Indonesia is set to reveal its US$20 billion energy transition investment plan in the coming month, ahead of the UN COP28 climate summit.
The plan, known as the Just Energy Transition Partnership (JETP), was initially scheduled for launch in mid-August but faced delays due to various issues, such as disagreements on funding details and Indonesia’s reliance on coal for electricity.
The new timeline aims to present JETP’s plans for public feedback on November 1, followed by an official launch around November 20, according to Paul Butarbutar, deputy secretary of Indonesia’s JETP office.
When asked if the International Partners Group (IPG), which includes countries like the United States and Japan, along with development banks and private lenders, is expected to approve the investment plan by then, Butarbutar mentioned that content agreement would come first, while funding details would be addressed later.
Indonesia has committed to capping and peaking the power sector’s carbon emissions at 290 million metric tons by 2030 as part of the JETP, with financial support from the IPG through a mix of equity investments, grants, and concessional loans.
Indonesian authorities have expressed concerns that Western nations are hesitant to finance the early retirement of coal-fired power plants, which is necessary to make way for renewable energy projects.
Currently, more than half of Indonesia’s electricity capacity, as the world’s leading thermal coal exporter, relies on coal.
Support from Minister of Finance
Finance Minister Sri Mulyani Indrawati has also advocated for an increase in grants within the fund to reduce interest rates. The delay in August was attributed to the need to ensure that proposals account for additional coal power plant capacity being constructed off-grid by industrial companies, including remote nickel smelters.
In summary, Indonesia plans to unveil its US$20 billion energy transition investment plan in November, addressing issues surrounding funding and the energy mix for the initiative.
The delay was caused by various challenges, and the release is now scheduled for public feedback in early November, with the official launch set for later in the month.
The agreement on content will precede discussions on funding. The plan is crucial for Indonesia to reduce carbon emissions and transition away from coal in its power sector, with a focus on obtaining financial support from international partners.