Bank financing for the energy sector is still dominated by fossil-based energy rather than renewable energy. This is caused by obstacles and challenges in financing the energy transition, as well as the perception that financing renewable energy is less profitable than fossil energy.
However, Indonesia has set emission reduction targets and has a road-map to achieve them net zero emissions in 2060. Therefore, policies and strategic steps are needed to encourage banks to transition financing from fossil energy to renewable energy, including increasing financing to the renewable energy sector and reducing financing of the fossil fuel energy sector.
Read more PRAKARSA Policy Brief edition 38 "Chaotic Bank Financing Transition and Energy Transition in Indonesia" via the following link.