Financing Green Buildings in Indonesian Cities

The report identifies financial barriers as the most severe challenge to green building implementation in Indonesia, citing a lack of dedicated financing instruments and high interest rates. While national regulations like GR 16/2021 have introduced green building standards, they are limited to very large buildings and exclude the residential sector, which accounts for 83% of building energy demand. A case study in Semarang demonstrates that combining building material retrofits with high-efficiency air conditioning can reduce cooling energy use by 32% to 44%, potentially saving USD 3.19 million annually. However, meeting green building mandates in Semarang over the next decade is estimated to require USD 223.7 million in investment.

• Financial barriers are the most significant obstacle to green building adoption in Indonesia, primarily due to the absence of dedicated financing tools and high interest rates for standard corporate loans.
• Current national regulations, specifically GR 16/2021, are limited in scope because they only mandate green building standards for very large buildings (over 5,000 m2) and exclude the residential sector, which represents 83% of the country's building energy demand.
• 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 building or renewable energy sectors.
• Cooling is a critical area for energy reduction in Indonesia, with an estimated 550 million air conditioning units expected to be sold between 2022 and 2060.
• A deep dive in Semarang indicates that combining building material retrofits (BMR) with high-efficiency AC systems can reduce energy use by 32% to 44% depending on the building type.
• Implementing the combined BMR and high-efficiency AC scenario in Semarang could result in annual energy cost savings of approximately USD 3.19 million (IDR 50.56 billion).
• The total investment required to meet green building mandates for new constructions in Semarang over the next ten years is estimated at USD 223.7 million.
• Green buildings in Indonesia are estimated to have upfront construction costs 10-15% higher than conventional buildings.
• Subnational implementation of green building codes is low, with only six subnational governments in Indonesia having adopted local regulations.

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} }