The Asian Development Bank (ADB) has approved a $500 million policy-based loan to aid Indonesia in accelerating its energy transition. The Affordable and Sustainable Energy Transition Program is designed to help the country achieve its enhanced nationally determined contribution (NDC) and its target of net-zero power emissions by 2050. This loan is part of the first of two subprograms.
“Indonesia is at a critical juncture in its energy transition journey,” said ADB Country Director for Indonesia, Jiro Tominaga. He added that the loan program would support policy development aimed at addressing the sector’s challenges and advancing the transition to clean energy.
Despite significant progress in expanding its electricity generation capacity, Indonesia remains heavily dependent on fossil fuels such as coal, gas, and diesel. The ADB program aims to address this by establishing a strong policy and regulatory framework for clean energy, enhancing sector governance and financial sustainability, and ensuring a just and inclusive transition.
One of the key measures under the program is the development of a Comprehensive Investment and Policy Plan (CIPP), which outlines the investment needs and opportunities for a just energy transition. Other measures include regulatory improvements to boost renewable energy capacity and initiatives to strengthen energy state-owned enterprises, particularly in promoting gender equality.
The program is a collaborative effort between ADB and cofinancing partners, including Agence Française de Développement (AFD) and German Development Cooperation through KfW. These efforts are part of broader support from ADB, which includes technical assistance projects and infrastructure financing.
Founded in 1966, ADB aims to foster prosperity, inclusivity, and sustainability across Asia and the Pacific, with a focus on eradicating extreme poverty. The bank is owned by 68 members, 49 of which are from the region.
