Briefing Paper : Improving the Financing Landscape for Renewable Energy Development in APAC – A case study of Indonesia

Indonesia is a pivotal region in global efforts to curb climate change. In addition to being considered significantly more vulnerable to the impacts of climate change than other regions worldwide, it is also expected to play a key role in keeping global warming within 1.5°C as set under the Paris Agreement.
With the region’s share of global emissions increasing from 35% in 2010 to 58% in 20202, several countries, including Indonesia, have recently renewed their Nationally Determined Contributions (NDCs) to reflect more ambitious climate targets. Meeting the 1.5°C target, however, will require a vast amount
of climate finance as well as more strategic investment planning. Looking at commitments made by the 38 developing member countries of the Asian Development Bank (ADB), up to $16,999.3 billion will have to be invested between now and 2030 to meet the region’s NDC targets. Recognizing the urgency for robust investment growth and more strategic allocation of climate finance, this article looks at the latest developments and challenges facing Indonesia’s clean energy transition in comparison with other APAC countries, as well as insights on how we can leverage more climate finance opportunities to accelerate coal phase-out and the growth of renewable energy investment.


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Briefing Paper : Indonesia Landscape of Climate Finance – Financing Indonesia Energy Transition

Indonesia’s National Energy Policy aims to increase renewable energy capacity to 23 percent of the energy mix by 2025. Coal (30%) and oil and gas (47%) would make up the balance. However, progress has been slow, as renewables accounted for only 14% of the energy mix in 2020. Although Indonesia has announced a moratorium on new coal power plant permits by 2025; a large number of coal-fired power plants are already in the pipeline (IEA 2021). The government’s 2021–2030 national electricity supply plan (RUPTL 2021–2030) has set a coal capacity target of 44.7 GW by 2030, representing a 40 percent increase from 2020 levels (Ministry of Energy and Mineral Resources (MEMR) 2020 and PT Perusahaan Listrik Negara (PT PLN) 2021). Fossil fuel subsidies have remained at an annual average of USD 135 million since 2015, together with uncompetitive feed-in tariffs for renewables and locked-in coal investments. Renewable energy investments need to be mobilized at an accelerated rate, while investments in coal need to decrease to narrow the investment gap and ensure clean energy transition targets are met.


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Briefing Paper : Carbon Pricing Instruments to Accelerate NZE Target Achievement in Indonesia and ASEAN

Most ASEAN member states (AMS) have announced their net zero emission target (NZE). Most of those countries’ emissions come from the energy sector, with fossil-based energy dominating. With the fact that all AMS are still in need of development to increase their level of economy as well as their people’s
welfare, decoupling their development pathways from their greenhouse gas (GHG) emissions is inevitable.

Effective mitigation actions need access to the most advanced technology, which means a huge investment. The dilemma being faced by AMS is where to spend the relatively limited financial resources: should it be spent on those advanced low-GHG emissions technologies or should it be spent on people’s needs, including the basic ones for some countries? It is therefore necessary for AMS to find another source of finance outside of domestic public money. Carbon pricing has been acknowledged and implemented by countries with more advanced economies to support their efforts to reduce GHG emissions in a more cost-effective way. This is also a way that is currently being explored by most of the AMS.

This paper will cover the role of carbon pricing instruments in accelerating the effort to achieve NZE both in Indonesia and its potential roles in ASEAN.


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Time for a Big Rethinking? A Brief Assessment on Energy Transition and Climate Ambition after Indonesia’s ASEAN Chairmanship

Ringkasan kebijakan ini mengkaji peran Indonesia sebagai Ketua ASEAN dalam memajukan agenda transisi iklim dan energi di kawasan ini. Laporan ini mengkaji prioritas utama Indonesia terkait transisi energi di ASEAN, serta mengevaluasi adopsi inisiatif yang diusulkan. Analisis ini mencakup keterkaitan antara sektor energi dan agenda iklim, dengan mengacu pada hasil Pertemuan Menteri Energi ASEAN (AMEM) ke-41 dan Pertemuan Tingkat Menteri ASEAN ke-17 tentang Lingkungan Hidup (AMME). Laporan ini mengidentifikasi tantangan dan peluang untuk mempercepat kemajuan dalam transisi energi di kawasan ini. Dengan menekankan sifat energi yang lintas sektoral, laporan ini menggarisbawahi pentingnya ketahanan energi di bawah pilar Masyarakat Ekonomi ASEAN (MEA) dan menyoroti capaian ekonomi prioritas (PED) yang relevan terkait keberlanjutan. PED ini mencakup pengembangan standar yang diselaraskan, ekosistem kendaraan listrik, Kerangka Kerja Ekonomi Biru ASEAN, dan Kerangka Kerja Pembiayaan Transisi, yang mencerminkan upaya diplomatik Indonesia di platform multilateral untuk menyelaraskan transisi energi dengan tujuan pembangunan internasional.


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