The value of Indonesia’s green growth opportunity is at $400 billion, combining industry revenue and carbon offset potential, AC Ventures (ACV) and Boston Consulting Group (BCG) said Thursday.

In their report “Catalyzing Indonesia’s Green Growth Potential”, the duo said Indonesia, as Southeast Asia’s single largest economy and one that is projected to be the world’s fourth-largest by 2050, has a considerable stake in transforming into a green growth economy.

“Not only is this transformation environmentally imperative, but it is also a substantial business opportunity,” they said.

According to the report, the green growth in Indonesia involves three key focus areas – strategy and professional services (a $46 billion potential market by 2030), solutions that optimize greenhouse gases (GHG) intensity (a $350 billion potential market by 2030), and emission offsetting (a $3.5 billion potential market by 2030).

As the fourth largest global greenhouse gas (GHG) emitter, the report said Indonesia faces significant environmental challenges and stands critically exposed to climate change risks.

However, it said Indonesia also possesses the immense potential to transition to a green economy.

“This shift is an opportunity for startups, micro, small and medium-sized enterprises (MSMEs), and investors to play a leading role in fostering sustainable economic development and combating climate change,” said Lauren Blasco of ACV.

He noted the tremendous decarbonization potential of Indonesia holds.

For example, the international demand for voluntary carbon credits is set to skyrocket, increasing by about 27 percent annually until 2030.

Currently, around 30 percent of the world’s total carbon reserves are in Indonesia’s peatlands alone.

“When we commoditize their preservation, Indonesia is poised to be a frontrunner in this burgeoning market,

“We foresee our carbon credit market expanding to 140 million tons by 2030, a huge leap from the 40 million issued in the past decade,” said Blasco.

At a projected rate of $25 per ton, he said this market alone could bring in $3.5 billion annually, signaling a significant opportunity.

Meanwhile, Marc Schmidt from BCG said that building a low-carbon economy and the associated decarbonization will provide opportunities for stakeholders across all sectors, including Indonesia’s large and important MSME sector.

“Broad participation by innovators will be essential to implement and sustain the necessary changes in Indonesia’s economy,” he added.

The report also highlighted the potential for smaller-scale ventures like startups and MSMEs, as well as investors and financiers, to drive Indonesia’s transition.

For instance, Unravel Carbon, a notable startup providing a SaaS decarbonization platform, and MAKA Motors, accelerating electric vehicle (EV) two-wheeler adoption in Indonesia, exemplify the country’s emerging green growth sector.

Meanwhile, ventures like Fairatmos aid carbon mitigation project developers, establishing a developing domestic carbon credit ecosystem.

To address the nation’s significant talent shortage, especially in the green startup space, the report noted that Indonesia has established the National Talent Management body to develop and retain talent.

Simultaneously, it said the Indonesian Financial Services Authority (OJK) is fostering sustainable finance practices, and the country’s central bank has joined the Network for Greening the Financial System (NGFS).

“Indonesia’s path to green growth is clear, but the journey will require concerted efforts from all sectors,

“We’re calling on businesses, citizens, financiers, and investors to join us in building a future that’s sustainable and equitable for all,” said Marc.

Blasco added that in developing the regulatory frameworks and driving green growth across the economy, it’s crucial to ensure a ‘just transition’.

“We need to consider the interests of all stakeholders and create economic transformations that are fair and equitable,” he said.

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