High Demand, Indonesia's Green Economy Bonds Sell Out

As awareness of sustainable business practices increases, so does the need for access to funding for green economy activities. For the financial industry, this is an opportunity to be a source of funding for activities that support climate resilience.

Environmental Finance (EF) Data as quoted by Bank Mandiri's economist team said that Indonesia is in second place among Southeast Asian countries that release green and sustainable economy bonds.

In detail, 18% of the totalgreen, social, sustainability, and sustainability-linked (GSSS) bonds in Southeast Asia in the second quarter of 2025 were issued by Indonesia. In first place is Singapore with a share of 64.3%. However, bonds from Indonesia offer the highest coupon: 8,1%. The tenor period is quite short at 3%.

Bank Mandiri Chief Economist Andry Asmoro said that the amount of green bonds released by Indonesia shows the great interest and potential for green economic activities in the country.

"Many projects require funding. There is a lot of potential here, including in the funding sector," said Asmoro, as quoted from his research on Thursday (25/9/2025).

Various projects

The high need for funding is reflected in the many and varied government projects in the green economy. Deputy Minister of the Ministry of Energy and Mineral Resources (ESDM) Yuliot Tanjung said the various projects were to boost national energy security.

"Indonesia is rich in energy sources, but the challenge is access and affordability, especially in the 3T (underdeveloped, frontier, remote) areas," he said.

The One Price Fuel Oil (BBM) program has leveled the cost of energy in 80% of regions, and is targeted to expand to 225 new regions by 2029. But even more ambitious is the acceleration of new renewable energy (EBT). In PLN's 2025-2034 RUPTL, the government targets 69.5 GW of additional electricity capacity, with 62% from EBT or around 42.6 GW.

The potential is tremendous: of Indonesia's total renewable energy potential of 3,687 GW, only 15.2 GW has been utilized. Or only 0.4%.

In terms of the economy, the EBT roadmap and downstreaming have a massive impact:

Green energy investment for 2025-2034 is projected to reach IDR 1,682 trillion.
Creation of 760,000 green jobs from renewable energy.
Emission reduction of 129.5 million tons of CO2.
The mandatory B40 (2025) and B45-B50 (2026) biodiesel programs are estimated to save USD 9.3 billion (IDR 147 trillion) in foreign exchange and create 2 million jobs.
The downstreaming of nickel and other minerals has the potential to generate USD 498 billion in investment and generate 3 million jobs.

"Indonesia is a country blessed with an abundance of renewable energy. The challenge is not availability, but how to utilize this potential with the right regulations and financing," said Yuliot.

For investors, this prospect opens up Southeast Asia's largest green energy market, as well as an opportunity to diversify away from fossil dominance. However, regulatory certainty, including the emerging Renewable Energy Bill, is key to mitigating risks.

As Ignatius Wahyu Marjaka, Director of Governance for the Application of Carbon Economic Value, Ministry of Environment and Forestry (KLHK), emphasized in his opening speech, "A just energy transition is a manifestation of the vision of development sovereignty. We prove that commitment to the earth can go hand in hand with commitment to the welfare of the people."

Aerial photo of solar panels installed on the roof of Harita Nickel's Living quarter, on Obi Island, South Halmahera, North Maluku, Wednesday (17/9/2025). Harita Nickel has installed rooftop solar panels with a capacity of 40 MWp from a development target of 300 MWp as an effort to reduce carbon emissions to support Indonesia to achieve Net Zero Emission (NZE) 2060. ANTARA FOTO/Iggoy el Fitra/rwa.

Ignatius emphasized that the energy transition is not just a moral obligation, but a strategic investment for economic resilience. But he also gave a warning: if the acceleration is not carefully calculated, the risk of energy inflation and social disparity will increase.

MoEF's larger framework now rests on the value of carbon economy (NEK). This scheme integrates climate change mitigation and adaptation with innovative financing, including the utilization of the Paris Agreement Article 6 mechanism. This means that every decarbonization action, from forest reforestation to industrial emission reduction, can be translated into tradable carbon credits.

Since the Indonesian Carbon Exchange was launched in 2023, transactions have been ongoing. But the volume is still far below the potential. If ecosystems mature, forests, village cooperatives and companies could sell carbon certificates, creating a multi-billion dollar market.

Ignatius emphasized three principles: environmental sustainability, social justice, and inclusive economic growth. "The success of the transition is not only measured by the quantity of investment, but by the quality of implementation and environmental integrity," he said in the same session on Tuesday (23/9).

For businesses, the signals are clear: green investment opportunities are growing, but credibility and transparency are key requirements to attract long-term capital.