U.S., Japan and partners mobilise $20 billion to move Indonesia away from coal

  • The agreement would lead to a peak in emissions by 2030
  • Indonesia has set a net zero target in the electricity sector
  • The program is based on the COP26 South Africa plan

NUSA DUA, Indonesia/SHARM EL SHEIKH, Egypt, Nov 15 (Reuters) – A coalition of nations will mobilize $20 billion in public and private finance to help Indonesia close coal power plants and reduce the sector’s highest emissions in seven years. 2030, the United States, Japan and partners said on Tuesday.

The Indonesia Just Energy Transition Partnership (JETP), more than a year in the making, is “probably the largest climate finance deal or partnership,” a US Treasury official told reporters.

Indonesia’s JETP builds on an $8.5 billion initiative launched last year by the US, UK and EU at the COP26 climate summit in Glasgow to help South Africa rapidly decarbonise its energy sector.

In order to receive the program’s $20 billion in grants and soft loans over three to five years, Indonesia committed to limiting electricity sector emissions to 290 million tons by 2030. The public and private sectors each pledged half of the funding.

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Indonesia is also committed to achieving net-zero emissions in its energy sector and doubling the rate of renewable energy deployment by 2050, a decade ahead of the current target in its national climate plan, so it can at least aims to make 34%. All energy production by 2030.

“We have created a platform for cooperation that can truly transform Indonesia’s energy sector from coal to renewable energy and support significant economic growth,” said US Special Representative for Climate Change John Kerry.


According to the plan, the peak level of energy emissions for Indonesia in 2030 will be 25 percent lower than the expected peak in 2037, a Treasury official said. The annual reduction in Indonesia’s emissions over those years would be greater than the annual emissions of Britain’s energy sector, the official said. .

The plan would eliminate 300 million tons of greenhouse gas emissions by 2030 and cut more than 2 billion tons by 2060, the partners said in a statement.

“Indonesia is committed to using the energy transition to achieve a green economy and ensure sustainable development,” said President Joko Widodo. “This partnership provides valuable lessons for the global community.”

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The United States and Japan are working with Indonesia on behalf of other G7 democracies Britain, Canada, France, Germany, Italy, as well as Norway, Denmark and EU partners.

Multilateral development banks and Climate Investment Funds account for about a third of Indonesia’s $10 billion state funding for JETP, CIF chief Mafalda Duarte told reporters. CIF has committed approximately $500 million to help Indonesia’s energy transition.

“This is the first step, the first support package, and more will be needed,” Duarte said when asked about the adequacy of JETP funding.

Japan announced on Monday that it would help Indonesia transition away from coal through public and private institutions, including the state-owned Japan Bank for International Cooperation (JBIC).

Indonesia, the Asian Development Bank (ADB) and a private power producer on Monday announced plans to refinance and early shut down a 660-megawatt coal-fired power plant in West Java province, the first agreement under the ADB’s new financing program to reduce carbon emissions. .

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U.S. Treasury and State Department officials said half of the $20 billion would come from the private sector, including seven global banks: Bank of America ( BA.N ) Citigroup Deutsche Bank ( DBKGn.DE ), HSBC ( HSBA.L ) , Standard Chartered ( STAN.L ), Macquarie ( MQG.AX ) and MUFG.

U.S. officials say public financing includes soft loans and equity, as well as some grants.

The United States will work with Indonesia to establish a secretariat to implement the initiative and develop a 90-day plan for Indonesia to reform its policies, such as regulating permitting and establishing a competitive procurement process to meet the goals.

South Africa said this month that the amount of funding needed to phase out coal was far greater than what was raised through the JETP mechanism.

A State Department official said it had learned some lessons and engaged local partners from the start to “move as quickly as possible.”

Reports from David Loder in Nusa Dua and Valerie Volkovich in Sharm el-Sheikh; Edited by Robert Birsel and Janet Lawrence

Our standards: Thomson Reuters Trust Principles.


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