Accessing climate finance for inclusive, low-carbon transport in Indonesia

The document identifies significant barriers preventing Indonesian local governments from accessing climate finance, including the inability to directly access international funds and a lack of technical expertise in project preparation. It suggests that Indonesia can unlock over USD 3 billion in potential climate finance by strengthening institutional capacity, improving the 'bankability' of projects through comprehensive feasibility studies and ESG standards, and utilizing blended finance and public-private partnerships. The brief highlights specific transport projects in Jakarta, Bandung, Makassar, Medan, and Semarang, noting a heavy reliance on central government funding.

• Local governments in Indonesia face critical regulatory and technical obstacles when seeking climate finance, most notably the requirement for national government approval to access international funds and a general lack of experience in long-term financial planning and project preparation.
• The Indonesia Green Taxonomy, created by the Financial Services Authority of Indonesia, currently limits the availability of green finance for urban transport because it does not prioritize public transport.
• While Indonesia has access to more than USD 3 billion in potential climate finance, many projects remain underfunded due to policy uncertainties, regulatory gaps, and challenges with co-financing.
• To make low-carbon transport projects 'bankable' and attractive to funders, they must include comprehensive feasibility studies, robust risk-management strategies, alignment with national policies, and clear revenue mechanisms such as carbon credit trading or congestion pricing.
• Climate finance providers increasingly prioritize projects that integrate environmental, social, and governance (ESG) considerations, specifically those that improve mobility for vulnerable groups, including persons with disabilities and low-income communities.
• Analysis of five metropolitan areas—Jakarta, Bandung, Makassar, Medan, and Semarang—shows that while projects like Bus Rapid Transit and electric buses are being implemented, they rely heavily on central government and some private sector funding, with local governments struggling to secure stable, long-term co-financing.
• Available climate finance sources for Indonesia include international multilateral funds (Green Climate Fund, Global Environment Facility, Clean Technology Fund) and domestic mechanisms (SDG Indonesia One platform, Indonesia Environmental Fund, and the Joint Crediting Mechanism).

APA

O'Reilly, K., Haq, G., & Busch, J. (2025). Accessing climate finance for inclusive, low-carbon transport in Indonesia. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2025/07/climate-finance-for-indonesian-transport.pdf

Chicago

O'Reilly, Kate, Gary Haq, and Jana Busch. Accessing climate finance for inclusive, low-carbon transport in Indonesia. Stockholm Environment Institute, 2025. https://www.sei.org/wp-content/uploads/2025/07/climate-finance-for-indonesian-transport.pdf.

Wikipedia

{{cite report |last1=O'Reilly |first1=Kate |last2=Haq |first2=Gary |last3=Busch |first3=Jana |title=Accessing climate finance for inclusive, low-carbon transport in Indonesia |publisher=Stockholm Environment Institute |date=July 2025 |url=https://www.sei.org/wp-content/uploads/2025/07/climate-finance-for-indonesian-transport.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oreilly2025accessing, author = {O'Reilly, Kate and Haq, Gary and Busch, Jana}, title = {{Accessing climate finance for inclusive, low-carbon transport in Indonesia}}, institution = {Stockholm Environment Institute}, year = {2025}, month = jul, url = {https://www.sei.org/wp-content/uploads/2025/07/climate-finance-for-indonesian-transport.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }