Thanks to tremendous renewable energy and energy efficiency potential and a stable, dynamic economy, Indonesia has become a coveted destination for investors in the clean energy sector. Clean energy investment, however, remains far below the level needed to realise Indonesia’s ambitious clean energy and sustainable finance goals. Instead, investment in fossil fuels continues to dominate.
This first Clean Energy Finance and Investment Policy Review of Indonesia supports efforts to reverse these trends and achieve a clean energy transition. The report provides a comprehensive overview of the current policy framework, highlighting progress and identifying untapped opportunities for strengthening policy interventions that can help scale up clean energy finance and investment. It also provides a number of tailored recommendations for the Government of Indonesia and development partners. The Review was undertaken within the OECD Clean Energy Finance and Investment Mobilisation (CEFIM) Programme, which supports governments in emerging economies to unlock finance and investment in clean energy.
Green growth means achieving economic growth while reducing pollution and greenhouse gas emissions, minimising waste and improving efficiency in the use of natural resources. This requires long-term investment and sustained financing. Public budgets have traditionally been an important source of green infrastructure financing. But given the strains on public finances, large-scale private investment will be needed for the transition towards a green economy. Governments have a key role to play in strengthening domestic policy frameworks to catalyse and mobilise private finance and investment in support of green growth. It is necessary to better align and reform policies across the regulatory spectrum to overcome barriers to green investment, and to provide an enabling environment that can attract both domestic and international investment. This OECD series on Green Finance and Investment provides policy analysis and guidance to scale up financing and investment in technologies, infrastructure and companies that will be critical in the transition to a low-carbon, climate-resilient and resource-efficient economy.