Mr. Muhammad Rizkarmen is an auditor at BPK’s Representative Office in West Java Province. He completed both his bachelor and master’s degrees at Banding Institute of Technology. In addition to being an auditor, he has various working experiences in the area of engineering, finance, and procurement. He is also a Certified Fraud Examiner from the Association of Certified Fraud Examiner and a national procurement expert from the National Public Procurement Agency of Indonesia.
Mr. Normas Andi Ahmad has a bachelor degree in Chemical Engineering from Diponegoro University and a master degree in Environment and Sustainable Development from Glasgow University. He is experienced in conducting audit on energy and natural resources management as well as SDGs related audits. His audit engagements include Audit on SDGs Preparedness, Audit on Watershed Pollution Control, Audit on Sustainable Palm Oil Management, and Audit on Renewable Energy Development.
Climate change is a strategic issue at the global level that has been the focus of attention of world leaders in recent years. Several action plans have become common understandings at the global level, ranging from efforts to address deforestation to the encouragement of the use of green products (United Nations Climate Change, 2021). Efforts to encourage the use of environmentally friendly products are not an easy work. There is a phenomenon of carbon lock-in which hinders the development of carbon-saving technologies or environmentally friendly products due to several factors (Unruh, 2000).
The term carbon lock-in is the condition where the fossil fuel-based energy systems have locked the industrial economies that creates long-term market and policy problems that might stymie the spread of carbon-saving technologies, despite their obvious environmental and economic benefits (Unruh, 2000). This carbon lock-in phenomenon can occur because of (a) infrastructural and technological lock-in, (b) institutional lock-in, and (c) behavioral lock-in (Seto, et al., 2016). These three major types of carbon lock-in are interrelated specifically where institutional and behavioral lock-in reinforces infrastructural and technological lock-in.
The physical infrastructure can lock communities into carbon-intensive emission pathways that are difficult to change because of its long life uses (Seto, et al., 2016). Furthermore, the non-environmentally friendly technologies such as combustion engine-based vehicles or fossil fuel-based vehicles have more competitive prices. Currently, the price of the fossil fuel-based vehicles are more competitive because they have a relatively large production scale due to the high demand from its consumers which is much related to the behavioral lock-in.
The institutional lock-in differs from the technological lock-in in respects of intended feature, institutional nature, and differences between political processes and market (Seto, et al., 2016). The institutional lock-in such as industry standards can also hinder the development of environmentally friendly technologies such as electric vehicles. Several researches have shown that electric vehicles area promising way to reduce carbon dioxide emissions (Rizkarmen, Kusuma, & Pramono, 2019).
People's behavior (behavioral) who are accustomed to environmentally unfriendly technologies can also hinder the development of new technologies that are more environmentally friendly.
Multi-stakeholder engagement is very much needed to overcome the climate change issue and the phenomenon of carbon lock-in. The stakeholders, according to their roles, functions, and authorities, need to be actively involved in finding alternative solutions to the issues.
For example, the government needs to play a role through its policies inter alia the incentive policies for environmentally friendly technologies, disincentive policies for non-environmentally friendly technologies, elimination of institutional barriers, campaigns to change people's behavior, and the supporting infrastructure for example the ease and availability of the charging stations for electric vehicles. The government's involvement here is very important to encourage economic transformation from the equilibrium of environmentally unfriendly technologies to a new equilibrium that is environmentally friendly. The role of the government needs to be strengthened, especially about the financial aspect, as a key element in economic development (Sachs, Woo, Yoshino, & Taghizadeh-Hesary, 2019).
Currently, the financial services institutions are more likely to be interested in financing fossil fuel-based projects because green projects are considered to have some risks as the new technologies and provide a lower rate of return on investment.
The government needs to encourage the development of green projects and increase the financing of investments that provide environmental benefits, through new financial instruments and new policies. These policies are collectively known as “green finance”, which include green bonds, green banks, carbon market instruments, green fiscal and monetary policies, financial technology, green community-based funds, and others. (Sachs, Woo, Yoshino, & Taghizadeh-Hesary, 2019).
