Climate change has impacted development progress and increased global inequality. Therefore, all emitters, both developed and developing countries, must implement climate change mitigation and adaptation actions. Indonesia is one of the developing countries that signed the Paris Agreement. In its NDC document, Indonesia has pledged to reduce greenhouse gases emission by 29% using domestic resources (unconditional) and 41% with international support (conditional) from the business as usual (BAU) scenario by 2030. This commitment gives Indonesia the right to take advantage of various types of support, including ICF opportunities offered by the ADB through the non-UNFCCC financial scheme and the Global Green Growth Institute through the UNFCCC financial mechanism. This paper explores to what extent ICF supports the achievement of Indonesia’s Nationally Deter mined Contribution (NDC) target. The study uses qualitative analysis to provide a general overview of ICF in Indonesia, its climate finance strategies, and the case study of the energy sector. The study finds that ICF in Indonesia continues to develop, albeit with many limitations. Several ICF channels could be utilized more optimally such as, loan and grant instruments. Indonesia cannot rely solely on international support to meet its enormous climate finance needs; it must develop innovative financing through various instruments, such as green sukuk. ICF also plays a role in facilitating the energy transition from coal-based to renewable energy sources and increasing energy efficiency.

This report is part of the project “Strengthen national climate policy implementation: Comparative empirical learning & creating linkage to climate finance (SNAPFI), see www.diw.de/snapfi. The project is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU) support this initiative on the basis of a decision adopted by the German Bundestag. More information on IKI can be found at www.international-climate-initiative.com.

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