Indonesia is still waiting for $20 billion in G7 funding to phase out coal

Indonesia, Southeast Asia’s biggest economy, is still waiting for much of the $20 billion in funding promised by the richest nations to ease 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? Interest in financing has to be attractive,” Luhut Pandjaitan, a senior minister overseeing mining, told the Coaltrans Asia industry event, reported by Reuters.

In late 2022, Indonesia, the world’s largest coal exporter and heavily dependent on coal for power generation, signed an agreement to launch a US-Japan-led Just Energy Transition Partnership (JETP) includes Canada, Denmark, the European Union, France, Germany, Italy, Norway and the United Kingdom.

Indonesia has sought below-market interest rate levels to finance its reduction in coal-fired power consumption.

To reach the maximum level of total energy sector emissions by 2030, the long-term partnership said in 2022 that it plans to mobilize an initial $20 billion in public and private financing over three to five years, using a combination of grants, concessions. loans, market rate loans, guarantees and private investments.

These investments are expected to help Indonesia achieve the other main objectives of the JETP. These objectives are: limiting emissions from the energy sector to 290 megatons of CO2 in 2030, down from the reference value of 357 MT CO2; setting a goal to achieve net zero emissions in the energy sector by 2050, thereby advancing Indonesia’s energy sector net zero emissions goal by ten years and accelerating the deployment of renewable energy.

Under the partnership, Indonesia will aim for renewable energy generation to account for at least 34% of total energy production by 2030, which would roughly double the total deployment of renewables over this decade compared to current plans.

Indonesia was one of the countries, along with China and India, to add coal capacity in 2023, according to an April 2024 report by climate non-profits and groups.

By Tsvetana Paraskova for Oilprice.com

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