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The report argues that Indonesia's biomass co-firing policy, led by PT Perusahaan Listrik Negara (PLN), threatens natural forests. To achieve 10% co-firing across 107 coal power plants, Trend Asia estimates a need for at least 2.33 million hectares of energy wood plantations. Based on historical data showing 38% of industrial timber plantations were established via deforestation, the report warns that this policy could increase annual deforestation rates from 630 thousand to 2.1 million hectares. It further highlights contradictions between the government's Enhanced NDC emission targets and its increasing deforestation quotas, while noting that biomass burning creates a 'carbon debt' rather than being carbon neutral.

The document argues that Indonesia's heavy reliance on coal and oil and gas creates significant social and economic risks that necessitate a 'just transition' framework. It highlights a lack of institutionalized social dialogue and the continued use of fossil fuel subsidies and recovery funding for the fossil fuel sector. The author recommends institutionalizing tripartite social dialogue, diversifying the economy in fossil-fuel-dependent regions, and utilizing state-owned enterprises to drive a green recovery through conditionalities.

The report identifies 78 support measures for Indonesia's energy sector between FY 2016 and FY 2020, finding that 94.1% of the estimated value (IDR 1,153 trillion) supported fossil fuels, while renewable energy received less than 1%. The analysis highlights a significant imbalance in funding, with the majority of support benefiting producers over consumers and heavily favoring oil, gas, coal, and fossil-fuel-based electricity, thereby potentially hindering Indonesia's net-zero 2060 goal.

The report inventories 78 support measures for Indonesia's energy sector between FY 2016 and FY 2020, covering oil and gas, coal, electricity, renewable energy, biofuels, and electric vehicles (EVs). It details various mechanisms including direct fund transfers, tax exemptions, and price supports, noting that only 37% of these measures were quantified due to data limitations.

The report finds that Jakarta's urban climate finance from 2015-2019 totaled USD 44.9 billion, heavily dominated by public funding and a single mega-project, the Giant Sea Wall. Despite having the highest fiscal capacity in Indonesia, Jakarta underutilizes private finance, which accounted for only 2% of total climate investment. The study recommends better alignment between the city, the central government, and satellite cities, alongside the adoption of innovative financing tools like green municipal bonds to reduce reliance on central government funding, especially given plans to move the national capital.

The report finds that Jakarta's climate finance from 2015-2019 was dominated by public funding, totaling USD 44.9 billion across 37 projects, with 83% of this amount committed to the controversial Giant Sea Wall project. Despite having the highest fiscal capacity in Indonesia, Jakarta's environmental spending remained low at 8.6% of its budget in 2017-2018, and private sector investment accounted for only 2% of total climate funding. The document recommends better alignment between Jakarta, the central government, and satellite cities, the implementation of climate budget tagging, and the use of innovative financial instruments like municipal green bonds to mobilize private capital, especially in anticipation of the capital city's relocation.

The report finds that 2,277 million tonnes per annum (mtpa) of new coal mining capacity is under development globally, with 614 mtpa already under construction. This expansion is heavily concentrated in China, Australia, India, and Russia, which together represent 77% of global development. The authors argue that this trajectory is incompatible with the Paris Agreement, as coal production would need to decline 11% annually through 2030 to limit warming to 1.5°C. If all proposed capacity is realized, 2030 production would be over four times the 1.5°C-compliant pathway. The report also highlights a potential $91 billion USD in stranded assets and significant greenhouse gas emissions, estimated between 5,000 and 5,800 Mt of CO2-equivalent annually from these projects.

The report argues that existing village development indices in Indonesia fail to adequately measure or reward environmental performance. To address this, the Climate Policy Initiative (CPI) proposes the Indeks Desa Membangun Plus (IDM+), which adds 10 ecological indicators to the existing Indeks Desa Membangun (IDM). The report suggests using IDM+ as a basis for Ecological Fiscal Transfers (EFT), specifically through a mixed fiscal instrument approach in Berau Regency, East Kalimantan. This approach combines performance-based incentives via the Alokasi Dana Desa (ADD) with affirmative action funding for low-performing villages, potentially utilizing untapped reforestation funds (DBH DR).

The report argues that diversifying oil palm plantations with crops like maize and cocoa can significantly increase smallholder incomes in Berau, East Kalimantan, compared to monocropping. It identifies that oil palm alone often fails to meet minimum living costs and exposes farmers to price volatility. The study recommends a strategy of diversification starting when oil palm reaches peak productivity (around year 10) to ensure positive cash flow and bankability. Key financial instruments proposed to support this transition include Kredit Usaha Rakyat (KUR), credit guarantee schemes, and maize crop insurance. The report emphasizes that diversification must occur on existing allocated land to avoid deforestation.

The report analyzes the economic risks of palm oil monocropping for independent smallholders in Berau, Indonesia, finding that palm oil returns are often below minimum living costs. It argues that diversifying into crops like maize and cocoa can significantly increase revenue—potentially by up to 825% for maize—while enhancing regional food security and economic stability. The study recommends that the Berau government strengthen priority economic programs, facilitate access to agricultural financing and insurance, and implement environmental safeguards for alternative crops.

