Indonesia is one of Asia’s largest emitters of greenhouse gases, with land use change and deforestation the primary culprits. The industry, power, and transport sectors dominate Indonesia’s energy-related carbon dioxide emissions. If Indonesia continues on the current energy consumption path, it will release greenhouse gas emissions that are nearly triple the current amount by 2025. 

The government of Indonesia is committed to mitigating climate change and has announced that the country will reduce greenhouse gas emissions by 26 percent by 2020. Fossil fuels dominate the country’s energy supply. To mitigate the local environmental impacts and diversify the fuel mix as a hedge against fossil fuel price volatility, the government is launching a program to develop 10,000 megawatts of generation capacity by 2014 through a program of predominantly renewable energy. 

In line with the government’s program, the CTF Investment Plan for Indonesia proposes CTF cofinancing of $400 million to support Indonesia’s goals of providing 17 percent of total energy use from renewable energy and improving energy efficiency by 30 percent by 2025. Specifically, the Investment Plan proposes CTF financing for two areas: the scale-up of large-scale geothermal power and the acceleration of initiatives to promote renewable energy (especially from biomass) and energy efficiency. CTF investments will mobilize financing of up to $2.7 billion from multilateral financiers, state-owned enterprises, and the private sector. 

Expected Results: Indonesia will accelerate the use of renewable energy by establishing its first geothermal exploration risk reduction fund and developing technical capacity through exchanges with other large geothermal power-producing countries. These advances are being made possible by CTF assistance for project preparation.