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Fiscal Policies to Address Air Pollution from Road Transport in Cities and Improve Health: Insights from Country Experiences and Lessons for Indonesia

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Fiscal Policies to Address Air Pollution from Road Transport in Cities and Improve Health: Insights from Country Experiences and Lessons for Indonesia Fiscal policies to address air pollution from road transport in cities and improve health: Insights from country experiences and lessons for Indonesia Working Paper December 2019 r 2019 Cover photo credits: Arran Smith as published on Unsplash ________________________________________ Copyright © United Nations Environment Programme, 2019 This publication may be reproduced in whole or in part and in any form for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgement of the source is made. The United Nations Environment Programme would appreciate receiving a copy of any publication that uses this publication as a source. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the United Nations Environment Programme. Disclaimer The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Environment Programme concerning the legal status of any country, territory, city or area or of its authorities, or concerning delimitation of its frontiers or boundaries. Moreover, the views expressed do not necessarily represent the decision or the stated policy of the United Nations Environment Programme, nor does citing of trade names or commercial processes constitute endorsement. 2 Acknowledgements This study was undertaken in the context of a United Nations Environment Programme (UNEP) project on Environment, Health and Pollution as well as a project on Enhancing Knowledge and Capacity for Inclusive Green Economies. This study was prepared by a team of researchers. Kai Schlegelmilch of Green Budget Germany was the overall lead for the study. Jacqueline Cottrell of Green Budget Germany led the development of policy recommendations and coordinated inputs of all authors. Anja Rosenberg of the Energy Community Secretariat was responsible for estimating the impacts of measures. Verena Streitferdt and Maya Virdayanti Anggraini of Pertiwi- Consulting, Aditya Mahalana an independent consultant in Indonesia, Budi Haryanto of the University of Indonesia, and Ahmad Safrudin of KPBB were responsible for analyzing data, delivering policy analysis, conducting interviews and stakeholder consultations. The study was led and carried out by Joy Kim, Senior Economic Affairs Officer at the Economy Division of UNEP, under the overall supervision of Steven Stone, Chief of the Resources and Markets Branch of the Economy Division of UNEP. Administrative support was provided by Rahila Somra, Fatma Pandey and Desiree Leon. The authors gratefully acknowledge the insightful comments and contribution of experts and participants at a stakeholder workshop including: Dr Adi Budiarso, Eka Hendra Permana and Angustin Samosir from the Fiscal Policy Office, Ministry of Finance of Indonesia (BKF); Ms Fitri, Mr Agung, Ms Ambar and Sri Mulyati from the Environmental Protection Agency of DKI Jakarta Province; Barlev Nico Marhehe from UNEP; Ririn Kusuma from the Vital Strategies Programme; Mega Kunue from the International Council on Clean transportation (ICCT); Stkvura Azurar and Dr Ir. Sylvira Ananda Azwar from the Indonesian Environmental Scientists Association; and Mr Yuniar from the Transport Agency of Jakarta Special Region. In addition, the authors would like to thank KPBB for providing their facilities for meetings and the stakeholder workshop. The authors gratefully acknowledge the contribution of UNEP reviewers for their invaluable comments and support to the development of the study including Sirini Withana, Bert Fabian, Barlev Nico Marhehe, Maria Katherina Patdu, Teodora Cakarmis and Himanshu Sharma. The layout and design of the report and the bibliography was prepared by Rouven Stubbe of Green Budget Germany. The study was undertaken in the context of a UNEP-led project on Environment, Health and Pollution which seeks to provide the needed understanding, capacities and tools to help countries and stakeholders take effective action to address pollution. As part of this project, a series of studies have been carried out which explore the effective use of fiscal policies for pollution reduction. These fiscal studies contribute to the Implementation Plan ‘Towards a pollution-free planet’ adopted at the Third UN Environment Assembly (UNEA-3) which identifies stimulating good practices through fiscal policy as an accelerator for implementation. 3 Table of Contents List of figures ................................................................................................................................... 8 List of tables..................................................................................................................................... 9 List of Abbreviations ...................................................................................................................... 10 Executive Summary ....................................................................................................................... 13 1. Introduction ........................................................................................................................... 20 1.1. Background ......................................................................................................................... 20 1.2. The role of green fiscal policy in achieving emissions reductions from the transport sector ................................................................................................................................................... 23 1.3. Indonesia and DKI Jakarta as a case study to investigate opportunities for fiscal policy measures to curb air pollution .................................................................................................. 24 1.3.1. Regulatory framework for air pollution ................................................................... 24 1.3.2. Fiscal situation ......................................................................................................... 25 1.3.3. Growing public awareness ....................................................................................... 25 1.4. Objectives of the study .................................................................................................. 26 1.5. Methodology ................................................................................................................. 27 1.6. Structure ........................................................................................................................ 27 2. Key Trends, Costs and Challenges of Air Pollution ................................................................ 29 2.1 Introduction ......................................................................................................................... 29 2.1.1. Air pollution ................................................................................................................. 29 2.1.2. Air pollutant monitoring in Indonesia ......................................................................... 30 Air pollutant monitoring stations in Indonesia .............................................................. 30 2.1.3. Publicly available data ................................................................................................. 30 2.1.4. Overview of data used for the review ......................................................................... 32 The GAINS Model ................................................................................................................... 32 Monitoring Stations in DKI Jakarta ........................................................................................ 33 2.2. Air pollutants in Indonesia .................................................................................................. 35 2.3. Overview of air pollution in DKI Jakarta ............................................................................. 37 2.4. Costs of air pollution .......................................................................................................... 41 2.4.1. Explanation of health impacts attributable to the pollutants ..................................... 41 2.4.2. Bottom up health cost assessment in Jakarta ............................................................. 43 2.4.3 Sources of air pollution and hotspots .......................................................................... 47 2.5. Conclusions ......................................................................................................................... 50 4 3. Analysis of policy framework for air pollution ...................................................................... 52 3.1. Existing and planned policies to address air pollution from transport in Indonesia and Jakarta ....................................................................................................................................... 52 3.1.1. Regulations in Indonesia ............................................................................................. 52 3.1.2. Regulations in DKI Jakarta ....................................................................................... 60 3.1.3. Summary of the regulatory overview .......................................................................... 63 3.2. Recommendations and reflections on the existing policy framework ............................... 64 3.2.1. Updating standards across different government
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