Unlocking Jakarta’s Green Investment Potential Towards Global Climate Commitments

The urgency to raise awareness and accelerate action on climate change continues to grow. Global commitment to this challenge was reaffirmed through the Paris Agreement in 2015, which set the objective of limiting the global temperature rise to below 2°C, while pursuing efforts to restrict it to 1.5°C above pre-industrial levels (UNFCCC, 2015). Under this agreement, countries submit Nationally Determined Contributions (NDCs), which include emission targets, adaptation measures, and timelines that are updated every five years (Whiting, 2025). Since its adoption, climate-related challenges have worsened. Between 2015 and 2023, the world experienced one of the warmest periods in recorded history. At the same time, the frequency of extreme weather events has risen sharply, increasing fivefold over the past fifty years (Naran et al., 2024). This highlights the urgent need for specific and measurable climate actions.

In response to these growing challenges, countries worldwide are translating their climate commitments into concrete and measurable policy actions, with a particular focus on green investment as a means to achieve their targets. According to the OECD (2012), green investment broadly refers to low-carbon and climate-resilient investments made in companies, projects, and financial instruments that operate primarily in the renewable energy, clean technology, environmental technology, or sustainability-related markets, as well as those that are climate change specific. Within this context, the Paris Agreement provides a global mandate and direction for coordinated climate action, while green investment serves as a key mechanism for turning these commitments into tangible outcomes. Without substantial and sustained green investment, the targets set under the Paris Agreement are unlikely to be achieved.

Among the various national approaches to advancing green investment, the United States has introduced the Inflation Reduction Act (IRA) as a key policy instrument. Enacted in 2022, the IRA represents a significant effort to accelerate green investment in alignment with national climate objectives. The legislation allocates nearly US$400 billion to support a wide range of climate and energy initiatives (McKinsey & Company, 2022). Through a mix of tax incentives, grants, and loan programs, it promotes private sector participation in the development of clean energy infrastructure, transportation electrification, and the expansion of low-carbon technologies. The policy also includes domestic content requirements, such as the use of U.S manufactured products in eligible projects (Internal Revenue Service, 2024). While designed to meet climate targets, the IRA is also projected to generate significant economic returns, including an estimated US$3.8 trillion in net economic activity over the next ten years, US$1.9 trillion in economic growth, 13.7 million new jobs, and a US$846 billion increase in household income (American Clean Power Association, 2024). These outcomes not only improve the financial well-being of Americans but also demonstrate an integrated approach in which climate goals are aligned with broader economic development strategies, sending a strong signal to global markets that the transition to a green economy is aligned with the nation’s long-term development strategy.

Meanwhile, the European Union (EU) has introduced the European Green Deal as a strategic framework to promote green investment and advance its goal of achieving climate neutrality by 2050. This policy framework reflects the EU’s strong commitment to integrating green investment into its broader climate agenda through coordinated, cross-border initiatives. The European Green Deal outlines a clear pathway toward decarbonization, including an interim target to reduce greenhouse gas emissions by 55% by 2030 (Council of the European Union, n.d.). It includes a wide range of strategic actions, such as expanding renewable energy, enhancing energy efficiency, protecting natural ecosystems, and accelerating the transition to green mobility.

Furthermore, China has also emerged as a country that focuses on the global green transition. China has embedded its climate ambitions into a national development strategy through the implementation of the 14th Five-Year Plan (2021–2025), which serves as a framework to support its pledge of achieving carbon neutrality by 2060 and peaking carbon emissions before 2030. This plan reflects China’s commitment to accelerating green investment by prioritizing clean energy expansion, urban sustainability, and innovation-driven growth (Hepburn et al., 2021). It outlines concrete action areas such as reducing coal dependency, modernizing the power grid to integrate renewable energy, and increasing investment in low-carbon technologies, including solar, wind, hydrogen, and electric vehicles. In addition, the plan supports the development of “clean, compact, and connected” (CCC) cities to promote more sustainable urbanization and enhance regional economic balance (Ahmad et al., 2020). Through a coordinated strategy that combines environmental goals with sustainable economic transformation, China’s approach demonstrates that climate action can also serve as a foundation for competitiveness, resilience, and long-term prosperity.

