The government is pushing for real support from the International Partners Group (IPG) and the Glasgow Financial Alliance for Net Zero (GFANZ) for the energy transition in Indonesia, by creating transparent and accountable financing mechanisms and structures.
IPG and GFANZ contributes through JETP
Both the IPG and the GFANZ are two entities included in the JETP scheme in which each entity has promised to provide US$ 10 billion assistance fund.
The International Partners Group (IPG) which is a group of developed countries such as the United States, France, Germany, the United Kingdom and the European Union. Meanwhile, the GFANZ is a private banking alliance consisting of Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, MUFG and Standard Chartered.
To accommodate the creation of structures and financing, the government launched the Comprehensive Investment and Policy Plan Indonesia (CIP), which is currently being prepared and planned to be completed on August 16, 2023. The CIP is established to facilitate renewable energy development.
JETP implementation
A number of Ministry of Energy and Mineral Resources energy transition projects include projects in the EBT sector through the Just Energy Transition Partnership (JETP) scheme facilitated by CIP. In addition, the project has gained the support of the Asia Development Bank and the International Energy Agency, as well as other friendly countries.
JETP is the outcome of the discussed energy transition from last year’s G20 in Bali. The JETP is expected to support the acceleration of the energy transition program in Indonesia through a financing scheme.
Dadan Kusdiana, Director General of New, Renewable Energy and Energy Conservation, said that the activities listed in the joint statement will facilitate the development of EBT supporting industries.
“Some of the main activities at JETP are the development of clean energy, specifically renewable energy, accelerating the retirement of coal-fired power plants, and programs to help increase energy efficiency,” explained the Ministry of Energy and Mineral Resources.
Formation of JETP Secretariat
The government plans to implement this JETP investment with a series of policies such as establishing a JETP Secretariat, both in terms of funding mechanisms, regulatory adjustments, including for early retirement of coal-fired power plants.
“The establishment of the JETP Secretariat is an important milestone. This secretariat will manage the day-to-day implementation of Indonesia’s energy transition towards low carbon that is sustainable, equitable and supports Indonesia’s economic growth,” said Rachmat Kaimuddin, Deputy for Infrastructure and Transportation Coordination at the Coordinating Ministry for Maritime Affairs and Investment back in February 17, 2023.
Issues related to JETP
However, presently, the JETP remains unclear about the disbursement of the US$ 20 billion fund promised to Indonesia within 3 to 5 years.
Indonesia plans to use this funding to reduce emissions in the electricity sector, develop EBT and increase it.
Kusdiana said that there has not been a penny of funds from America for JETP funding and discussions will continue to be held to push for real support.
