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Research Background

The energy sector is one of the largest contributors to emissions in Indonesia. UNICEF recently noted that Indonesia is among 50 countries at high risk of climate change

Countries around the world agreed to a legally binding international agreement on climate change, called the Paris Agreement in 2015

Breakdown of Indonesia's Total Primary Energy Supply, 2009-2020Source : MEMR, 2021

Share of Renewable Energy in Total Primary Energy Supply, 2009-2020 Source : MEMR, 2021

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Research Background

In 2030, the Global Landscape of Climate Finance 2021 notes that existing sources of financing will come from 61% debt, 33% equity investment and 6% grants.

Islamic social finance such as Waqf provides alternative financing and investment mobilization channels that can be used to provide important infrastructure, especially renewable energy financing.

Indonesia needs USD 534.15 billion and USD 322.86 billion to achieve the SDGs and climate targets respectively by 2030 (Ministry of National Development Planning, 2019) .

According to Khan (2019), Ibrahim and Billah (2020), and Ibrahim and Koc (2021),waqf will build an environmentally friendly financing ecosystem (green financing) where the community, private sector and philanthropic sector collaborate to encourage environmentally friendly growth.

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The Aims

Based on this background, this research aims to integrate waqf and RE. It is hoped that the current research will increase knowledge on the topic of waqf and energy and provide meaningful information for policy makers and related stakeholders.

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Revious Research

Research information on this theme obtained from Google Scholar shows that there are still very few researchers who discuss waqf and renewable energy.

Technically, the Systematic Literature Review (SLR) was carried out by searching using specific keywords in the open access Google Scholar database at 11.00 Indonesian time on 01 August 2023.

From the initial review, 7,430 results were obtained with the keywords "waqf" and "energy". easy to find.

However, from searching the titles, only four papers used these keywords.

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The paper entitled Towards a sustainable financing model: Proof of concept of an alternative waqf-based financing model for renewable energy investments was published in Borsa Istanbul Review (Science Direct) (Ari & Koc, 2021). The other three papers represent three different concepts; one in general, one focused at the provincial level, and one on solar power generation

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Research Method

The terms “literature research” or “literature review” refer to research that analyzes or critically assesses information, concepts, or findings found in academic literature and develops theoretical and methodological contributions to specific themes.

So that readers can easily understand the data collected for this research, descriptive analysis, or systematic decomposition and interpretation of data, is required.

This research is qualitative in nature and uses a literature review method. This kind of research is a literature study.

The aim of conducting a literature search is to find various ideas, laws, propositions, principles or concepts that can be used to analyze and answer the research questions that have been asked.

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Energy supply in Indonesia is still dominated by fossil fuels which account for 74.7% of the energy mix

Indonesia's energy intensity is declining more slowly than the G20 five-year trend (Climate Transparency, 2021).

Carbon intensity in the energy sector is also increasing due to the increasing share of coal in the energy mix.

Recent years have seen a decline in the country's oil reserves, a ban on thermal coal exports in Indonesia, and rising fossil fuel prices around the world.

Result and Discussion

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Indonesia has initiated a mixed energy use policy. In particular, Government Regulation no. 79/2014 concerning National Energy Policy sets out the country's ambition to carry out transformation, in 2025 and 2050. These targets encourage Indonesia's efforts to maximize all renewable energy potential.

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Business Model Waqf and New and Renewable Energy In Indonesia

Stakeholder Mapping and Analysis

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Resource of Financing Waqf and Renewable Energy

Direct Cash Waqf

Indirect Cash Waqf

Hybrid between waqf and Infaq

The Collected cash represents the waqf and is invested in profitable green

The collected cash represent a medium to create a waqf. Within this scheme, the waqf. Within this scheme, the waqf asset can be tangible or intangible assets.

Combination of waqf and infaq. In this scheme, the waqf asset can be in the form of non cash (land, building, intellectual rights) and cash represents infaq. In the term of usage, infaq is more flexible in use.

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Source of Financing for Waqf and Reneweble Energy

Islamic Social and Commercial Finance Source:

Other Sources :

Islamic social and commercial finance sources; waqf (direct and indirect cash waqf, hybrid between waqf and infaq), zakat, sadaqah, other Islamic schemes for Islamic financial institution,

crowdfunding, CWLS, SLW, Green Sukuk.

APBN, APBD, CRS Fund, International Fund

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Green Waqf Ecosystem for Renewable Energy

Figure 6. Green Waqf Ecosystem for Renewable Energy

Source : Badan Wakaf Indonesia, 2022 (Modified)

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Opportunities and challenges for Waqf and renewable energy in Indonesia

The existence of critical and very critical land

The country's commitment to reducing carbon emissions in the Nationally Determined Commitment (NDC) agreement

Generous society

Accommodative waqf regulatory framework

Waqf campaign product differentiation

Da'wah opportunity for renewable energy activists

Ex-mining land rehabilitation project

Sustainable Development Goals

The availability of waqf land is not productive

Cash flow of waqf institutions

Regional solutions for electricity

Communal development of renewable energy

Willingness to pay for the energy produced

Community involvement in the campaign

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Challenges of waqf and renewable energy in Indonesia:

Waqf Literacy

Land ownership

Funding

Individual program

Economies of Scale

Concerns about project guarantees

There are no consortium regulations

Preference for proven projects

Good maintenance

Sustainability of renewable energy projects

Expensive renewable energy development

Maintenance and operation costs

Social engineering

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Recommendations

The government through various institutions must provide important support to enable the implementation of the Green Waqf Framework, this support includes:

Simplifying the Green Waqf Framework for renewable energy into national strategic development plans, both for long-term and medium-term development plans;
Technical regulations as part of the implementation of Indonesia's NDC from various institutions
Monetary, fiscal and structural incentives for parties involved in green waqf projects.

Waqf authorities or related institutions must coordinate the implementation of pilot projects and ecosystem development so that the feasibility and sustainability of projects and development can be maintained.
Inclusion of Green Waqf Framework material as part of public communication efforts to support environmental protection and energy sustainability campaigns. This can include the inclusion of green waqf materials in public spaces, digital media, and even religious sermons (such as sermons in the Islamic tradition).
Higher education institutions that accommodate Green Waqf projects as part of student study plans, such as the Kampus Merdeka platform.

Strengthening the technical aspects of the Green Waqf project, especially the application of renewable energy, such as:

Availability of standard operating procedures required for the project;
Monitoring and evaluation system; AndEmission reduction measurement methods.
These technical aspects must be prepared with good quality and evaluated periodically so that continuous improvement can be maintained

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