Some of the biggest car manufacturers, including Jaguar and Bentley, have previously stated their intention to go all-electric between 2025 and 2030. Ford claims that by 2030, all of its vehicles sold in Europe will be electrified. However, some of the world's largest car manufacturers believe that progress will be stunted in many markets because many governments plan to continue to rely on fossil fuels (Bateman, 2021). The government policies as mentioned before will encourage the industry to start increasing their production of electric vehicles. This increase in production is expected to make the price of electric vehicles more competitive and encourage the changes in people's behavior to switch from fossil fuel-based vehicles to electric vehicles. Bloomberg NES forecasted that electric cars will be cheaper to produce than fossil fuel vehicles by 2027 (Partridge, 2021). Other examples of policies for developing the electric vehicle ecosystem include establishing an electric mobility roadmap, implementation strategy administration, providing specific and easily accessible incentives, and electrifying public transport and ride-hailing services (UNIDO, 2020).
Another stakeholder that has a crucial role in overcoming carbon lock-in is Supreme Audit Institutions (SAIs). SAIs have a significant role in accelerating successful climate change mitigation and adaptation by providing recommendations that improve cross-sectoral coordination and policy coherence between stakeholders (Yudi & Ahmad, 2021). Furthermore, the role of SAIs is being recognized as crucial to supporting the government response mechanisms through maintaining public financial management discipline, ensuring transparency and accountability (World Bank, 2020). The relation between stakeholders can be shown as follows:
Table 1: Summary of the multi stakeholders engagement to overcome the climate change issue
| No. | Stakeholders | Alternative Effort |
|---|---|---|
| 1. | Government |
|
| 2. | Business/Industry | increasingvehicles the production of electric vehicles |
| 3. | Civil Society | the willingness to switch from fossil fuel-based vehicles into electric vehicles |
| 4. | Supreme Audit Institution | audit program and recommendation |
Figure 1: Relation of the stakeholders
From the table and figure above, it can be implied that SAIs have a crucial role in catalyzing the successful interaction between stakeholders. For example, SAIs provide recommendations to the government to maximize its services to the community especially in providing access to more environmentally friendly products and technologies. SAIs can also encourage industries through relevant stakeholders to improve community welfare as well as to improve the production process to become more efficient.
We can conclude that carbon lock-in more or less exacerbates the level of carbon emissions and climate change. However, this problem can be immediately reduced through a multi-stakeholder engagement approach. This article aimed to introduce the term carbon lock-in and its relation with climate change. Further review and studies might be needed to enrich this article.
REFERENCES
Bateman, K. (2021, Dec 6). What are countries doing to encourage the transition to electric vehicles?. weforum.org. Retrieved from https://www.weforum.org/agenda/2021/12/electric-cars-global- transition-ev-chargers/.
Partridge, J. (2021, May 9). Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’. https://www.theguardian.com/. Retrieved from https://www.theguardian.com/business/2021/may/09/electric- cars-will-be-cheaper-to-produce-than-fossil-fuel-vehicles-by-2027.
UNIDO (2020). Best Practices in Electric Mobility. Vienna: UNIDO
Rizkarmen, M., Kusuma, T. G., & Pramono, A. J. (2019). From Trade Deficits and Severe Air Pollution to Sustainable Development: Implementation Strategy of Electric Vehicles and Renewable Energy in Indonesia. International Conference of State Finance and Accountability. Bali.
Sachs, J., Woo, W. T., Yoshino, N., & Taghizadeh-Hesary, F. (2019). Why Is Green Finance Important? Tokyo: Asian Development Bank Institute.
Seto, K. C., Davis, S. J., Mitchell, R. B., Stokes, E. C., Unruh, G., & Ürge-Vorsatz, D. (2016). Carbon Lock-In: Types, Causes, and Policy Implications., 41, hal. 425-452. doi: https://doi.org/10.1146/annurev-environ-110615-085934
United Nations Climate Change. (2021). COP26 The Glasgow Climate Pact. The 26th United Nations Climate Change Conference - UK 2021 (hal. 13). Glasgow: United Nations. Unruh, G. C. (2000). Understanding Carbon Lock-In. Energy Policy, 28(12), 817-830. doi: https://doi.org/10.1016/S0301-4215(00)00070-7
World Bank Group. (2020). Covid-19 Role of Supreme Audit Institutions (SAIs) in Government's Response to Covid-19: Emergency and Post Emergency Phases. World Bank, 2020.
Yudi, K., & Ahmad, N. A. (2021). The Role of SAI in Alleviating Climate Change: Case Study of SAI Indonesia-SAI Indonesia. Asian Journal of Government Audit.