Nusa Dua, Indonesia; Sharm el-Sheikh, Egypt (AFP) The US, Japan, and partners will raise $20 billion in public and private funds to assist Indonesia in closing coal power facilities and advancing the sector’s peak emissions date by seven years, to 2030.
The Indonesia Just Energy Transition Partnership (JETP) took more than a year to create, a U.S. Treasury official said.
The Indonesia JETP is based on a $8.5 billion program introduced at COP26 in Glasgow last year to help South Africa decarbonize its electricity sector.
Indonesia has agreed to cap power sector emissions at 290 million t by 2030, with a peak in the same year. The public and private sectors have pledged nearly half of the funds apiece.
Indonesia also has established a goal to reach net-zero emissions in its power sector by 2050, a full decade before its current objective set in its national climate plan, and to increase the pace of renewable energy deployment so that it accounts for at least 34% of all power output by 2030.
“We’ve developed a platform for cooperation that can change Indonesia’s power sector from coal to renewables,” John Kerry remarked. “We’ve grappled with innumerable issues to arrive at today’s breakthrough announcement.”
EARLIER, LOWER PEAK
The Treasury official added that the peak electricity emissions for Indonesia in 2030 under the plan would be at a level 25% lower than their currently predicted peak in 2037. Indonesia’s yearly emissions reduction during those years would be larger than Britain’s annual power sector emissions, the official said.
The strategy will reduce greenhouse gas emissions by almost 2 billion tonnes by 2060, the partners stated.
“Indonesia is determined to utilize our energy transition toachieve a green economy and drive sustainable development,” Indonesian President Joko Widodo said in a statement.
“This alliance will create useful lessons for the global community and can be implemented in other nations to help accomplish our shared climate goals,” he added.
U.S., JAPAN LEAD
The United States and Japan are co-leading the initiative with Indonesia on behalf of the other G7 democracies Britain, Canada, France, Germany Italy, as well as partners Norway, Denmark and the European Union.
Japan will help Indonesia shift away from coal through public and commercial organizations, notably the Japan Bank for International Cooperation (JBIC).
Indonesia, the Asian Development Bank (ADB) and a commercial power producer on Monday announced plans to refinance and prematurely retire a 660-megawatt coal-fired power plant in West Java province, the first such deal under the ADB’s innovative new carbon emissions reduction financing scheme.
Half of the $20 billion would come from the private sector, with seven global banks participating: Bank of America (NYSE:BAC), Citigroup (NYSE:C), Deutsche Bank (ETR:DBKGn), HSBC, Standard Chartered (OTC:SCBFF), Macquarie and MUFG.
Public financing will include concessional loans, equity, and grants, according to U.S. officials.
The US will work with Indonesia to sketch out a 90-day plan to establish up a secretariat to oversee the program and modify Indonesia’s regulations, such as streamlining permission and setting up a competitive procurement procedure, to achieve the targets.
South Africa this month stated the volume of financing it required to phase out its coal was far more than the funding gathered under its JETP mechanism.
The State Department source said it had learnt some lessons and had engaged local partners from the onset to “move as rapidly as feasible”.