Many countries are responding to their Paris Agreement commitments by addressing environmental challenges, and Indonesia is no exception. Indonesia is aligning its development priorities with climate goals through a structured and integrated policy approach, particularly in sectors such as electric vehicles, carbon markets, and renewable energy. This commitment is reflected in the updated Nationally Determined Contribution (NDC) submitted in 2022, which raised Indonesia’s unconditional emissions reduction target from 29% to 31.9% by 2030 (Agarwal et al., 2024). To support the achievement of these targets, the government has introduced a series of policies and regulations aimed at promoting green investment and sustainable finance. One of the foundational frameworks is Financial Services Authority (OJK) Regulation No. 51/POJK.03/2017, which mandates the integration of environmental, social, and governance (ESG) principles into the business practices and risk management of financial institutions and public companies. This regulation reflects Indonesia’s continued commitment to building a financial system that supports not only economic growth but also environmental and social responsibility.

Another initiative is the launch of the Indonesian Green Taxonomy in January 2022, which provides official guidelines for identifying environmentally sustainable economic activities across approximately 919 subsectors (Mulyana & Shawndefar, n.d.). The taxonomy serves as a reference for stakeholders to assess the environmental sustainability of economic activities and helps prevent greenwashing by providing a standardized framework for sustainable investment. Furthermore, Indonesia’s National Medium-Term Development Plan (RPJMN) 2025–2029 identifies the strengthening of green investment as a national priority to accelerate the transition toward a low-carbon economy. In this context, the green economy is positioned not only as an environmental strategy but also as a new engine of economic growth through improved resource efficiency, green job creation, and reduced greenhouse gas emissions.

In line with the national policy direction to promote the green transition, Jakarta is actively reinforcing its role through locally driven sustainability initiatives. The city faces complex environmental challenges, including air pollution, flooding, and rising sea levels, which have made it one of the world’s major cities most at risk of sinking (Mafira et al., 2021). In response, the Jakarta Provincial Government has adopted more progressive policies to address the climate crisis. Through Governor Regulation No. 90 of 2021, Jakarta committed to a low-carbon and climate-resilient development pathway. This regulation emphasizes the city’s efforts to reduce emissions, enhance climate resilience, and promote green economic growth by strengthening sectors such as clean energy, sustainable transportation, and waste management. These efforts are backed by concrete implementation. For example, Jakarta aims to fully transition its TransJakarta fleet to electric buses by 2030, with a target of more than 10,000 units (Institute for Transportation and Development Policy, 2023). To further strengthen this transition, the Jakarta Long-Term Development Plan (RPJPD) 2025–2045 highlights the need to accelerate the currently low adoption of renewable energy and expand green financing and investment as part of Jakarta’s shift toward a green economy.

Jakarta’s commitment to addressing the climate crisis extends not only through its local policies but also through active participation in global climate networks. This includes Jakarta’s role as an active member of the C40 Cities Climate Leadership Group, a global network of nearly 100 mayors from the world’s leading cities united in their efforts to confront the climate crisis (C40 Cities, n.d.). One example of this collaboration is the C40 Clean Investment Accelerator (CIA), which aims to support cities in attracting financing and delivering green, sustainable, and climate-resilient infrastructure projects. Jakarta joins notable cities such as Amsterdam, London, Cape Town, Copenhagen, Glasgow, New York, Seattle, Rio de Janeiro, Paris, and Milan. Through its engagement with global organizations like C40, Jakarta demonstrates a clear determination to collaborate internationally and strengthen its position as an emerging global city.

To conclude, the global green transition is no longer an abstract goal but a necessary course of action in response to escalating climate risks. Countries and regions around the world, including the United States, the European Union, China, and Indonesia, are translating their climate commitments into concrete policy actions. Indonesia, through national strategies and local implementation, demonstrates how environmental priorities can align with sustainable economic development. Jakarta, in particular, continues to take active steps to implement green policies and promote sustainability-driven growth. As the city strengthens its commitment to low-emission development, it welcomes collaboration and investment, especially in areas such as renewable energy, sustainable transportation, and climate-resilient infrastructure. With clear policy direction, regulatory support, and a long-term vision for inclusive and sustainable development, Jakarta presents a promising environment for investors, especially for green investment. These collective efforts not only support climate goals but also elevate Jakarta’s position as a dynamic and forward-looking global city.