Perpustakaan Digital ITB

Indonesia faces a significant climate financing gap, requiring over USD 280 billion by 2030 to align with its Paris Agreement commitments, yet current flows remain insufficient due to regulatory uncertainty, limited pipelines of bankable projects, and weak monitoring that risks greenwashing. While innovative instruments such as sovereign green sukuk, blended finance platforms, and the IDX Carbon market have positioned the country as a regional frontrunner, mobilizing large-scale private investment remains constrained. Key challenges include insufficient private capital, underdeveloped project preparation capacity, and fragmented regulatory frameworks across Southeast Asia. To address these barriers, policy interventions must focus on strengthening regulatory clarity and disclosure standards, mobilizing public and development finance to derisk investments, expanding bankable project pipelines, and enhancing transparency through robust MRV systems. Opportunities lie in scaling blended finance, issuing thematic sovereign and corporate green bonds, leveraging Just Energy Transition Partnerships (JETPs), advancing digital green fintech solutions, and pursuing regional pooled financing mechanisms. With the right mix of policy reforms, partnerships, and monitoring integrity, Indonesia can unlock private capital at scale, reduce reliance on concessional finance, and establish itself as a leader in sustainable finance for the Global South— turning climate ambition into actionable investment pathways.