COMPREHENSIVE SYNERGY OF FINANCIAL INSTRUMENTS AND POLICIES ENCOURAGING RENEWABLE ENERGY TRANSITION IN INDONESIA

Abstract

Indonesia's significant potential in new and renewable energy (NRE), combined with the pressing need to curb carbon emissions, underscores the vital role of effective financing models and regulatory systems. Despite this, the country's transition toward cleaner energy is challenged by limited financial resources and inefficient policies. This study examines the interaction between financial mechanisms such as green bonds and tax incentives—and government policies, including NRE-based electricity tariffs and simplified licensing procedures, in encouraging investment across six major regions: Medan, Jakarta, Surabaya, Makassar, Banjarmasin, and Papua. It evaluates how these policies influence the implementation of renewable energy projects, explores the synergies between innovative financing and public policy at the regional level, and proposes strategic directions for designing more efficient, market-oriented financial tools and policy frameworks. Using both qualitative and quantitative methods, the study reveals that a coordinated approach integrating financial and policy instruments significantly enhances NRE investment realization. The findings highlight the need for joint efforts between financial sectors and policymakers to meet Indonesia’s renewable energy target of 23% by 2025.