Take A Peek At Four Green Financing Challenges Amid Political Year

Green economy (photo: dock. Unsplash)

JAKARTA - Economist and Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira revealed that Indonesia faces four (4) challenges in the development of green financing in the midst of the political year.

First, there are differences in the technology model that the three presidential candidates (candidates) have in their vision and mission to commit to energy financing.

"There are (paslons) that use solar panels, biomass, geothermals, some even have a commitment to the nuclear industry, so the direction (energy transition) is not clear for the next five years," Bhima told reporters in Jakarta, quoted Wednesday, December 20.

Bhima said this caused investors to consider the risk factors to be faced.

"If he (the investors) has geothermal financing, suddenly the solar panel implements there is a risk of bad credit," he said.

The second challenge is the issue of green taxonomy which has yet to reach the final. This is known because the Financial Services Authority (OJK) has not finished making revisions related to the gasification project or converting coal into gas fuel.

"Whether it will be forced to be put in yellow or green. So, there has been no confirmation yet that (investors) are international and domestic," said Bhima.

Meanwhile, Indonesia's Green Taxonomy is a classification of economic activities based on an assessment of business activities in the business sector, whether it meets environmental protection standards and good governance or vice versa.

Third, Bhima assessed that the challenge regarding Indonesia's monetary policy has not yet supported the ratio of macroprudential intermediation. For example, there is no minimum credit stamp to the green sector.

Cap credit itself is a credit rate limit with variable interest rates. This is the highest rate of interest that must be paid by borrowers and also the highest interest rate earned by creditors.

Later, the provisions for the interest rate limit will be stated in a loan contract or investment prospectus.

The fourth challenge is the question of financing the renewable energy sector to the community which is considered minimal. This is because the State Electricity Company (PLN) is still monopolizing energy transition financing.

"That's why there is still a very small portion of energy transition financing based on the community. In fact, People's Business Credit (KUR) should be able to enter there. However, we are worried that the policies of our electrical activities have not accommodated," he added.