Landscape of Climate-Aligned Investment in Indonesia's Financial Sector

This report by the Climate Policy Initiative (CPI) assesses the landscape of climate-aligned investment within Indonesia's financial sector from 2015 to 2021. It identifies a significant funding gap to meet the country's 2030 Enhanced Nationally Determined Contribution (NDC) targets, noting that government budgets and the financial sector combined cover only a portion of the required investment. The document analyzes the roles of public and private financial institutions, sectoral investment trends—particularly in land use and power—and the impact of policy signals like the Just Energy Transition Partnership (JETP) and the Energy Transition Mechanism (ETM).

• Indonesia requires approximately USD 285 billion in climate-aligned investment to achieve its Enhanced NDC targets for 2030. The government budget addresses about 34% of this need, totaling USD 96.9 billion, while the broader financial sector (public and private) contributes 15% of the total investment needs.
• Between 2015 and 2021, public and private financial institutions provided roughly equal amounts of climate-aligned investment, totaling USD 41.7 billion. Public Development Finance Institutions (DFIs) average USD 3.5 billion in climate-aligned investment annually, primarily through market rate loans focused on renewable energy systems, though their average disbursement performance is below 50%.
• Private sector investment in climate-aligned activities is very low, representing only 3% of total private investment. Within this segment, land use—specifically agriculture and ISPO/RSPO certified sustainable palm oil—receives over half of the investment due to sector familiarity.
• In the power sector, investment totaled USD 35.6 billion from 2015 to 2021, with 58% allocated to renewables and 42% to fossil fuels. Commercial financial institutions provided 38% of the renewable energy finance, with the majority going to hydropower and geothermal, while solar energy received less than 2%.
• The transition of the power sector is being driven by government policy signals and global initiatives. Key mechanisms include the Just Energy Transition Partnership (JETP), which aims to disburse USD 20 billion within 3-5 years, the Energy Transition Mechanism (ETM), and a mandatory intensity-based Emissions Trading Scheme (ETS) launched in February 2023 covering 99 coal-fired power plants (>100 MW).

APA

Climate Policy Initiative (2023). Landscape of Climate-Aligned Investment in Indonesia's Financial Sector. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/Landscape-of-Climate-Aligned-Investment-in-Indonesias-Financial-Sector-CPI-December-2023.pdf

Chicago

Climate Policy Initiative. Landscape of Climate-Aligned Investment in Indonesia's Financial Sector. 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/Landscape-of-Climate-Aligned-Investment-in-Indonesias-Financial-Sector-CPI-December-2023.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Landscape of Climate-Aligned Investment in Indonesia's Financial Sector |date=December 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/Landscape-of-Climate-Aligned-Investment-in-Indonesias-Financial-Sector-CPI-December-2023.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023landscape, author = {{Climate Policy Initiative}}, title = {{Landscape of Climate-Aligned Investment in Indonesia's Financial Sector}}, institution = {Climate Policy Initiative}, year = {2023}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/12/Landscape-of-Climate-Aligned-Investment-in-Indonesias-Financial-Sector-CPI-December-2023.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }