The Green Climate Fund (GCF) is the operating entity of the financial mechanism of The United Nations Framework Convention on Climate Change (UNFCCC). GCF’s goal is to help countries like Indonesia fill its financial gap and achieve its National Determined Contribution (NDC) targets to reduce greenhouse gas (GHG) emissions by 2030.

Through the Readiness Program, GCF aids developing countries by providing grants and technical support to strengthen the government’s institutional capacities, governance, and climate action planning, as well as enhancing access to climate financing. The Indonesia Ministry of Finance’s Fiscal Policy Agency, which acts as Indonesia’s National Designated Authority (NDA) for GCF, is the main implementing partner of the GCF Readiness Program.

GGGI, as a Delivery Partner, has been supporting the Fiscal Policy Agency since 2019. The program has entered its third phase, which focuses on enhancing Indonesia’s access to international climate finance and private sector investment for climate actions. As the focal point between the GCF and the country, the NDA ensures the implementation of the GCF’s country ownership principles in its funding mechanism. The NDA also ensures that AEs (Accredited Entities) & DAEs (Direct Access Entities) can manage the finances effectively and safeguard GCF-funded projects.

The project aims to support the Government of Indonesia in mobilizing and leveraging international climate finance and private sector investment to close the financing gap across priority sectors based on NDA’s sector prioritization study which are agriculture, forest and other land use (AFOLU), sanitation, food, and energy. The support is provided to the stakeholders by developing an engagement strategy, improving the project pipeline, and strengthening the institutional capacity of NDA and national entities, particularly in accessing climate finance.

Indonesia, contributing around two percent of global emissions* plays a crucial role in climate action due to its vast, carbon-rich forests and peatlands. Bilateral and multilateral cooperation is essential to meet its enhanced Nationally Determined Contribution (NDC) targets—31.89% emission reduction with domestic resources and 43.20% with international support. Access to international funding, like the GCF, is crucial for Indonesia to achieve these targets.

However, there is still a need to improve the country’s readiness to access international climate finance. The remaining challenges include (1) balanced and adequate financing for climate actions, (2) promoting country ownership in a large and multi-level governance setting, and (3) catalyzing private sector investment in the country’s climate actions.

The desired outcome of the GCF Readiness Project is for Indonesia to be ready to mobilize international climate finance and private sector investment. The support has been provided through technical assistance to national and sub-national governments, improving the DAE’s capacity to develop high-quality concept notes and funding proposals, and increasing private sector investments in climate action.

Nominated National Entities – Two financial institutions are nominated as national entities for GCF.

Private Sector Engagement Strategy – Private sector engagement strategy developed as a policy recommendation on how to engage and attract the private sector in mobilizing climate finance.

Climate Finance Tools Dashboard – Climate Finance Tools Dashboard is initiated to support transparency in sustainable investment.

Technical Support – Provided technical support in developing a high-quality concept note to DAE on Indonesia’s energy transition, which was submitted to GCF.