Indonesia should quadruple its annual investment target for new and renewable energy to more than US$8 billion by 2025 to reach energy transition goals, according to a new report published by the International Institute for Sustainable Development (IISD). The report, Leveraging Public Funding to Incentivize Private Investment in Renewable Energy in Indonesia, cites figures according to which Indonesia spent just $1.51 billion on renewables last year. That was “just 20 percent of what it needs to invest each year from 2021 to 2025 to reach 23 percent of new and renewable energy in the energy mix by 2025,” reads an IISD press release from Friday.
The country needs to take concrete measures to incentivize investment in low-carbon energy and meet its net-zero climate goals, according to the report, which suggests that the government use state budget spending and seek international help to attract private investment in renewable energy. It also urged the government to get state-owned enterprises to align with national climate goals and to use public infrastructure funding institutions, such as Indonesia Infrastructure Guarantee Fund (PT IIGF), PT Sarana Multi Infrastructure (PT SMI), and PT Indonesia Infrastructure Finance (PT IIF), to spur project development.
The NGO, headquartered in Winnipeg, Canada, makes the case that the government’s targets are far too low to meet the stated climate goals. “With the Ministry of Energy and Mineral Resources projecting that $37 billion would be required by 2025 to reach the 23 percent target, the country now needs to invest over $8 billion each year. And yet, the government currently targets $2.1 billion average annual investments.
”To mobilize private investments in green energy, Indonesia had to “increase the clarity and traceability of current financial flows and allocation of public financing for renewable energy projects,” the IISD suggested, arguing this would increase private investor confidence and trust from international funders. “Indonesia must act now to incentivize private investments and reverse the current trend, especially because supporting renewable energy development can significantly contribute to post-COVID-19 recovery and a green transition,” Theresia Betty Sumarno, lead author of the report, was quoted as saying in the press release.
Feb 25, 2022, The Jakarta Post