WHO PAYS WHAT FOR INDONESIA'S GREEN TRANSITION?

The report examines Indonesia's path toward net-zero emissions by 2060, highlighting a significant gap between current investment levels and the estimated annual need of USD 73–76 billion. It argues that foreign climate finance is often debt-heavy and unreliable, urging a shift toward domestic funding and structural reforms. The analysis covers the banking sector's limited capacity to finance renewable energy, the underperformance of the national carbon market, and the socioeconomic disparities in energy access. It proposes an "Indonesian Way" consisting of eight strategic actions, including targeted subsidies and the development of a domestic clean-tech ecosystem, to ensure a just and sovereign transition.

• Foreign climate finance for Indonesia is predominantly composed of debt rather than grants, leading to concerns that the transition is a "debt disguised as global welfare."
• Indonesia's commercial banking sector lacks the capacity to fully finance renewable energy power plants, which require an estimated USD 11 billion annually, especially under high-growth scenarios where sector concentration and funding risks emerge.
• The Indonesian carbon market is currently underdeveloped, with low transaction values and prices (approximately IDR 60,000 per ton) that are significantly below the levels required to effectively incentivize emission reductions.
• Significant regional energy inequality exists, with 96% of households without electricity located outside Java and Bali as of March 2023.
• Indonesia's energy transition targets are often inconsistent across different official documents, with the Enhanced NDC projecting higher 2030 emissions than the Long-Term Strategy (LTS).
• The manufacturing sector remains heavily dependent on fossil fuels, with coal accounting for nearly 50% of its total energy consumption in 2020.
• Blended finance is viewed as a tool to bridge the funding gap, but its implementation in Indonesia is hindered by a lack of investable projects and a limited understanding among domestic stakeholders.
• Indonesia possesses immense carbon absorption potential in its marine and terrestrial ecosystems, including the world's largest mangrove forests, though these are not yet fully integrated into official NDC targets.
• The report proposes an "Indonesian Way" for transition, which includes eight strategic actions: increasing public awareness, limiting cross-sector emissions, decarbonizing transport, targeting subsidies, improving gas infrastructure, developing the carbon sector, decarbonizing electricity/industry, and future energy development.

APA

Panggabean, A. T. P., & Siagian, A. P. (2025). WHO PAYS WHAT FOR INDONESIA'S GREEN TRANSITION? Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/09/Who-Pays-What-for-Indonesias-Green-Transition.pdf

Chicago

Panggabean, Adrian T. P., and Albertus P. Siagian. WHO PAYS WHAT FOR INDONESIA'S GREEN TRANSITION? Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/09/Who-Pays-What-for-Indonesias-Green-Transition.pdf.

Wikipedia

{{cite report |last1=Panggabean |first1=Adrian T. P. |last2=Siagian |first2=Albertus P. |title=WHO PAYS WHAT FOR INDONESIA'S GREEN TRANSITION? |publisher=Climate Policy Initiative |date=April 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/09/Who-Pays-What-for-Indonesias-Green-Transition.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{panggabean2025who, author = {Panggabean, Adrian T. P. and Siagian, Albertus P.}, title = {{WHO PAYS WHAT FOR INDONESIA'S GREEN TRANSITION?}}, institution = {Climate Policy Initiative}, year = {2025}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/09/Who-Pays-What-for-Indonesias-Green-Transition.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }