Indonesia, the largest economy in Southeast Asia, is still awaiting a large part of the $20 billion funding it was promised by the richest nations to facilitate its move away from coal, a government official said on Monday.
"If you push us to retire our coal plants early, how do we finance it? The interest on the finance needs to be attractive," Luhut Pandjaitan, a senior minister overseeing mining, said at the Coaltrans Asia industry event, as carried by Reuters.
At the end of 2022, Indonesia, the world's top coal exporter and heavily reliant on coal for power generation, signed an agreement to launch a Just Energy Transition Partnership (JETP) co-led by the U.S. and Japan and including Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom.
Indonesia has been seeking below-market interest rate levels to finance its reduction of coal power use.
To achieve total power sector emissions peaking by 2030, the long-term partnership said in 2022 that it intends to mobilize an initial $20 billion in public and private financing over a three-to-five-year period, using a mix of grants, concessional loans, market-rate loans, guarantees, and private investments.
These investments are expected to help Indonesia achieve the other main targets of the JETP. These targets are: capping power sector emissions at 290 megatons of CO2 in 2030, down from the baseline value of 357 MT CO2; establishing a goal to reach net-zero emissions in the power sector by 2050, thus bringing forward Indonesia's net-zero power sector emissions target by ten years, and accelerating the deployment of renewable energy.
Under the partnership, Indonesia will target to have renewable energy generation accounting for at least 34% of all power generation by 2030, which would roughly double the total renewables deployment over the course of this decade compared to current plans.
Indonesia was one of the countries besides China and India that added coal capacity in 2023, according to a report by non-profits and climate groups from April 2024.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More