Indonesia’s Massive Potential for Green Growth and Decarbonisation Revealed: A $400 Billion Opportunity
Indonesia, known as the world’s fourth-largest global greenhouse gas emitter, has the potential to transform its economy and spearhead the concept of green growth. AC Ventures (ACV), Indonesia’s leading early-stage venture capital firm, and Boston Consulting Group (BCG) have jointly released a groundbreaking report that underscores the country’s massive potential in the decarbonisation sector and its implications for sustainable economic development.
Titled Catalyzing Indonesia’s Green Growth Potential, the report highlights three key focus areas for green growth in Indonesia: strategy and professional services, solutions that optimize greenhouse gas (GHG) intensity, and emission offsetting. By 2030, these focus areas have the potential to create a staggering $400 billion market opportunity. This potential also presents an opportunity for startups, micro, small, and medium-sized enterprises (MSMEs), as well as investors to play a pivotal role in fostering sustainable economic development and combating climate change.
During an online press conference, BCG Project Leader Brendan Board presented the report’s key findings, followed by a panel discussion with BCG’s Managing Director and Partner in Singapore, Marc Schmidt, AC Ventures’ Principal of ESG, Lauren Blasco, and Maka Motors’ Co-founder and CEO, Raditya Wibowo. The panel engaged in a live Q&A session with reporters from across Southeast Asia, providing valuable insights into Indonesia’s green growth potential.
The report emphasizes the need for Indonesia to leverage these opportunities fully by boosting green financing, developing supportive regulatory frameworks, and nurturing green talent. These measures will be crucial in meeting Indonesia’s emission-reduction targets for 2030 while supporting the country’s ongoing economic growth.
Marc Schmidt of BCG highlights that building a low-carbon economy and achieving decarbonisation will benefit stakeholders across all sectors, including the substantial MSME sector in Indonesia. To successfully implement and sustain the necessary changes, broad participation by innovators is vital.
The report further highlights the immense decarbonisation potential that Indonesia holds, particularly in the international demand for voluntary carbon credits. With around 30% of the world’s total carbon reserves located in Indonesia’s peatlands alone, the country has a significant opportunity to become a frontrunner in this burgeoning market. The report projects that the carbon credit market in Indonesia could expand to 140 million tons by 2030, generating a market worth $3.5 billion annually.
Indonesia, as Southeast Asia’s largest economy and projected to be the world’s fourth-largest by 2050, has a significant stake in transitioning towards green growth. Not only is this transformation environmentally imperative, but it also presents substantial business opportunities for industries across the country.
The report also highlights the potential for smaller-scale ventures, such as startups and MSMEs, as well as investors and financiers, to drive Indonesia’s transition towards a green growth economy. Startups like Unravel Carbon, offering a Software-as-a-Service (SaaS) decarbonisation platform, and MAKA Motors, accelerating the adoption of electric two-wheelers in Indonesia, exemplify the emerging green growth sector in the country. Additionally, ventures like Fairatmos help mitigate carbon emissions and establish a domestic carbon credit ecosystem.
To address the talent shortage in the green startup space, Indonesia has established the National Talent Management body. The country’s financial regulatory bodies, such as the Indonesian Financial Services Authority (OJK) and the central bank, have also taken steps to promote sustainable finance practices and support the transition towards a low-carbon economy.
Indonesia’s path to green growth is clear, but it requires concerted efforts from all sectors. The report calls on businesses, citizens, financiers, and investors to join together in building a sustainable and equitable future for all. With the immense economic potential estimated at $400 billion and the opportunity to combat climate change, Indonesia has the chance to become a global leader in green growth and contribute significantly to a greener and more sustainable world.
