Indonesia has chosen to omit coal-fired power plants operated by industrial estates from its funding plan under the G7-led Just Energy Transition Partnership (JETP). This decision raises questions about Indonesia's emission targets and G7's commitment to supporting cleaner energy in developing nations.
The JETP, offering equity investments, grants, and concessional loans, aims to aid developing countries in transitioning to cleaner energy sources in the power sector.
Indonesia's exclusion of industrial coal plants may hinder its ability to meet the JETP target of capping emissions at 290 million metric tons of CO2-equivalent by 2030, shifting the emission reduction burden to the public sector.
This exclusion is temporary, driven by the need to protect the nickel smelting sector. Indonesia is Southeast Asia's largest economy, with significant captive coal power capacity.
Challenges in implementing JETP include complaints about financing terms and commitments in other nations, such as Vietnam and South Africa.
Indonesia's success in implementing the JETP is seen as a test of the G7's commitment to assisting developing nations in their clean energy transition.
The Comprehensive Investment and Policy Plan (CIPP) will reveal that only $2.5 billion of JETP funding is allocated for closing coal plants.
Experts estimate Indonesia needs between $95 billion and $120 billion until 2030 to meet JETP goals, highlighting the financial challenges the nation faces in adopting cleaner energy sources.