Sustainable Finance and Sharia Financing Become Options to Achieve Energy Transition Target

Vice President Ma’ruf Amin together with Minister of Finance Sri Mulyani Indrawati and Minister of Energy and Mineral Resources Arifin Tasrif at the G20 seminar series (27/07/2002). (Doc. Seminar Secretariat)

Jakarta, 28 July 2022 – Towards G20 Summit, Energy Transition Working Group (ETWG) Indonesia G20 2022 and T20 Indonesia conducted a seminar series titled “Unlocking Innovative Financing Schemes and Islamic Finance to Accelerate a Just Energy Transition in Emerging Economies”.

Three main issues under energy transition are accessibility, technology and financing. Prior to the G20 Summit in November this year, ETWG is expected to explore innovations, especially on technology, financing and discuss the best model to mobilize public and private financing for renewable energy. Head of ETWG Forum, Yudo D.Priaadi, said that unlocking and seizing financing opportunities will be essential for Indonesia in widening accessibility and inclusivity to create sustainable energy transition.

Responding to that, Chairman of The Board of Commissioner of The Indonesia Financial Services Authority Mahendra Siregar stated, “OJK committed to promote sustainable financing to ensure smooth transition toward a low carbon economy”.

“OJK supports the government in the realization of commitment in the Paris Agreement in regards to Net Zero Emission in 2050 by issuing several sustainable financing roadmap since 2015 where the second phase will be completed in 2021-2025 period”, he added.

In the meantime, Vice President of The Republic of Indonesia, Ma’aruf Amin explained, sustainable financing in Indonesia can be done side by side with the Sharia financing. The Sharia principle upholds the earth’s sustainability. Hence, Islamic financing has huge potential to finance New and Renewable Energy, for instance through waqf, sukuk and bonds.

He added,”Sukuk’s innovation and promotion need to be increased in order to attract more public funding”.

Addressing that statement, Minister of Finance of The Republic of Indonesia, Sri Mulyani Indrawati, agrees that sukuk waqf can be chosen as a great option to achieve energy transition target. 

From a framework side, she explained that the energy transition priority will be accommodated through Energy Transition Mechanism (ETM) that was launched last year. ETM will serve as a framework in providing necessary financing for national energy transition acceleration by mobilizing commercial and noncommercial fund sources in a sustainable way. This platform enables the increasing of Indonesia’s energy infrastructure and expedites clean energy transition toward NZE in a just/ fair and affordable manner.

Anna Skarbek, CEO Climateworks Centre, as one of the seminar secretariat’s partners added, “The momentum of energy transition financing in Indonesia is visible. ETM Platform under the Ministry of Finance through PT Sarana Multi Infrastruktur (SMI) and Asian Development Bank (ADB) is a concrete example that shows this country took steps to attract more investment and create various financing opportunities schemes for energy transition”.

This seminar series was hosted by Energy Transition Working Group (ETWG) Indonesia G20 2022 and T20 Indonesia, in collaboration with the Centre For Policy Development (CPD) Australia, Climateworks Centre, International Institute for Sustainable Development (IISD), Indonesia Research Institute for Decarbonization (IRID), and the Institute for Essential Services Reform (IESR), supported by Asia Investor Group on Climate Change (AIGCC).

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