Partnering to accelerate climate action in Indonesia

Blog Post CoolingForests & Land UseGlobal IntelligenceIndonesiaSustainable FinanceTransportation
Published November 1, 2021

Colin Kelly

Associate Director, Programs
Edgar van de Brug

Edgar van de Brug

IKEA Foundation

After an intensive strategy scoping exercise in collaboration with Indonesia-based civil society partners and other climate funders, ClimateWorks Foundation and the IKEA Foundation are launching a $12 million, three-year partnership to help accelerate climate action and philanthropic engagement in Indonesia.

A critical time for climate action. Despite the setbacks from Covid-19, this is an especially exciting time to be ramping up work on climate in Indonesia. While incumbent economic interests built around resource extraction and fossil fuels continue to exert their sway, the old paradigm that climate action and development are at odds is beginning to crumble. As trading partners, companies, and financiers around the world deepen their commitment to climate action, and the economics of renewables, EVs, and efficiency continue to improve, Indonesia is beginning to take serious steps on climate. Despite a decision not to increase the ambition of its 2030 NDC, Indonesia has advanced the timeframe for its net-zero target, planned how it will phase out its coal fleet, reduced its rate of deforestation for four years in a row, rolled out a modest carbon tax, and signaled that it is ready to be a leader on Electric Vehicles (EVs). Given the scale of Indonesia’s emissions and potential for further growth, supporting the experts and advocates working to turn this emerging ambition into sustained action is an absolutely essential part of the global response to climate change.

The new partnership will have a special focus on supporting ambitious, transparent, and measurable policy progress in the economic sectors that use the most energy — transportation, buildings, appliances, and heavy industries.

Early strategic priorities. At the highest level, the mission is to support Indonesia on its journey to net-zero emissions by midcentury through approaches that provide tangible benefits to Indonesian citizens, businesses, communities, and the environment. The new partnership will have a special focus on supporting ambitious, transparent, and measurable policy progress in the economic sectors that use the most energy — transportation, buildings, appliances, and heavy industries. These sectors currently do not receive philanthropic support commensurate with their emission reduction potential, and can also deliver tremendous benefits in terms of pollution reduction, improved health and comfort, climate resilience, and economic competitiveness. In tandem, the partnership will seek to elevate the role of the national and international business and investment communities in demonstrating that a path of ambitious climate action is the best way for Indonesia to attract investment and jobs, reduce risk and boost competitiveness over the long term. Early strategic priorities were developed in collaboration with other climate funders supporting the transition to net-zero, and grantmaking will seek to align with and amplify the impact of partners’ efforts. Finally, in concert with other interested funders, the initiative will explore how to build a long-term, climate-focused organizational presence in the country that is led and governed by Indonesians for the benefit of Indonesia.

Leveraging ClimateWorks’ existing assets. This is an exciting opportunity for ClimateWorks to bring together its organizational assets to help the IKEA Foundation achieve results in a specific geography. ClimateWorks’ Global Programs, including TransportationFinance, Clean Cooling, and Forests and Land Use are engaging with in-country partners to guide the strategy and develop project pipelines. ClimateWorks Global Intelligence played a key role in early scoping for the initiative and continues to provide a wealth of international expertise while supporting key workstreams focused on building a deadline-driven transition to net-zero emissions. Opportunities for south-south collaboration will continue to be explored in partnership with ClimateWorks’ programs focused on China and India. Finally, ClimateWorks’ commitment to collaboration with the larger funder community will allow us to learn from the in-country experience of peers, while aligning with and enhancing funder commitment to Indonesia going forward.

Helping build a thriving ecosystem. The stakes are high — a recently released assessment by Deloitte found that ambitious climate action across Southeast Asia as a whole can deliver economic benefits of $12.5 trillion by 2070 while inaction would result in losses of $28 trillion. Despite some lingering contradictions and blank spaces in Indonesia’s approach to addressing climate so far, climate leaders in Indonesia are optimistic about how positive shifts in finance, corporate risk perceptions, and policymaker ambition — coupled with rapidly declining costs for the technologies needed for the transition — are coming together to improve the likelihood of meaningful climate action in Indonesia. The IKEA Foundation and ClimateWorks are excited to contribute enabling resources so that the ecosystem necessary to achieve this transition can grow and thrive in the critical years ahead.