The document argues that existing village-level evaluation tools in Indonesia, such as the IDM and IPD, are inadequate for measuring environmental performance and mainstreaming Sustainable Development Goals (SDGs). To address this, the Climate Policy Initiative (CPI) proposes the Sustainable Village Development Index (IDM+), which adds 10 ecological indicators covering land-use, natural resource management, and climate actions to the existing index. Using Berau District in East Kalimantan as a case study, the paper demonstrates how IDM+ can be linked to fiscal instruments like Village Fund Allocation (ADD) and Financial Assistance (Bantuan Keuangan Kabupaten) to reward high-performing villages while providing affirmative support to low-performing ones. The author recommends that the central government incorporate IDM+ into the national IDM and that local governments ensure transparent implementation and capacity building.

The report argues that existing village-level evaluation tools in Indonesia, such as the Village Development Index (IDM), are inadequate for measuring and rewarding environmental sustainability. To address this, the Climate Policy Initiative (CPI) proposes the 'IDM+', which adds 10 ecological indicators covering land-use, natural resource management, and climate actions. Using Berau Regency in East Kalimantan as a case study, the report demonstrates how this index can underpin Ecological Fiscal Transfers (EFTs) to reward high-performing villages. It recommends a mixed fiscal approach—combining reformulated Village Fund Allocations (ADD) with targeted financial assistance—to incentivize green growth while supporting low-performing villages.

The report argues that independent palm oil smallholders in Berau face significant economic risks due to monocropping and low productivity, with returns often falling far below the regional minimum wage. Through financial modelling, the study finds that diversifying into maize and cocoa can substantially increase revenue—potentially up to 825% more than monocropping—while reducing sensitivity to market price volatility. It recommends that diversification begin during the peak productivity of palm oil trees (around year 10) to ensure bankability and positive cash flow. To facilitate this transition, the report suggests leveraging financial instruments such as the Kredit Usaha Rakyat (KUR) interest rate subsidy, credit guarantee schemes, and maize insurance, while strengthening local programs like PRUKADES and farmers' corporation plantation zones.

The author contends that Indonesia's COVID-19 recovery stimulus should shift away from fossil fuel support toward renewable energy, sustainable agriculture, and decentralized energy systems to ensure long-term economic stability and climate resilience.

The report analyzes the economic fragility of Berau, East Kalimantan, caused by its heavy reliance on coal mining, which contributes over 60% of its GRDP. While the district is shifting toward palm oil, the study warns that mono-cropping palm oil risks replicating the same commodity-dependency trap. It recommends a transition plan based on increasing productivity and efficiency over land expansion, diversifying into high-value crops like pepper and cocoa, and developing downstream processing refineries to capture added value. Additionally, the report suggests optimizing government revenue through 'Own-Source Revenue' and implementing innovative ecological fiscal transfer mechanisms to reward sustainable land management.

The report analyzes the economic fragility of Berau Regency due to its heavy reliance on coal mining and the risks of replacing it with a palm oil monoculture. It argues for a multi-dimensional transition focusing on palm oil productivity efficiency over expansion, diversification into high-value crops like pepper and cocoa, and the development of downstream processing industries. The document also proposes optimizing local government revenue and implementing innovative ecological fiscal transfer mechanisms to incentivize sustainable land management.

The report analyzes Indonesia's shift from a high fiscal reliance on oil and gas revenues to a more diversified economy. It highlights a critical imbalance where government revenues from fossil fuel production are largely offset by inefficient consumption subsidies that disproportionately benefit wealthy households. The document warns of the risk of stranded assets valued between USD 200–300 billion and argues for phasing out fossil fuel subsidies to create fiscal space for renewable energy and social development.

The report analyzes the palm oil sector in Berau, East Kalimantan, finding that the region can meet its production targets and mill capacities without further land expansion by focusing on productivity increases. While corporate plantations operate efficiently, smallholders face significant barriers, including lack of land certification, limited access to finance, and inefficient transport routes. The report recommends strengthening smallholder cooperatives, improving financial access, and exploring the feasibility of local CPO refineries to increase regional value-add.

The report finds that Berau can meet its palm oil production needs and fulfill mill capacities by 2021-2023 by improving agricultural practices and reaching 90% optimum productivity, eliminating the need for further land expansion. While company plantations operate efficiently, independent smallholders face significant barriers, including lack of land certificates, limited access to finance, and inefficient transport routes to mills. The region lacks CPO refineries, resulting in most crude palm oil being exported to other provinces or Malaysia. The authors recommend strengthening smallholder cooperatives, improving bankability, and analyzing the business case for local refineries to increase regional value addition.

The document outlines the environmental risks associated with the EU-Indonesia FTA, specifically regarding palm oil and timber trade, and proposes specific textual amendments and structural safeguards to ensure the agreement supports climate goals and human rights.