A coalition of nations plans to mobilize US$20 billion of public and private finance to help Indonesia shut coal-fired power plants and bring forward the sector’s peak emissions date by seven years to 2030, the US, Japan and partners announced yesterday.
The Indonesia Just Energy Transition Partnership (JETP), more than a year in the making, “is probably the single largest climate finance transaction or partnership ever,” a US Department of the Treasury official told reporters.
The Indonesia JETP is based on last year’s US$8.5 billion initiative to help South Africa more quickly decarbonize its power sector that was launched at COP26 in Glasgow, Scotland, by the US, UK and the EU.
Photo: AFP
To access the program’s US$20 billion of grants and concessional loans over a three to five-year period, Indonesia has committed to capping power-sector emissions at 290 million tonnes by 2030 — and with a peak that same year. The public and private sectors have pledged about half of the funds each.
Indonesia has also set a goal to reach net zero emissions in its power sector by 2050, a full decade before its current target set in its national climate plan, and to double the pace of renewable energy deployment so that it accounts for at least 34 percent of all power generation by 2030.
“We’ve built a platform for cooperation that can truly transform Indonesia’s power sector from coal to renewables and support significant economic growth,” US Special Envoy on Climate Change John Kerry said. “We’ve wrestled with countless issues to arrive at today’s groundbreaking announcement.”
The US Treasury official said that the peak power emissions for Indonesia in 2030 under the plan would be at a level 25 percent lower than their currently estimated peak in 2037. Indonesia’s annual emissions reduction over those years would be larger than the UK’s annual power-sector emissions, the official said.
The plan would eliminate 300 million tonnes of greenhouse gas emissions through 2030 and a reduction of well over 2 billion tonnes through 2060, the partners said in their statement.
“Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development,” Indonesian President Joko Widodo said in a statement. “This partnership will generate valuable lessons for the global community and can be replicated in other countries to help meet our shared climate goals.”
The US and Japan are coleading the effort with Indonesia on behalf of the other G7 democracies the UK, Canada, France, Germany and Italy, as well as partners Norway, Denmark and the EU.
Japan on Monday announced that it would help Indonesia transition away from coal power through public and private institutions, including the state-affiliated Japan Bank for International Cooperation.
Indonesia, the Asian Development Bank and a private power producer on Monday announced plans to refinance and prematurely retire a 660-megawatt coal-fired power plant in West Java Province, the first such deal under the bank’s groundbreaking new carbon emissions reduction financing program.
US Treasury and Department of State officials said that half of the US$20 billion would come from the private sector, with seven global banks participating: Bank of America, Citigroup, Deutsche Bank, HSBC, Standard Chartered, Macquarie and MUFG.
The US officials said that public finance would include concessional lending and equity, as well as some grants.
The officials said the US would work with Indonesia to map out a 90-day plan to set up a secretariat to run the initiative and for Indonesia to reform its policies, such as streamlining permitting and setting up a competitive procurement process to make the targets achievable.
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