The Climate Investment Funds (CIF) is a multilateral fund established to finance and scale climate pilot projects in developing countries. Established in 2008 at the request of the G8 and G20, the CIF administers a collection of programs that help resource-strapped nations fight the impacts of climate change and accelerate the shift to a low-carbon economy. Through contributions from 14 donor countries, CIF supports more than 350 projects in 72 low and middle-income countries on the frontlines of the climate crisis.[1]
CIF partnerships have channeled more than $60 billion from governments and the private sector to projects such as the world's largest solar park, the first geothermal power plant in South America, and investments in Mexico’s wind power industry.[3][4][5] CIF supports 10 of the UN’s 17 Sustainable Development Goals (SDGs).[1]
Knowledge Hub | Climate Investment Funds
In March 2021, the Climate Investment Funds (CIF) established the Accelerating Coal Transition (ACT) Program to support developing countries that are heavily reliant on coal to accelerate the transition away from coal to renewable energy (RE) while ensuring a holistic, integrated, socially inclusive, and gender-equal transition. The program is structured around three pillars of governance, people and communities, and infrastructure. In October 2021, Indonesia, along with three other countries namely, South Africa, India and the Philippines, was selected as an ACT pilot country and was invited to develop its ACT Investment Plan (IP). This IP, developed by the Government of Indonesia (GoI) in collaboration with the Asian Development Bank (ADB) and the World Bank Group (WBG), is a business plan that identifies potential areas for ADB and WBG investment and support to initiate the accelerated retirement and repurposing of coal-fired power plants (CFPPs) and mines, and financing of clean energy alternatives, while also pro-actively addressing associated challenges linked to the energy transition as it applies to national strategies, people and communities, and land and infrastructure
Under its Nationally Determined Contributions (NDC) Indonesia has committed to reducing emissions by 29 per cent relative to a business-as-usual (BAU) baseline of 2.87 GT of carbon emission equivalent by 2030. With sufficient international support, it plans to reduce emissions by 41 per cent over the same period. On 21 July 2021, Indonesia submitted the Indonesia Long-Term Strategy for Low Carbon and Climate Resilience 2050 (LTS) to the United Nations Framework Convention on Climate Change (UNFCCC), which sets out a framework for reaching Net Zero emissions by 2060.
As such, the highly anticipated Presidential Regulation No. 112 of 2022 on the Acceleration of Renewable Energy Development for the Supply of Power (RE PR) was signed and enacted by President Joko Widodo on 13 September 2022. The RE PR creates a broad enabling framework for the clean energy transition and calls for the drafting of detailed roadmaps and implementing guidelines to address some of the historical bottlenecks in Indonesia’s RE development. The GoI has also identified a key partner for clean energy transition implementation, PT Sarana Multi Infrastruktur (Persero) (PT SMI), a state-owned enterprise overseen by the Ministry of Finance (MoF). MoF has assigned PT SMI as the Energy Transition Mechanism Country Platform (ETMCP) secretariat and fund manager. The ETMCP will play a critical role in coordinating various energy transition activities, channeling fiscal support where needed, and supporting the just transition framework and implementation.
Target outcomes: Avoided greenhouse gas emissions of up to [77] million tons carbon dioxide equivalent (CO2e) and mobilization of [US$2.2 billion] in MDB co-financing and over [US$1.3 billion] in commercial co-financing. Facilitated accelerated retirement of up to 2 GW of CFPP generation capacity [1,415] million tons of coal diversion, [150] hectares (Ha) of mine area reclaimed, reforested or restored, as well as [3,504] GWh in energy savings per annum from CFPP closure and repurposing. Increased installed RE and energy storage capacity of up to [550MW] and [380MWh], respectively.7
India and the People’s Republic of China (PRC) are the biggest destinations for Indonesian coal. Based on the NDCs of India and the PRC, Indonesia’s coal exports are expected to remain close to current levels for at least the next 10-15 years. It is estimated that China and India would have to cut coal consumption by at least 100 million tons/year (in aggregate) before Indonesia’s exports would be impacted. Coal mining, domestic trans-shipment, and exports represent about $80 billion per year in economic activity — nearly 8% of GDP.
Indonesia’s national energy plan (Rencana Umum Energi Nasional, RUEN) as officiated in Presidential Regulation No. 22/2017 states that Indonesia has a combined RE potential of 443.2 GW from renewable energy (RE), RE installed capacity only stood at 11.6 GW as of 2021. The GoI is pursuing its goal on achieving a 23% share of renewable energy in its primary energy mix by 2025 as stipulated in the National Energy Policy 2014. Since the policy was put in place, the RE as a share of primary energy supply increased from 5% in 2014 to 12% in 2021
Emission Trading System. A presidential regulation to provide a national framework for carbon pricing instruments, including an ETS, was signed in October 2021 (98/2021). Building on previous regulation, it was introduced in November 2017 and provides a first mandate for an emissions and/or waste permit trading system to be implemented by 2024. A voluntary and intensity‐based pilot ETS for the power sector was tested between March and August 2021. Participants traded allowances and offset credits stemming from RE generation. Initially, 84 coal‐fired plants, both PLN- and IPP-owned, were invited to participate, with 26 eventually taking part.
