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
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.
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.