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

Indonesia requires approximately USD 285 billion in climate-aligned investment to meet its Enhanced NDC, but current funding is insufficient. The government budget covers 34% of this need, while the financial sector (public and private) contributes 15%. Between 2015 and 2021, public and private financial institutions provided roughly equal amounts of climate-aligned investment, totaling USD 41.7 billion. Private investment is notably low, with only 3% of total private investment being climate-aligned, and much of this concentrated in land use. In the power sector, 58% of the USD 35.6 billion invested went to renewables, with a significant drop in coal finance since 2016. Future investment trends are expected to be driven by government policy signals such as the Just Energy Transition Partnership (JETP) and the Energy Transition Mechanism (ETM).

• Indonesia faces a significant funding gap to meet its 2030 Enhanced NDC, requiring USD 285 billion in climate-aligned investment. The government budget accounts for approximately 34% of this requirement, while the broader financial sector contributes 15%.
• Between 2015 and 2021, public and private financial institutions provided a combined USD 41.7 billion in climate-aligned investment, with both groups contributing roughly equal amounts. Public financial institutions average USD 3.5 billion in climate-aligned investment annually, primarily through market rate loans focused on renewable energy.
• 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 certified sustainable palm oil—receives over half of the investment due to sector familiarity.
• The power sector received USD 35.6 billion in investment from 2015 to 2021, with 58% allocated to renewables and 42% to fossil fuels. Commercial financial institutions provided 38% of the renewable energy finance, though this was heavily skewed toward geothermal and hydropower, with solar receiving less than 2%.
• Investment trends for decarbonizing the power sector are increasingly driven by government policy signals and global initiatives, including the Just Energy Transition Partnership (JETP), the Energy Transition Mechanism (ETM), and the Emissions Trading Scheme (ETS) launched in February 2023.

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} }