Financing Climate & Sustainable Development
Financing Indonesia’s Green Industrialization: System Pathways, Structural Diagnosis, and Tailored Solutions
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Indonesia’s energy transition requires roughly USD 140 billion annually through 2050. The difficulty is allocation, not volume: only around 3 percent of private financial sector investment is climate-aligned, while roughly 66 percent of tracked power sector financing continues to flow to coal, including the captive coal serving nickel processing.
This report diagnoses that misallocation and identifies the instruments that would correct it. It traces four constraints—a structural cost-of-capital premium, an asymmetry between balance-sheet and project finance, a price stack and contracting architecture built for coal and for single counterparties, and a missing regulatory foundation for circularity—and argues that financing instruments work when matched to the specific risk blocking a specific transaction. It proposes a three-phase sequence and maps recommendations institution by institution.
