This article explores Indonesia’s strategic use of the Indonesian Carbon Exchange (IDXCarbon) to balance economic growth with environmental sustainability. IDXCarbon, launched in September 2023, is pivotal for Indonesia’s goal to achieve net-zero emissions by 2050, in line with its Nationally Determined Contribution. It not only facilitates carbon trading, fostering economic development but also aligns with international climate commitments. The platform is expected to generate significant revenue by capitalising on Indonesia’s natural ability to sequester carbon. Analysing IDXCarbon through the Environmental Economics Framework reveals its potential for economic and environmental impact, emphasising the importance of carbon markets in mitigating climate change. Additionally, IDXCarbon incentivizes businesses and industries to adopt sustainable practices, thereby internalising carbon emissions. This initiative follows international trends in emissions trading, drawing inspiration from successful models like China’s carbon market. Indonesia’s engagement in carbon markets is crucial for meeting its ambitious climate targets and reflects its commitment to global climate diplomacy.

Climate finance plays a critical role in addressing climate change issues. Global donors have provided much of this finance to help developing countries adapt and cope with ongoing climate change effects. However, limited technical capabilities and political interference in said countries can cause difficulties for donors, particularly when they want to implement it themselves. In this brief, we examine key problems faced by global donors in deploying their climate funds to developing countries and propose solutions on how the government can enable the mobilisation of such funds.We find that the government of Indonesia(GoI) has established a national intermediary called the Indonesian Environment Fund (IEF) under the Ministry of Finance. However, the IEF still has shortcomings, and could be rectified to unleash its full role in mobilising climate finance. Improvement of the IEF is necessary to help scale up the amount of funding, encourage more blended financing, and develop local implementation capabilities.

ASEAN

This article explores the potential of the Loss and Damage Fund to fortify climate adaptation and disaster risk management initiatives in Indonesia. It delves into the evolving landscape of climate change impacts on the country and examines the opportunities and challenges presented by the fund. The article underscores the need for Indonesia to harness the financial resources from the Loss and Damage Fund to bolster its climate resilience strategies. It discusses various adaptation measures and strategies, emphasizing their alignment with the fund’s objectives. The article also sheds light on the importance of establishing clear governance structures and enhancing stakeholder engagement to ensure effective utilization of the fund. Ultimately, it offers insights into how Indonesia can leverage the Loss and Damage Fund to advance its climate adaptation efforts and address the growing challenges posed by climate change.

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