New report sets out road map to financing sustainable waste infrastructure in Indonesia

02 September 2020

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  • New report sets road map for the UK and Indonesia to work together to drive investment into Indonesia’s sustainable waste management sector and eradicate plastic pollution by 2040
  • Almost £19 billion of investment into Indonesia’s waste management infrastructure is needed over the next 20 years
  • The UK is uniquely placed to help Indonesia deliver new sustainable waste management infrastructure and tackle pollution from plastics.

The UK is uniquely placed to help Indonesia deliver the infrastructure needed to tackle waste sustainably, according to a new report released today.

Commissioned by the City of London Corporation and produced by Macquarie’s Green Investment Group (GIG), the document outlines key actions that can be taken in the UK and in Indonesia to resolve urgent issues facing the country’s waste management system, particularly in relation to plastic.

Global plastics use has increased twenty-fold in the past 50 years and is expected to double again in the next 201. Yet, plastic waste management infrastructure, from sorting, recycling and recovery, has not kept up with the rise in production around the world, leading to pollution in the natural environment and associated impacts on local communities.

Alongside Indonesia’s rise in domestic plastic waste, it is also one of the main recipients of exported plastic waste2. If current rates of plastic waste collection and treatment are maintained in line with increasing waste generation, leakage of plastics into Indonesia’s water bodies is projected to increase 30% by 2025 and more than double by 20403. The situation is already costing the coastal tourism industry $13 billion per year4 and impacting the 3.7 million Indonesians working in the fishing industry5.

Earlier this year, the Indonesian Government set out ambitious plans to reach near zero plastic pollution by 2040. However, difficulties remain around raising the necessary finance to deliver this vision, with around £19 billion of investment required6 to achieve appropriate levels of waste collection, sorting, recycling, recovery and disposal over the next 20 years.

As home to some of the world’s most experienced waste firms, and with an extensive green finance and sustainable infrastructure aid programme, including Partnering for Accelerated Climate Transitions and the Global Infrastructure Programme, the report finds the UK is uniquely placed to support Indonesia in its waste management goals.

Following discussions and interviews with government bodies, development banks, international infrastructure investors and other relevant parties, the report presents an overview of the policy measures that can be taken to help unlock private sector investment into sustainable waste management infrastructure in Indonesia, including:

  • The creation of a new Waste Management Authority by the Government of Indonesia;
  • Greater support and expertise sharing by the UK government and relevant bodies, for example on Extended Producer Responsibility scheme design;
  • Waste to be included in the UK’s Economic and Financial Dialogues in South-East Asia;
  • UK Export Finance (UKEF) to explore how it could support UK investment into Indonesian waste infrastructure;
  • The creation of a Waste Management Development Fund concept in order to provide bridging support for municipalities in their development of waste infrastructure.

The report was produced for the City of London Corporation by GIG’s Climate Finance Advisory Team. The team utilises GIG’s unique heritage and climate finance expertise, to deliver practical advice to governments and organisations around the world, helping them achieve their transitions to low-carbon and climate-resilient economies. 

"Indonesia has shown tremendous leadership in tackling a critical environment challenge for us all - plastic waste. But if the country is to meet its goal of zero plastic pollution by 2040, it urgently needs to raise the finance for critical waste infrastructure.

I hope this report helps support those efforts, providing clear actions for private investors, the UK Government, and the Government of Indonesia to tackle many of the issues currently faced."

William Russell
Lord Mayor of the City of London

"Tackling the global waste challenge is an essential part of the green transition, but the scale of the challenge means a significant volume of private sector capital is required to meet it. Having committed over £1bn in debt and equity into waste and bioenergy projects across the globe, we know exactly what it takes to mobilise the private sector in this area. 

"We hope the report sets out a clear roadmap for the public and private sectors of the UK and Indonesia to work together to unlock this c.£19 billion investment opportunity and eradicate Indonesia’s plastic problem."

Edward Northam
Head of GIG UK and Europe

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  1. World Economic Forum, Ellen MacArthur Foundation, McKinsey & Company (2016) The New Plastic Economy
  2. Jambeck, Geyer,Wilcox, Seigler, Perryman, Andrady, Narayan and Lavender Law (2015) ‘Plastic waste inputs from land into the ocean’
  3. World Economic Forum (2020) Radically Reducing Plastic Pollution in Indonesia: A Multistakeholder Action Plan National Plastic Action Partnership
  4. OECD (2018) Improving Plastics Management: Trends, policy responses, and the role of international co-operation and trade
  5. World Economic Forum (2020) Radically Reducing Plastic Pollution in Indonesia: A Multistakeholder Action Plan National Plastic Action Partnership
  6. Pew Charitable Trusts and Systemiq analysis