"""""""""""""""" Cities Climate Finance Leadership Alliance
Posted on: Mar 17th, 2022

Assessment of the Alliance Project Preparation Action Group Value Chain for Early-Stage Project Preparation in Indonesia

Rapid urbanization and the risks anticipated by the climate crisis highlight the critical role local governments (LG) play in achieving and scaling up climate change mitigation and adaptation goals locally and globally.

Despite the crucial role they play, local governments, particularly in the emerging economies, face numerous challenges and constraints in achieving their climate goals. These challenges can include a lack of technical capacities, low credit rating, and constant administrative changes that affect their capacity to mobilize the massive infrastructure investment needed to build sustainable infrastructure. Their often limited fiscal autonomy and insufficient capacity also hinder their ability to develop robust and bankable projects, as well as to access sufficient external finance. Overcoming these barriers and limitations is critical for achieving net zero emissions and climate resilient urban development.

Project preparation is a critical step to get strong technical studies and political support for the development of infrastructure projects. During project preparation cycles, early stage of project development is critical. This is the phase to ensure political commitment, engage stakeholders, collect and validate data, prepare technical studies, and develop business models. Members of the Cities Climate Finance Leadership Alliance (Alliance) Project Preparation Action (PPAG) group recognize this gap and are committed to leveraging the potential of LGs and the services that Alliance members’ initiatives offer. Building on the assessment of the Alliance’s value chain for project preparation in Mexico and the Alliance project preparation practitioners forum in Mexico, held in 2021, PPAG members voted in December 2020 to replicate this practice and selected Indonesia as the second region to map Alliance members activities and analyze the needs of local and regional governments (LRG).

This study analyzes the initiatives of the PPAG members and the services they offer in terms of technical and financial assistance for project preparation in Indonesia. It also maps and proposes potential synergies and joint activities for enhanced collaboration. The assessment also includes the findings of interviews conducted with selected city officials to understand their experience with PPAG members’ initiatives, their needs to build bankable projects, and matching these with the offer and expertise of PPAG members.