United Towards A Decarbonised Energy System

To reach Indonesia’s NDC and NZE commitment, an estimated amount of approximately USD 280 billion until 2030, with the energy sector accounting for the majority of the needed financing, is needed. Public finance alone will not be sufficient to fulfill the financing needs of the measures. It is expected that the majority of total finance should involve the private sector. 

Strategically, employing scarce public finance will therefore be key to optimizing finance at scale. The role of public finance will be concentrated on offering specific key instruments to trigger investments by the private sector, or through blended finance. So far investments by the private sector in clean energy projects, are still falling short of what is required to achieve the targeted transformation. This is an indication that the framework condition in Indonesia may not yet offer adequate security to private-sector investment and guarantee a risk-appropriate return. Moreover, in the framework of the green economy that unites a variety of different fields (environment, development, labor, business) to outline an inclusive vision through the energy transition, a positive investment decision has to be based on a stringent illustration of key economic facts and if possible quantifiable indicators of the political, technical, and economic risks (e.g. internalization of environmental externalities, shifting subsidies and market distortion, etc.) and articulates the green economic paradigm. 

To contribute to finding better approaches and solutions on how to lay out the economic opportunity inherent in the energy transition for a green economy, as well as to optimize public finance and private investments in clean energy development, the ISEW 2023 will discuss it through the session: “Accelerating Finance and Investment to Support Energy Transition and Achieving Green Economy in Indonesia: How to Minimize Investment Risks and Optimize Investment Flows?”