Indonesia

With nearly 1.5 gigatons of CO 2 equivalent emitted annually, Indonesia is one of the world’s largest emitters of greenhouse gases. This is mainly due to deforestation, land-use change, and the significant use of fossil fuels for energy production and transport.

AFD is supporting Indonesia in its commitment to energy transition and achieving carbon neutrality in the electricity sector by 2050. Our funds have contributed to State reform in the sector, investments by the national electric operator (PLN) through network renovation projects and loans to private and public operators to fund small renewable energy projects through credit lines to the financial institution PT-SMI.

Our future funding will be part of the just Energy Transition Partnership, an alliance between Indonesia and its partner countries to accelerate its energy transition. 

Proparco, AFD Group’s private sector subsidiary, will support independent energy producers, primarily through loans. 

Indonesia is the world's second largest producer of fishery products. It is also the second largest producer of plastic waste that ends up in the ocean. The country is a hotspot for biodiversity. It is home to the third largest rainforest in the world, yet it is also one of the largest contributors to deforestation (although the rate of deforestation has dropped significantly in recent years). 

AFD is focusing its efforts on conserving natural coastal and marine environments, an area in which it has recognized experience in the country. AFD’s objectives include capacity-building for Indonesian institutions to increase their knowledge of the environment (fishing resources, oceanography, marine meteorology, blue carbon) and promoting the sustainable development of a blue economy (modernization of fishing ports based on an eco-certification approach, traceability of seafood products). Together with KfW and the Asian Development Bank, AFD also intends to support the implementation of the national action plan to reduce plastic debris in the ocean. 

Indonesia wants to develop infrastructure and public services, which are absolutely essential in responding to the increase in urbanization and tackling territorial inequalities. 

AFD supports the country by contributing to funding for sustainable infrastructure and capacity-building initiatives for the institutions that are in charge of its management. Given the needs for urban mobility and the sector’s contribution to greenhouse gas emissions, AFD is prioritizing the implementation of integrated and inclusive urban transport projects and strengthening the resilience of territories to natural disasters.

Credit lines for public banks could be used to promote the development of other urban services, such as water and sanitation.

The financial system plays an important role in funding the energy transition and low-carbon infrastructure. AFD supports financial transition that promotes the allocation of capital in keeping with the Paris Agreement and contributes to managing climate-related risks to the financial system.

AFD therefore intends to strengthen its collaboration with public banks by setting up credit lines and providing technical support to improve their internal practices and procedures or to integrate climate risk into their operations. It is also studying the possibility of supporting the Indonesia financial services Authority (OJK) to promote sustainable finance principles. This would include integrating environmental and social risks and conducting climate stress tests.