B. Purpose and Objectives

The purpose of this activity is to conduct research on the potential private sector engagement in financing and investment for low carbon development initiatives that support Indonesia’s green economy transformation and the achievement of Net Zero Emissions target.

The consultant is expected to do the following tasks:
–  Identify Indonesia’s regulatory environment related to climate finance and low-carbon investments, including tax holiday, subsidies, and carbon credits, as well as restrictions and compliance requirements that impact private sector engagement.

–  Conduct a thorough analysis of Indonesia’s low-carbon sectors to identify areas with high investment and financing potentials, such as renewable energy (solar, wind, and hydropower), sustainable forestry, electric mobility, and energy-efficient infrastructure.

–  Assess market needs and gaps in financing across identified low-carbon sectors. This includes assessing current investment flows, identifying underfunded areas, and showing opportunities for private sector involvement in line with Indonesia’s climate targets and commitments.

–  Assess financial, operational, and regulatory risks associated with low-carbon investments in Indonesia. Consider currency fluctuation risks, regulatory uncertainty, market readiness, and technology risks.

–  Gather and assess market data, policy trends (including incentive and disincentive), and financial flows with actionable insights on where to invest and the types of projects that align with Indonesia’s low-carbon roadmap.

–  Identify investment and various innovative financing opportunities to accelerate private sector involvement in low carbon development initiatives.

C. Scope of Works

The primary objective of this consultancy is to conduct a comprehensive assessment on private sector engagement on financing & investment, with a focus on:

  • Reviewing existing policy and regulatory and other public sector support mechanisms intended to attract private investment into low-carbon projects.
  • Assessing financial mechanisms used by the private sector in low-carbon investment (e.g. green bonds, climate funds, sustainability-linked loans), the implementation, and the feasibility of introducing or expanding innovative financing options, such as blended finance, concessional loans, risk-sharing mechanisms, or impact investing, that can appeal to private investors.
  • Evaluating the typical barriers and risks associated with low-carbon investments including regulatory, market, technology, and operational risks and the potential Return on Investment (ROI) for different low-carbon projects, that can show the profitability and long-term gains.
  • Identifying current investment and innovative financing opportunities to step up business adoption in low carbon development initiatives.
  • Providing recommendations on financing mechanisms and strategy for mobilizing private capital for green projects that can support low-carbon development and other important enabling recommendations that can accelerate investment in low carbon initiatives. These recommendations need to be presented in a matrix mentioning a list of existing problems (barriers), proposed recommendations specifically related to these problems/ barriers, and relevant actors/ stakeholders to engage.

The consultant shall be able to propose any methodology deemed appropriate to deliver the best outcome from the outlined activities:

1) Preliminary Drafting

The consultant will be responsible to develop a first draft of research (in Bahasa) based on desk review conducted towards various materials, which at least include:
–  Review of the national and sub-national regulatory framework and incentives for private sector involvement on LCDI.

–  Analyze specific plans related to key industrial sectors that are critical to low-carbon development.

–  Assessment of financial mechanisms used by the private sector in low-carbon investment (e.g. green bonds, climate funds, sustainability-linked loans), the implementation, and the feasibility of introducing or expanding innovative financing options, such as blended finance, concessional loans, risk-sharing mechanisms, or impact investing, that can appeal to private investors.

–  Analyze reports from any national industry associations that detail sectoral trends, challenges, and opportunities on LCDI at national and sub national level.

–  Consider market reports and investment analyses that highlight the private sector’s role in LCDI and also reports from organizations such as the World Bank, International Energy Agency (IEA), and the Global Green Growth Institute (GGGI) that provide insights into low-carbon development trends and best practices.

–  Consider available academic articles, research papers, books, and references in Indonesia, issued by other institutions that discuss the role of the private sector in low-carbon development, focusing on case studies, innovative practices, and theoretical frameworks.

2) Stakeholder Input

Following the finalization of preliminary draft, consultant shall be responsible to conduct interview or discussion with governmental stakeholder and government-related institution relevant to private sector involvement on LCDI, which may include:

a. Ministry of National Development Planning / BAPPENAS
b. Ministry of Finance
c. Banking & Financial Institutions

The consultant may propose other related stakeholders to maximize the support in developing works.

3) Final Report

The consultant is expected to synthesize the findings from the desk review and develop a comprehensive report (in Bahasa). This report should include an overview of key players, potential opportunities for engagement, challenges, and important recommendations that can accelerate private sector involvement in the investment and financing of low carbon initiatives. These recommendations need to be presented in a matrix mentioning a list of existing problems (barriers), proposed recommendations specifically related to these problems/ barriers, and relevant actors/ stakeholders to engage.

D. Tasks, Deliverables, and Level of Effort (LOE)

The tasks, outcome and products, as well as expected schedule to be delivered by the consultant are as follow:
No Tasks Deliverables LOE

No Tasks Deliverables LOE
1. Desk review and first draft  report Preliminary draft report 10 days
2. Stakeholders’ interview and dialogue/ discussions Minutes of Meeting 14 days
3. Finalization of Report Mapping Potential Private Sector  Final Report  7 days

 

It is expected that the consultant is able to deliver their best results in 1,5 months since the signing of the contract. The consultant is expected to submit their own timeline of program plan in accordance with the outlined activities under this term of reference.

E. Division of Responsibility
Following is the division of responsibility or battery limit for the activities to be executed under this term of reference.
No Tasks IBCSD Consultant

No Tasks IBCSD Consultant
1. First Draft Mapping Providing access to any relevant references needed  Conducting overall activities until report preparation
2. Stakeholders’ Interview,  Dialogue/ Discussions Follow up stakeholder, preparing logistic for meeting (if necessary) Preparing materials, reports, and analysis
3. Finalization of Report  Final review Conducting overall activities until report preparation

 

F. Proposal Submission
Following are the documents to be submitted by consultant as proposal submission:

1) Administrative
Consultant is expected to submit their legal document (e.g. Decree of Establishment/SK Menkumham atas Pengesahan Akta, Taxpayer Identification/NPWP), corporate profile, and curriculum vitae of consultant, including extensive list of relevant working experiences.

2) Technical
Consultant is expected to submit a technical proposal, which outlines their take on this term of reference as well as their proposed approach and methodology to answer the requirement of this term of reference and to fulfill the expected deliverables at optimal quality.

3) Commercial
Consultant is expected to submit a commercial proposal (budget), which already covers overall personnel and non-personnel cost at most competitive offers.

 

The above documents shall be submitted at the latest of:
Day/Date : Wednesday, November 21th, 2024
Time : 13.00 WIB

G. Point of Contact

For any clarifications needed by consultant, kindly contact the following:
Name   : Lusye Marthalia (Program Manager, Climate Energy & Circular Economy)
E-mail : [email protected] / [email protected]