Sustainable Development

Thanks to tremendous renewable energy and energy efficiency potential and a stable, dynamic economy, Indonesia has become a coveted destination for investors in the clean energy sector. Clean energy investment, however, remains far below the level needed to realise Indonesia’s ambitious clean energy and sustainable finance goals. Instead, investment in fossil fuels continues to dominate. This first Clean Energy Finance and Investment Policy Review of Indonesia supports efforts to reverse these trends and achieve a clean energy transition. The report provides a comprehensive overview of the current policy framework, highlighting progress and identifying untapped opportunities for strengthening policy interventions that can help scale up clean energy finance and investment. It also provides a number of tailored recommendations for the Government of Indonesia and development partners. The Review was undertaken within the OECD Clean Energy Finance and Investment Mobilisation (CEFIM) Programme, which supports governments in emerging economies to unlock finance and investment in clean energy.

Indonesia is the world’s fourth most populated country, and the largest archipelagic one. Vibrant economic growth has lifted millions of people out of poverty. Economic success, however, has come at a high environmental cost. Rapid land-use change and reliance on fossil energy make Indonesia one of the world’s largest greenhouse gas emitters. Deforestation and pollution are putting pressure on its megadiverse ecosystems. Environmental services such as water supply, sanitation and waste management need to be further expanded and improved. Advancing to a greener economy will require continued efforts to develop policies, strengthen institutions and secure sufficient resources. This is the first Green Growth Policy Review of Indonesia. It examines progress towards sustainable development and green growth, with a special emphasis on the nexus of land use, ecosystems and climate change.

Asian cities are particularly vulnerable to risks associated with natural disasters. While they are exposed to various types of natural hazards, flooding and other water-related disasters pose particularly significant risks and undermine long-term economic growth, especially in coastal cities. Managing such natural disaster risks is an essential component of urban policies in fast-growing Southeast Asian cities, especially as the impacts of climate change worsen. In addition to providing a framework for assessing disaster risk management policies in cities, this report also presents the results of assessment and locally tailored policy recommendations in five cities of different institutional, geographic, socio-economic and environmental contexts in Southeast Asia. They include Bandung (Indonesia), Bangkok (Thailand), Cebu (Philippines), Hai Phong (Viet Nam) and Iskandar (Malaysia). The study highlights that Southeast Asian cities are largely underprepared for natural disaster risks. Through an assessment of disaster risk management (DRM) policies at national and subnational levels, the study aims to enhance urban resilience by: i) identifying policy challenges related to DRM ; ii) assessing the impacts of current DRM policy practices; and iii) proposing more efficient and effective policy options to enhance urban resilience.

Bandung Metropolitan Area (BMA) is home to 8.6 million people and is Indonesia’s second-largest urban agglomeration. Rapid growth has created a number of challenges for the city, including traffic congestion, air pollution, municipal solid waste and water access and management. The BMA also faces several acute disaster risks primarily related to flooding and seismic activity. The area will need to address these challenges in order to continue sustainable development and to benefit from its environmental assets. Urban green growth policies encourage economic development while reducing either its negative environmental or the consumption of natural resources and environmental assets, including water, energy and undeveloped land.  This report, part of the OECD Urban Green Growth in Dynamic Asia project, explores policies, practices and governance systems to promote green growth in Bandung, Indonesia, and provides recommendations for enhancing Bandung’s green growth potential.