Indonesia Launches $20 Billion Green Energy Plan with Global Backing to Slash Emissions

Credit: Teguh Setiawan/Pexels

has officially launched its ambitious plan to secure $20 billion in financing, championed by global lenders such as the United States and Japan. The initiative, known as the Just Energy Transition Partnership (JETP), aims to expedite the decarbonisation of Indonesia's power sector and has called for the immediate disbursement of funds.

As part of the JETP, Indonesia is committed to reducing carbon dioxide emissions in its on-grid power sector to 250 million metric tons by 2030. This is a significant reduction from the estimated business-as-usual emissions of over 350 million. The Comprehensive Investment and Policy Plan (CIPP), the investment proposal associated with JETP, was officially announced after a public consultation period following the release of the draft earlier this month.

Indonesia, one of the world's largest greenhouse gas emitters, has set an ambitious target to increase the share of in its power generation to 44% by 2030, up from approximately 12% in 2022.

Erick Thohir, the ad-interim chief minister for investment affairs, emphasized the urgency of the situation, stating, “We have to move quickly because 2030 is less than seven years away. The partnership must be enhanced and accelerated to do the priority projects, including to immediately realize the financing commitments.”

The CIPP outlines the need for investments totaling $97.3 billion to achieve these targets, with $66.9 billion allocated to 400 projects that must commence by 2030 at the latest.

Michael Kleine, the U.S. charge d'affaires in Jakarta, expressed optimism that JETP would “jump start” energy transition investments and attract additional financing. However, concerns have been raised by environmentalists regarding the significant portion of commercial loans in the funding mix.

Half of the pledged funds are expected to come from private financing, which may include commercial loans with market rates, equity investments, or other debt instruments. Critics, such as Bhima Yudhistira of the Center of Economic and Law Studies, question the effectiveness of the JETP if it primarily relies on business-as-usual loans from advanced countries.

Indonesia's JETP is positioned as the largest initiative of its kind, surpassing Vietnam's $15 billion scheme in scale and ambition.

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