Integrating sustainable finance: A nation in transition

Mobilising capital and implementing progressive policies will be key to accelerating Indonesia’s energy transition.

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While the nation has joined the United Nations-led Energy Compacts, committing over US$122 billion to affordable and clean energy and to increase the share of renewable energy to 23 per cent before 2030, the amount is far from enough to fund the transition.

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The country will require investments of up to US$272 billion to meet its interim 2030 goals, according to the United Nations – dwarfing the US$20 billion Just Energy Transition Partnership (JETP) deal announced in 2022.

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Unless fossil fuel subsidies are reduced and clear and consistent regulatory frameworks for renewable energy developments under new leadership are put in place, the country won’t be able to meet its energy transition targets, nor increasing demands from companies for clean energy investments.

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With Indonesia looking to relocate its capital to East Kalimantan Nusantara to avoid climate-induced impacts, transition to renewables will also help the nation to ensure long term economic stability and prosperity.  

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How can Indonesia find the necessary capital to fund its energy transition and reduce its impact on the climate – all while balancing the needs of its economy and people?

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Indonesia is one of the world's most biodiverse countries.  

However, the nation is facing increased habitat loss and degradation due to human-led deforestation, urbanisation, and climate-induced forest fires.    

The nation’s rainforests contain 10 per cent of the world's known plant species and 12 per cent of mammal species, but are facing rapid loss, driving numerous species to the edge of survival.  

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While deforestation has slowed amid government-led moratoriums on clearing primary forests and the issuing of licenses for new oil palm plantations, the nation still lost 104,000 hectares of forest from 2021 to 2022.    

In the face of climate change and rapid deforestation, how can Indonesia prioritise its natural resourced and its rich biodiversity? What new policies, strategic investments and financial models can conserve and restore nature? How can biodiversity financing be leveraged to achieve net zero?

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