Clean Energy Finance and Investment in Indonesia webinar, 26 July 2023, Paris OECD

1. THE ROLE OF
INTERNATIONAL ORGANISATIONS
IN MOBILISING CLEAN ENERGY
FINANCE AND INVESTMENT
1
Geraldine ANG
CEFIM Team Lead
Clean Energy Finance and Investment in Indonesia
ESDM Webinar
26 July 2023

2. 2
About the OECD
• The Organisation for Economic Co-operation and Development (OECD) is an
international organisation that works to build better policies for better lives.
• Together with governments, policy makers and citizens, we work on establishing
evidence-based international standards and finding solutions to a range of social,
economic and environmental challenges.
• The OECD brings together Member countries and a range of partners that
collaborate on key global issues at national, regional and local levels. OECD countries
and Key Partners represent about 80% of world trade and investment.

3. The Clean Energy
Transition in Indonesia
3

4. 4
Breakdown of Indonesia’s carbon emissions
Source: OECD/IEA (2022)

5. 5
Indonesia’s power capacity expansion to 2050
for various 1.5C pathways
Source: IRENA (2022) PES: Planned Energy Scenario
Solar PV investments will play a key role regardless of the 1.5C pathway

6. 6
A 6-fold increase in renewable energy capacity is
needed to reach the RUEN targets
0
5
10
15
20
25
30
35
40
45
50
2019 2025 RUEN* targets
GW Other**
Waste-to-energy
Bioenergy
Wind
Solar
Small hydro
Hydro
Geothermal
Source: OECD based on MEMR and PLN statistics as well as Presidential Regulation No. 22/2017 Concerning
General Planning for National Energy.
Renewable energy represented 16% of the total installed electricity generation capacity of 74.5 GW in 2021
6x

7. 7
Average annual investment in the electricity sector in
Indonesia in the Net Zero Emissions by 2050 Scenario
Source: OECD/IEA (2022)
Significant boosts to investment for low emissions generation and networks enables accelerated decarbonisation
of the power sector in the Net Zero Emissions relative to the Announced Pledges Scenario (APS)

8. 8
Clean energy investment remains tilted towards RE
and overall falls short of investment needs
Source: Source: OECD calculations based on MEMR annual performance reports from 2011-19.
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2011 2012 2013 2014 2015 2016 2017 2018 2019
USD Million, 2015
constant prices
Energy conservation
New and renewable energy
Bioenergy
Geothermal
Total (undifferentiated)
Annual renewable power
investment needs to 2025
(excl. large hydro)

9. 6 strategic steps identified in the Joint IEA-MEMR’s Roadmap to Net Zero Emissions in
Indonesia for the industry sector:
9
IEA-MEMR Roadmap to Net Zero Emissions in Indonesia
Fuel switch
Energy
efficiency
Electrification in
industry
Hydrogen Biomass
Carbon Capture
and Storage
(CCS)
Electricity share
increase from
24% in 2020 to
51% in 2060
Reduce coal share
from 33% in 2020
to 7% in 2060
Reduce natural
gas share from
27% in 2020 to
15% in 2060
Reduce specific
energy
consumption of
equipment by
50%-60% by
2060
For low
temperature
processes (e.g.,
food &
beverage, textile,
electronic
devices),
assuming 55%
electrification in
2060
Replace fossil
natural gas by
green hydrogen
in high-
temperature
processes from
2036
Replace fossil
fuels with
biomass in
high-
temperature
processes,
especially in the
cement industry
Use CCS in the
cement and steel
sectors starting
from 2036
Potential to
reduce 13 million
tonnes CO2
emissions from
the use of coal
and gas in these
sectors.

10. Unlocking private investment for the clean
energy transition
Breakdown of Investable AUM and the share of Infrastructure Investment

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Key priorities to mobilising finance and
investment for a Just Energy Transition
• Financing a Just Energy Transition needs to be inclusive, increasing access
to finance for all and policies that increase both domestic and international
sources of finance and investment
• Key priorities include:
1. strengthening domestic enabling conditions for clean energy investment
2. Creating pipelines of bankable projects
3. Catalysing finance, including through blended finance, investment
vehicles, derisking financing instruments, platforms for clean energy
projects and transaction enablers
4. Aligning financial regulations with clean energy and climate objectives
and building capacity amongst financial actors.

