Synthesis Study on the Effectiveness of Energy Efficiency Financing Mechanisms to Support the Energy Transition in Indonesia

Thailand’s growing reliance on liquefied natural gas (LNG) imports has become a defining feature of its energy trajectory, driven by compounding supply- and demand-side dynamics. This policy brief examines how rising LNG demand, expanding LNG infrastructure and deeper integration with global LNG markets are exerting mounting pressure on Thailand’s energy security, economic resilience and decarbonisation objectives. It sets out a strategic framework and policy recommendations to help Thailand redefine the role of LNG, and gas more broadly, within its energy landscape and advance a more secure transition pathway.

The study aims to inform the development orientation of financing framework that supports clean energy development including recommendations to optimize financing through Indonesia's Blue Book and Green Book, along with required de-risking instruments. The result shows that despite significant RE financing gap of the energy transition towards the net Zero Emissions target, existing financing mechanisms: particularly sovereign loans are still constrained by limited project readiness, high environmental and social (E&S) risks, and fiscal space considerations.

Global energy-transition investment reached a record USD 2.4 trillion in 2024, but most funding still flows to advanced economies and China, leaving many emerging markets behind. Renewables drew USD 807 billion, yet growth slowed sharply. The report warns investment remains below 1.5°C needs and calls for more concessional, impact-focused finance.

This study analyzes electricity subsidy policy in Indonesia in relation to energy resilience, green energy transition, and fiscal sustainability. The study uses three main simulations (BAU and LTES) to evaluate the impact of subsidies on electricity tariffs, fiscal needs, and macroeconomic indicators until 2045. The results show that the current electricity subsidy, while supporting affordability for low-income households, has not yet encouraged productive use of electricity and, in fact, burdens the State Budget (APBN). Transitioning to renewable energy (LTES) can reduce the need for subsidies by up to 42% by 2045.

This joint report by ERIA, ADB, and METI examines the evolving role of transition finance, technology, and policy in supporting the decarbonisation of Southeast Asia’s emissions-intensive sectors such as power and heavy industry – the so-called ‘high emissions’ and ‘hard-to-abate’ sectors, respectively. These sectors are highlighted in high-level roadmaps that identify key investment areas for a pragmatic energy transition.