Report on Indonesia's Green Growth by AC Ventures, Boston Consulting Group

TEMPO.CO, Jakarta - AC Ventures (ACV), an early-stage venture fund company in Indonesia, in partnership with Boston Consulting Group, has released a comprehensive report on decarbonization and its implications for Indonesia’s “green growth”. The report entitled Catalyzing Indonesia’s Green Growth Potential explains the pivotal role of Indonesia on the global stage as it seeks to transform its economy.

Green growth is a term to describe a path of economic growth and prosperity that is also environmentally sustainable.

As the fourth biggest nation to produce GHG emissions, Indonesia is reportedly to face a significant and risky challenge of climate change. However, according to the Principal-Head of ESG AC Ventures, Lauren Blasco, Indonesia also possesses the immense potential to transition into a green economy. “This shift is an opportunity for startups, MSMEs, and investors to play a leading role in fostering sustainable economic development and combating climate change,” said Blasco in a press conference held virtually on Thursday, July 13, 2023.

Further, the report explained that green growth in Indonesia involves three key focus areas, namely strategy and professional services (a US$46 billion potential market by 2030), solutions that optimize GHG intensity (a US$350 billion potential market by 2030), and emission offsetting (a US$3.5 billion potential market by 2030). To fully leverage these opportunities, the report lays out how Indonesia can boost green financing, develop supportive regulatory frameworks, and nurture green talent. These measures are crucial for Indonesia to reach emission-reduction targets by 2030 while supporting the country’s continued economic growth. “Our report underlines the tremendous decarbonization potential Indonesia holds,” said Blasco.

For example, Blasco provided, the international demand for voluntary carbon credits is set to skyrocket, increasing by about 27% annually until 2030. “Currently, around of the world’s total carbon reserves are in Indonesia’s peatlands alone,” she added.

According to Blasco, Indonesia has the potential to be the frontrunner of the burgeoning peat industry if Indonesia commoditizes its preservation. Blasco revealed that AVC has projected the carbon credit market expanding to 140 million tons by 2030, a huge leap from the 40 million issued in the past decade. “At a projected rate of US$25 per ton, this market alone could bring in US$3.5 billion annually, signaling a significant opportunity,” she explained.

As Southeast Asia’s single largest economy and one that is projected to be the world’s fourth-largest by 2050, Indonesia has a considerable stake to transform into a green economy. It is not only crucial to a sustainable environment, but a significant business opportunity. The report also estimates the value of Indonesia’s green growth opportunity at US$400 billion, combining industry revenue and carbon offset potential. The potential for smaller-scale ventures like startups and MSMEs, as well as investors and financiers to encourage Indonesia’s transition is also highlighted in the report.

Meanwhile, Managing Director and Partner of Singapore BCG, Marc Schmidt, stated that developing a low-emission economy and the associated decarbonization will offer opportunities for stakeholders in all sectors, including the large and important MSMEs sector in Indonesia. “Broad participation by innovators will be essential to implement and sustain the necessary changes in Indonesia’s economy,” said Schmidt.

AMY HEPPY

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