The report has pointed to several sectors in which investment is both lucrative and good for the environment. (Reuters Photo/YT Haryono)
More than $274B Worth of Climate-Smart Investments Up for Grabs in Indonesia: IFC
BY : RATRI M. SINIWI
NOVEMBER 10, 2016
Jakarta. A new study by the World Bank’s International Finance Corporation, or IFC, revealed that the Paris Agreement climate change pact has opened up $23 trillion of opportunities in climate-smart investments in emerging markets from now to 2030.
IFC has estimated over $274 billion worth of investment opportunities in Indonesia for climate-smart projects in a variety of sectors, including renewable energy and urban infrastructure.
“Investment in renewable energy accounts for almost $23 billion by 2030, with under half of this [$9.3 billion] for biomass, and the other half for geothermal energy [$10 billion] and small hydropower [$3 billion],” IFC said in the report.
Meanwhile, with the population of the country expected to grow beyond 300 million by 2030, climate resilient buildings should also be growing in relation, especially in urban areas such as Jakarta, Riau, Banten, Yogyakarta and West Java.
“The low-carbon buildings sector in Indonesia should grow as a result of new green building codes and energy efficiency incentives, representing a $23.2 billion investment opportunity by 2020, while the transport and waste sectors are expected to require $250 billion in investment combined,” the report said.
With this finding, IFC believes that now is the best time for investors to bet money on climate-smart projects, particularly as smart policies are on the rise while the price of clean technologies decline.
As Indonesia aims to generate 23 percent of energy consumption through renewables by 2025, the outlook for investment in this sector seems bright.
“It is important to set ambitious goals – which is why IFC has pledged to increase our climate investments to a goal of $3.5 billion a year by 2020, and catalyze another $13 billion through other investors,” said IFC executive vice president Philippe Le Houérou in a statement on Tuesday (08/11).
To attract more investments in this sector, IFC suggests Indonesia align land development policies with climate goals and align efforts for Indonesia’s goals for nationally determined contributions (NDC) with the Financial Services Authority’s (OJK) sustainable finance roadmap.
The financier for emerging markets stated that the Indonesian government has improved policy framework for climate investments through the 13 policies, which has supported investments for green buildings and renewable energy projects.
In Indonesia, IFC has provided financial support to independent power producer Bajradaya Sentranusa through a $280 million loan, which will support the operations of a hydroelectric power plant in North Sumatra.