Financing Green Buildings in Indonesian Cities

This report analyzes the financial and regulatory landscape for green buildings in Indonesia, identifying significant barriers to scaling investment. It highlights a gap between national regulations and city-level implementation, noting that residential buildings—the largest energy consumers—are not mandated to follow green standards. Through a deep dive into Semarang, the report demonstrates that combining building material retrofits with high-efficiency cooling systems can reduce energy use by 32% to 44%, though meeting these mandates requires substantial investment.

• Financial barriers are the most severe challenge for green buildings in Indonesia, primarily due to a lack of dedicated financing instruments and high interest rates for conventional corporate loans.
• None of the fiscal instruments from the CCFLA taxonomy, such as capital cost subsidies, carbon credits, or property-assessed clean energy (PACE) mechanisms, have been implemented in Indonesia's green buildings or renewable energy sectors.
• Current national regulations, specifically GR 16/2021, are limited in scope as they are only mandatory for very large buildings with a floor area exceeding 5,000 m2, and they do not mandate standards for the residential sector, which accounts for 83% of building energy demand.
• National regulations lack requirements for renewable energy, which is necessary for achieving net zero carbon buildings. A local regulation in Jakarta that mandated solar systems on rooftops was revoked in December 2023 to align with national standards.
• Green buildings in Indonesia typically incur 10-15% higher upfront construction costs compared to conventional buildings.
• A case study in Semarang indicates that combining building material retrofits (BMR) and high-efficiency cooling systems (high COP) can reduce energy use by 32% to 44% depending on the building type.
• Implementing green building mandates in Semarang over the next ten years is estimated to require a total investment of USD 223.7 million.
• In Semarang, the combined BMR and high-COP scenario is projected to result in annual energy cost savings of approximately USD 3.19 million (IDR 50.56 billion) for mixed-use residential, office, and public buildings.

APA

Purnomo, I. Y., Nurfitriani, F., Press-Williams, J., & Haesra, A. (2024). Financing Green Buildings in Indonesian Cities. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/03/Financing-Green-Buildings-in-Indonesia.pdf

Chicago

Purnomo, Ira Yulianti, Fatiha Nurfitriani, Jessie Press-Williams, and Alke Haesra. Financing Green Buildings in Indonesian Cities. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/03/Financing-Green-Buildings-in-Indonesia.pdf.

Wikipedia

{{cite report |last1=Purnomo |first1=Ira Yulianti |last2=Nurfitriani |first2=Fatiha |last3=Press-Williams |first3=Jessie |last4=Haesra |first4=Alke |title=Financing Green Buildings in Indonesian Cities |publisher=Climate Policy Initiative |date=March 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/03/Financing-Green-Buildings-in-Indonesia.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{purnomo2024financing, author = {Purnomo, Ira Yulianti and Nurfitriani, Fatiha and Press-Williams, Jessie and Haesra, Alke}, title = {{Financing Green Buildings in Indonesian Cities}}, institution = {Climate Policy Initiative}, year = {2024}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/03/Financing-Green-Buildings-in-Indonesia.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }