The government on Tuesday unveiled an investment plan to mobilize $20 billion in funding pledged by global lenders led by the United States and Japan to accelerate decarbonization of the power sector. Indonesia also called for the disbursement of these funds as soon as possible.
Under an agreement called the Just Energy Transition Partnership (JETP), Indonesia will seek to reduce carbon dioxide emissions by 250 million tons for the on-grid electricity sector by 2030.
The investment proposal, known as the Comprehensive Investment and Policy Plan (CIPP), was officially announced following a public consultation period after the draft was published earlier this month.
Indonesia, one of the world’s largest emitters of greenhouse gases, plans to increase the share of renewable energy in its power plants to 44% by 2030 from around 12% in 2022.
A local resident was riding a motorbike on the road near the geothermal power generating unit (PLTP) owned by PT. Geo Dipa Energi (Persero) in the Dieng mountain area in Banjarnegara, Central Java, November 15 2020. (Photo: REUTERS/Willy Kurniawan)
“We have to move quickly because 2030 is less than seven years away. “This partnership must be enhanced and accelerated to implement priority projects, including immediately realizing financing commitments,” said BUMN Minister Erick at the launch.
CIPP indicates $97.3 billion in investment is needed to reach the target, including $66.9 billion for 400 projects that must start by 2030.
Michael Kleine, US charge d’affaires in Jakarta, said the JETP funding is expected to “stimulate” energy transition investment and attract more financing.
However, some environmental activists are concerned about the large portion of commercial loans included in it.
Half of the promised funds will come from private financing, which could take the form of commercial loans at market rates, equity investments or other debt instruments.
“What’s the point of waiting for the JETP CIPP documents to come out if the deals with developed countries are just business loans as usual?” said Bhima Yudhistira from the Center for Economic and Legal Studies think tank.
JETP in Indonesia is the largest in Southeast Asia. Vietnam took second place with a scheme worth $15 billion. (ab/lt)