

The Importance of Standardized National Emissions Factor for Corporate GHG Accounting and The Current Conditions in Indonesia 

Intergovernmental Panel on Climate Change (IPCC) has provided the fundamental framework of GHG accounting, in which the total CO2-equivalent GHG emission generally is the interactions between activity data, emission factors, and Global Warming Potential (GWP) factors.  IPCC demonstrates and advocates the importance of context-specific (i.e., geographic-based emission factor) emission factors to improve the reliability of GHG accounting. However, many developing countries have underestimated the importance of providing these standardized emission factors. More importantly, the emission factors (EF) are also important to quantify emission reduction when industries implement climate mitigation. Furthermore, most new clean technologies available today still have not provided their EFs, making it difficult for companies to measure emission reductions in their decarbonization plans. 

Standardized national emission factors are pivotal in ensuring uniformity and comparability in greenhouse gas (GHG) accounting across diverse industries. These factors establish a standardized measure for calculating emissions, considering the distinct characteristics of each sector. To achieve meaningful and comparable corporate GHG accounting at both national and international levels, the adoption of standardized emission factors becomes essential. Furthermore, providing more extensive EFs, encompassing EFs from various new low-carbon technologies, could accelerate the quantification of the decarbonization journey. This facilitates the assessment and benchmarking of emission performance by policymakers, businesses, and the public, promoting a more transparent and accountable approach to addressing climate change. Notably, some countries (Table 1), such as the US and the UK, have implemented standardized emission factors, proving their usefulness in evaluating diverse implementations across various emission-based incentive policies. 

In Indonesia, determining the accurate emissions factor for GHG accounting is intricate. The country's diverse industrial landscape, encompassing agriculture, manufacturing, and energy sectors, presents challenges in creating a universally applicable emissions factor. Moreover, the inconsistency and unreliability of data across industries hinder the establishment of comprehensive and standardized emissions factors that accurately represent the carbon intensity of each sector. Although the government has undertaken efforts to provide emissions factors data, several constraints persist; (1) limited availability to certain sectors (e.g., transportation, energy), (2) incomplete datasets for each sector, (3) outdated information, and (4) limited accessibility and scattered data. 

For instance, the Ministry of Energy and Mineral Resources has provided the emission factors for energy sectors, however, the emission factors are only limited in terms of more conventional fuel (i.e., jet fuel, natural gas, coal, gasoline, diesel). The more diverse emission factors for various sectors (i.e., refrigerants, waste, etc.) still remain unclear, and broader types of emission factors for specific fuel type (such as emission of diesel oil for various Cetane Number (CN) remain missing. Moreover, learning from other countries' efforts (Table 1), these countries pooled their EFs in specific institutions, resulting in clearer guidance for industries.

The current emissions factors available for Indonesia's corporate GHG accounting system have various adverse effects. Inaccurate or unreliable factors may result in either underestimating or overestimating actual emissions, thereby impeding the efficacy of emission reduction strategies. This lack of precision can lead to misguided investments, inefficient allocation of resources, and a failure to make substantial progress in decarbonization initiatives. Additionally, the absence of standardized emissions factors hinders the capability to compare industries according to their environmental performance, obstructing the establishment of clear benchmarks and reduction targets. 

Way Forward for Indonesia

As countries globally navigate the complexities of industrial decarbonization, the experiences of countries like South Korea offer valuable frameworks for the development of country-led emission factors to improve climate policies. These insights can guide and inspire Indonesia in tailoring its own strategies to enhance corporate GHG emissions accounting processes effectively. 

• First, a cross-ministry capacity building about the importance of developing credible and standardized emission factors. This needs to be done to create the same understanding among the stakeholders about the need for standardized emission factors. Capacity building also can involve perspectives from the industrial sector and research institutions as a way to integrate the efforts with the actors. Close collaboration between government, industries, and research institutions during the capacity-building phase can empower further efforts to move more swiftly.  
• Second, a comprehensive national inventory of emissions factors tailored to the unique characteristics of each industry and for new low-carbon technologies is imperative. This can be achieved through empowering existing research agencies, and collaborative efforts involving government agencies, research institutions, low-carbon technology providers, and industry stakeholders. The government should develop continuous engagement with industry experts, scientific communities, and international organizations to align with global best practices on making the national standardise emission factor.  
• Third, a platform capable of integrating all existing Indonesian emission factors should be established, ensuring accessibility for all stakeholders. This can be done by empowering existing government agencies on making one integrated platform or improving existing platform that can be accessed by all. In addition, prioritizing regular review and improvement is also important to ensure emission factors are not outdated.
• Fourth, the government should invest in the development and improvement of robust data collection and reporting mechanisms. Enhanced data transparency and accuracy are essential for building a reliable emissions inventory and incentivizing industries to adopt best practices in emissions monitoring and reporting.  

Addressing the challenge of decarbonizing Indonesia's industries requires a strategic, collaborative approach, focusing on the creation and adoption of standardized GHG accounting practices. The current limitations in available emissions factors in Indonesia impede accurate accounting, thereby challenging the country's ability to reach its climate objectives. Nevertheless, with focused initiatives from the Indonesian government, there exists an opportunity to overcome these obstacles. Through investments in comprehensive data collection, promoting collaboration among stakeholders, and encouraging the adoption of standardized emissions factors, Indonesia can pave the way for a more sustainable and low-carbon industrial future. In conclusion, the importance of GHG accounting in corporate emissions cannot be overstated, and the adoption of a nationally standardized emissions factor is essential to facilitate meaningful progress. Although the journey towards decarbonization may be arduous, it is indispensable for the well-being of the planet and future generations.