Indonesia received a significant boost of 1.2 billion euros  (US$1.14 billion) in green financing from a German bank, Kreditanstalt für Wiederaufbau (KfW), at the United Nations Climate Change Conference's 29th meeting (COP29) in Baku, Azerbaijan. This funding has unlocked a gateway for President Prabowo Subianto's energy vision amid environmentalists' concerns about the President's future commitment to addressing climate change.

The 1.2 billion euro green financing deal, which focuses on bolstering Indonesia's renewable energy sector, highlights the country's potential to transition toward cleaner energy. State-owned utility PLN and KfW are partnering to fund the construction of pumped storage hydroelectric plants and transmission systems that will integrate renewable energy sources into the national grid.¹ 

Indonesia plans to add 100 GW of new electricity generation capacity over the next 15 years, with 75 GW coming from renewable energy sources. The country will need a staggering $281 billion annually for green financing, but the state budget (APBN) can only cover a fraction of this, at around Rp 37.9 trillion ($2.37 billion).² 

One of President Prabowo's flagship programs is achieving energy self-sufficiency. While Prabowo has acclaimed the possibility of energy self-sufficiency, Indonesia is facing an energy trilemma, where the complex energy landscape, characterized by energy security, affordability issues and sustainability concerns, suggests a more nuanced reality.³ 

Despite the urgency of the energy and climate crisis, the President has rarely addressed this issue in his speeches since taking office on Oct. 20. President Prabowo only reiterated energy security, but not energy transition from fossil fuels toward clean energy. During his inauguration speech, the President explained that Indonesia has abundant of energy sources for self-sufficiency, especially palm oil for biodiesel to reduce crude oil and fuel import dependency, coal and renewable energy sources for electricity such as hydro and geothermal energy. 

Hashim Djojohadikusumo, President Prabowo's younger brother, attended COP29, representing the President, and delivered his long-awaited message regarding the energy transition. However, Hashim's appointment as the President's special envoy and Indonesian delegation head at COP29 has drawn criticism from civil society activists who question his suitability for the task.⁴ 

There is a growing concern that the programs presented by Hashim on behalf of President Prabowo at COP29 are hypocritical and will undermine Indonesia's climate change mitigation efforts. One of Prabowo's aims to achieve this energy transition is to expand carbon trading and position Indonesia as a carbon capture and storage hub. Indonesia plans to offer 577 million tonnes of carbon stock. Additionally, some worry that this is a distraction from real climate action as they focus on offsetting emissions rather than reducing them at the source, which contradicts the Paris Agreement goals.⁵ 

Prabowo has an ambitious target to reach 8 percent economic growth during his presidency, hence the goal of becoming self-sufficient in energy. But, environmentalists worry that the pursuit of this ambitious growth target risks worsening the climate crisis through increased carbon emissions. The Indonesian Forum for the Environment (Walhi) warns that the aggressive push for nickel mining and downstream industries, coupled with plans for food estate development to achieve Prabowo's food self-sufficiency target threatens to devastate millions of hectares of forests in Sulawesi, Maluku and Papua.⁶ 

In Indonesia, the appointment of Hashim Djojohadikusumo as the government's special envoy is closely tied to President Prabowo Subianto's plan to establish a Climate Change Agency. A source stated that Hashim is behind the government's plan to form the agency, which will later regulate carbon trading in Indonesia. Prabowo deliberately chose not to announce the formation of this agency immediately after his inauguration, intending to unveil it after the conclusion of COP 29.

According to the source, the decision to announce the Climate Change Agency after COP 29 was deliberate, as the government wanted to avoid being held accountable for its commitments during the conference. Prabowo's nephew, Budi Djiwandono, is reportedly being considered to head the agency. This is why he was summoned to Prabowo's residence in Kertanegara prior to the cabinet appointments.

Meanwhile, A participant at COP 29 mentioned negotiations were difficult because developed countries rejected to shoulder the entire burden of climate funding for the New Collective Quantified Goals (NCQG)

Developed countries, particularly those from the European Union and the United States, argued that the $1.3 trillion climate financing should also be shared with other major emitters like China and India. These two countries are regarded as among the largest emitters globally. Moreover, countries like Saudi Arabia, Qatar, and the United Arab Emirates were also expected to contribute to supporting developing nations.

A draft proposal on climate financing to be submitted to the COP president had circulated since Thursday morning local time. However, the draft drew criticism from many parties. The content, particularly regarding climate financing, was deemed inadequate and failed to provide a basis for compromise and consensus between developed and developing countries.

Instead of setting a global target of US$1.3 trillion in new funding for developing countries to address the climate crisis, the draft only contained an "X" placeholder rather than a specific figure. This meant that the draft did not specify the amount to be allocated and mobilized from developed countries to all developing nations during 2025–2035.

This is despite the draft stating that at least US$4 trillion per year needs to be invested in renewable energy by 2030 to achieve net-zero emissions by 2050. The global transformation toward a low-carbon economy is also estimated to require investments of between US$4 to 6 trillion per year.

New climate funding is needed after the term of financing agreed upon at COP 15 in Copenhagen in 2009 ended. At that time, developed countries committed to providing $30 billion between 2010 and 2012 to support developing nations. They also agreed to increase the funding to US$100 billion annually by 2020.

With the deadline looming, the source expressed concern that negotiators at COP 29 might fail to reach an agreement on climate financing. Developed countries have yet to reveal how much they can contribute to help developing nations combat climate change.

Meanwhile, developing countries are seeking at least US$1 trillion annually for climate financing, most of which should come directly from wealthy nations in the form of grants, some loans, and, if possible for the remainder, through contributions from the private sector.