12. OECD Clean Energy Finance
and Investment Mobilisation
(CEFIM) programme
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About the CEFIM Programme
CEFIM country partners: Colombia, Egypt,
India, Indonesia, Philippines, South Africa,
Thailand and Viet Nam
OECD programme funded by Australia, Canada,
Denmark, Egypt and Germany
Aim: to help emerging economies accelerate clean
energy finance and investment by strengthening
domestic enabling conditions
Scope: renewable electricity, energy efficiency in
buildings and industry decarbonisation
Activities:

14. 14
Examples of CEFIM demand-driven country
activities

15. • applies analytical framework through flexible
and demand-driven approach
• builds on OECD experience with Investment
Policy and Environmental Performance
Reviews
• undertakes a holistic analysis of policy areas
that affect the finance and investment
environment for clean energy
• considers how policies reinforce each other
15
Clean Energy Finance and Investment Policy Review
CEFI Policy Review of Indonesia
CEFI Policy Review of Viet Nam

16. CEFI Policy Review of Indonesia
Key recommendations
• Streamline policies and regulations as part of
current reforms
• Shift to public, competitive tenders to
procure renewables
• International assistance can support
Indonesia accelerate its clean energy
transition
• Development funds could support blended
finance mechanisms
CEFI Policy Review
of Indonesia

17. Solutions for a net-zero transition requires
understanding of industry / country considerations
Technology
transfer & R&D
Carbon
Markets
Asset
stranding
High costs of
transition &
competitiveness
A flexible approach is
needed to develop
solutions that encompass
many considerations for
emerging and developing
economies
• Improving enabling market
conditions
• Financing

18. • For project developers and
policy makers
• Increase financial
awareness to improve
project bankability and
policies
Energy Efficiency
Finance Course
• For financial institutions
• Enhance capacity to
undertake project due
diligence
• Develop new innovative
financing mechanisms
Clean Energy
Finance and
Investment Course • For project developers and
policy makers
• Increase financial
awareness to improve
project bankability and
policies
Renewable Energy
Finance Course
OECD Clean Energy Finance and Investment Training
Objective: Breakdown silos across
finance and energy to develop financing
solutions that can scale private finance
for clean energy

19. • ESDM’s HR Development Agency and RE and EE Training Centre together with OJK
Institute co-organise the CEFI training programme
• Training will be delivered in partnership with GiZ Clean Energy, Affordable, and Secure
Energy for South East Asia (Case) and the Energy Transition Partnership (ETP), UN OPS,
and USAID and will build on past training activities
• RE and EE project developers, policy makers and financial institutions will participate in
the training
• 3-year annual training week with a training of trainers session held in Year 3
OECD contribution to support HR development towards
NZE: Clean Energy Finance and Investment Training
H1 2022 31 Oct – 4 Nov 2022 Q2 2023 H1 2024
Course development
Training of trainers session
3rd Training Week
2nd Training Week
1st Training Week

20. • Currently, we have OJK secondee to CEFIM. We found that this program is crucial to foster
human capital development and knowledge sharing on clean energy finance and investment
and provide international exposure, capacity building and networking opportunities.
• We are very interested to exploring the potential to establish an MEMR secondment program
to the OECD CEFIM Programme. Together with OJK secondee, it is expected that this
program deliver a tangible output to help accelerate clean energy finance and investment by
strengthening domestic enabling conditions
• Potential topic for MEMR secondment programme
• Energy Efficiency guideline for financial institutions
• Needs assessment of Energy Saving Insurance (ESI) for emerging economies
• Tailored blended finance guidance for project, sector, and country-specific risk
20
OECD contribution to support HR development
towards NZE: Secondment program

21. • FGD series – Transition Financing in Indonesia (1st FGD on March
21 2023)
• FGD series – Carbon trading for Financial Institution in Indonesia
• Workshop on climate risk stress testing framework for banking
industry
21
CEFIM relevant activities to support clean energy
transitions

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Please visit our webpage:
www.oecd.org/cefim/
For more information, please contact:
Geraldine Ang
Geraldine.ANG@oecd.org
Hakimul Batih
Hakimul.BATIH@oecd.org