Preparing the ground for BioCNG investments in Indonesia: Lessons from project development
June 9, 2026
How can agricultural waste become a driver of Indonesia’s clean energy transition? The Indonesia – Biogas project, implemented by the Global Green Growth Institute (GGGI), is exploring exactly that through the development of a scalable BioCNG financing and implementation model. During a recent Detailed Preparation Phase (DPP) peer learning exchange, the project team shared key achievements, challenges, and lessons learnt from preparing the initiative for implementation.
Context
Indonesia’s rapidly growing energy demand poses a significant challenge for decarbonisation efforts. Projections indicate that by 2050, oil demand could double while natural gas demand may increase fourfold. Against this backdrop, the project aims to accelerate the use of Compressed Biomethane Gas (CBG) generated from agro-industrial and agricultural waste streams, helping reduce methane emissions while supporting renewable energy development.
Developing a project supported by the Mitigation Action Facility
The DPP is designed to help projects transform ambitious ideas into implementation-ready programmes. Through fully funded proposal development support, the Mitigation Action Facility enables project teams to conduct feasibility and technical studies, finance dedicated project staff and external consultancies, and access targeted technical expertise on topics such as greenhouse gas mitigation potential, financial mechanisms, gender equality and social inclusion (GESI), and carbon markets. In the case of the Indonesia BioCNG project, this support helped the team navigate complex institutional, technical, and financial requirements while strengthening the overall project design.
The DPP, funded by the Mitigation Action Facility with a grant of EUR 360,129, ran from September 2024 to June 2025. Its primary objective was to prepare a comprehensive implementation proposal and establish the conditions needed to scale up investments in waste-to-BioCNG projects in Indonesia. A central component of the proposed approach is the use of credit guarantees to de-risk investments and encourage wider market participation.
If approved for implementation, the project envisions a five-year implementation phase with an initial inception period focused on facility set-up and capacity building, followed by support for up to 50 BioCNG projects. The initiative also aims to establish a sustainable financial mechanism that can continue supporting BioCNG investments well beyond the project’s lifetime.
“What made this process meaningful for us was the sense of partnership. Developing such (Biomethane) projects is not something the private sector can do alone. The collaboration throughout the DPP process helped create stronger alignment between government priorities, finance expectations, and realities on the ground faced by project developers.“
– Ms Yasmine Surrachman, PT KIS Biofuel Indonesia, project developer from the private sector
During the exchange, the project team highlighted several factors that contributed to successful proposal development. Strong government ownership and early engagement from host and technical ministries proved critical from the concept development stage onward. Continuous dialogue with financial institutions, the private sector, ministries, and fund managers also helped strengthen institutional alignment and credibility.
The team additionally emphasised the value of building on lessons from previous BioCNG initiatives implemented by GGGI, as well as the importance of strong coordination across multiple parallel workstreams. Preparing the proposal required intensive management of consultants and annexes, alongside regular coordination with the Mitigation Action Facility Technical Support Unit (TSU) and external experts, including on greenhouse gas mitigation calculations, financial mechanisms, and gender equality and social inclusion (GESI).
Navigating challenges in project development
At the same time, the DPP process presented significant challenges. The project team navigated compressed timelines, delayed formal endorsements, political transitions, institutional restructuring, and evolving fund management arrangements. Securing co-financing and aligning institutions required extensive discussions and multiple iterations. The complexity of preparing and reviewing the required annexes also demanded substantial coordination and frequent engagement with Mitigation Action Facility experts.
Sharing lessons learnt with peers
Reflecting on the experience, the project team stressed that DPP preparation extends far beyond technical proposal writing. Institutional alignment, financial structuring, and coordination require considerable resources and early planning. They also underlined the importance of engaging financial institutions from the beginning to ensure commercial viability and highlighted that meaningful GESI integration requires direct engagement with beneficiaries rather than relying solely on literature reviews.
The exchange offered valuable insights not only for the Indonesia biogas project itself, but also for other Mitigation Action Facility projects preparing ambitious sector transformation initiatives. By sharing practical experiences and lessons learnt, the session contributed to peer learning across the portfolio and demonstrated the importance of collaboration, coordination, and adaptive planning in advancing climate mitigation investments.
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