COP31 Antalya, Türkiye, 11 November 2026 – Climate Policy Initiative (CPI) Indonesia has published a new discussion paper, Just Energy Transition Fund, proposing a dedicated financing mechanism to support community-based renewable energy development, strengthen local livelihoods, and drive economic diversification and transformation in Indonesia.

The publication was introduced during CPI’s panel discussion, “Advancing Just Energy Transition Finance (JETF) for Subnational Economic Diversification and Transformation in Indonesia,” at the Regional Climate Foundations (RCF) Pavilion during the United Nations Framework Convention on Climate Change (UNFCCC) 31st Conference of the Parties (COP31). The discussion brought together government, philanthropic, and climate finance stakeholders to explore financing solutions for a people-centered energy transition.

Indonesia requires approximately USD 30.3 billion in annual investment to achieve its net-zero emissions target by 2060. However, CPI’s analysis shows that clean power generation investments averaged only USD 1.2 billion annually between 2019 and 2023. Financing challenges are particularly acute for small-scale renewable energy projects in rural and low-income communities, which remain heavily reliant on public budgets and grants.

To address these challenges, CPI proposes the establishment of a Just Energy Transition Fund (JETF) through three complementary funding windows:

• Viability Gap Funding: Reducing capital cost of renewable energy deployment to deliver affordable electricity tariffs.
• Upskilling and Reskilling Funding: Strengthening local technical capacity for the operation and maintenance of renewable energy systems.
• Productive Use of Energy (PuE) Funding: Supporting micro, small, and medium enterprises (MSMEs), cooperatives, and village enterprises in utilizing renewable energy to strengthen local economies, particularly in agriculture and fisheries.

Tiza Mafira, Director of CPI Indonesia, emphasized the importance of placing communities at the center of energy transition financing. “Just energy transition is not only about expanding access to clean electricity, but also about creating economic opportunities for local communities. Through the proposed JETF, we aim to connect renewable energy investment with better livelihoods, stronger local businesses, and more inclusive economic growth,” said Tiza.

The discussion paper recommends a three-phase funding transition (Initiation, Transition, and Diversification/Maturity Phase) financing approach, to diversify financing sources, reduce investment risks, and gradually attract greater private-sector participation. It also identifies the Indonesia Environment Fund (Badan Pengelola Dana Lingkungan Hidup/BPDLH) as the strongest potential fund manager, considering its institutional mandate and experience in managing environmental financing.

Joko Tri Haryanto, Executive Director of BPDLH, called for cross-sector collaboration to channel environmental finance into local economies. “A just energy transition requires financing that bridges investment gaps, manages risk, and delivers tangible benefits to communities,” he noted.

The paper further recommends that public and philanthropic funding provide initial capital to attract private investors, alongside developing project pipelines in coordination with subnational governments and local developers.

Maryati Abdullah, Program Officer at the Ford Foundation, underscored the role of philanthropy in advancing an inclusive energy transition. “Philanthropic funding can be catalytic, supporting community-level initiatives that may not yet attract commercial investment. Equally important is ensuring that local communities have a voice in the transition and that its economic and social benefits are shared equitably,” Maryati concluded.

The COP31 discussion serves as a platform for stakeholder feedback and potential partnerships toward establishing the proposed JETF in Indonesia, with opportunities for replication across Southeast Asia.

Read CPI’s full discussion paper here:
https://www.climatepolicyinitiative.org/publication/indonesia-just-energy-transition-fund/


About CPI
CPI is an advisory organization with deep expertise in finance and policy. Our mission is to help governments and businesses drive economic growth while addressing climate change. CPI has seven offices around the world in Austria, Brazil, India, Indonesia, Italy, South Africa, the UK, and the US. In Indonesia, CPI focuses on supporting the country’s transition journey towards net zero and climate-resilient economy. We work closely with strategic government partners, including the Ministry of Finance, Ministry of Energy and Mineral Resources, JETP Delivery Unit, Ministry of Environment, Ministry of Forestry, Indonesia Financial Services Authority, and PT Sarana Multi Infrastruktur.  

Contact:  

Rindo Saio
Rindo.Saio@cpiglobal.org