SUBSIDISED support from wealthier nations and public-private partnerships such as blended finance are key to helping Asia transition to a cleaner and more sustainable economic model, panellists at sustainability conference Ecosperity said on Tuesday (Jun 6).

Speaking on Indonesia’s decarbonisation efforts, the country’s Coordinating Minister of Maritime and Investment Affairs Luhut Binsar Pandjaitan said: “You have a big fund, put it together using blended finance to fund this programme. The rest? We are ready. Don’t disturb our economic growth. Because we like to be a high-income country.”

He added: “So, to all the foreign countries, to all the banks, please understand that we don’t need you lecturing us (on our transition plans) any more.”

Luhut, whose country has come under scrutiny for its net-zero plans and efforts, said that Indonesia has no shortage of opportunities and ambition for decarbonisation. Pulling up a slide that detailed the country’s plans to decarbonise its power sector, he referred to intentions to reduce coal dependency through transmission lines and renewable energy.

He also cited the recently announced Just Energy Transition Partnership (JETP) between Indonesia and its international partners, under which an initial US$20 billion will be mobilised over the next three to five years towards Indonesia’s adoption of renewable energy.

“We understand (what we need to do). What we need today is action – concrete action – (but) we never see the money,” he said.

A NEWSLETTER FOR YOU

Friday, 12.30 pm

ESG Insights

An exclusive weekly report on the latest environmental, social and governance issues.

Sign Up

The missing piece? Affordable financing.

“We hope the international community will understand that if you give a loan to Indonesia, it cannot be at a commercial interest rate.”

Acknowledging the Indonesian minister’s remarks was fellow panellist Catherine McKenna, chair of the United Nations (UN) High-Level Expert Group on Net-Zero Commitments of Non-State Entities, and former minister of environment, climate change and infrastructure of Canada.

“Often, you hear people saying, ‘Oh, Indonesia, it’s really hard’. But you’re sitting in New York; have you been to Indonesia? They actually know what they want to do. So you’re going to have to dig a bit deeper. And I hear a lot about currency risk, credit risks – we need to address real risk, but sometimes there’s an overstatement of risk.”

She added: “There’s lots of money on the one hand, and there’s lots of opportunity on the other, could we all just dig a bit deeper, and just be practical and just figure out how to do it? I hear the minister is open for business. I’ve never heard such great pitching.”

Singapore’s Minister for Sustainability and the Environment, Grace Fu, said in her keynote address at the event that international cooperation is vital in mobilising and enhancing access to technology and finance, especially in developing countries, to enable greater global ambition.

She also stressed the need for the public and private sectors to come together to finance net-zero goals, citing a McKinsey report that said achieving net-zero by 2050 would require US$9.2 trillion of climate investments per year globally.

“But we are coming up short – by about a third – of US$3.5 trillion a year. Public funds alone cannot meet this shortfall, while the risk return profile of many green projects is not attractive enough for private funds,” she said.

“A breakthrough that can address this issue is the scaling of blended finance. Blended finance is public, multilateral, or philanthropic funding coming in as catalytic capital to improve the bankability of green products and encourage private investments.”

Fu added that another breakthrough in finance would be the development of credible carbon markets. “Carbon credits are key instruments that channel financing to mitigation projects, which will otherwise not be bankable nor implementable. It is a critical enabler to scale decarbonisation projects around the world.”