- The agreement brings forward peak emissions to 2030
- Indonesia has a net zero target in the electricity sector
- A program based on the COP26 South Africa project
NUSA DUA, Indonesia/SHARM EL-SHEIKH, Egypt, Nov 15 (Reuters) – A coalition of countries will mobilize $20 billion in public and private financing to help Indonesia close coal-fired power plants and bring forward the sector’s peak emissions date by 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 single largest climate finance transaction or partnership ever,” a US Treasury official told reporters.
The Indonesia JETP builds on last year’s $8.5 billion initiative to help South Africa rapidly decarbonize its power sector, launched at the COP26 climate summit in Glasgow by the United States, Britain and the European Union.
To access the program’s $20 billion worth of grants and concessional loans over a three-to-five-year period, Indonesia committed to cap power sector emissions at 290 million tons by 2030, peaking that year. The public and private sectors have pledged half each.
Indonesia has set a goal in its national climate plan to reach net-zero emissions in its power sector by 2050, a decade ahead of its current target, and to double the pace of renewable energy deployment to at least 34%. All electricity generation by 2030.
“We have built a platform for cooperation that will support Indonesia’s power sector transition from coal to renewables and significant economic growth,” said John Kerry, US special representative on climate change.
The previous peak
Indonesia’s peak electricity emissions in 2030 under the plan will be 25% lower than the current peak in 2037, the Treasury official said. Indonesia’s annual emissions reductions in those years were larger than Britain’s annual power sector emissions, the official said. .
The project will eliminate 300 million tons of greenhouse gas emissions by 2030 and reduce them by more than 2 billion tons by 2060, the partners said in their statement.
“Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development,” President Joko Widodo said in a statement. “This partnership will create valuable lessons for the global community.”
US, Japan lead
The United States and Japan are co-leading with Indonesia on behalf of other G7 democracies such as Britain, Canada, France, Germany, Italy, as well as partners Norway, Denmark and the European Union.
Multilateral development banks and climate investment funds account for a third of the $10 billion in public funding for Indonesia’s JETP, CIF chief Mafalda Duarte told reporters. CIF has committed nearly $500 million to help Indonesia’s energy transition.
“This is recognized as 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 power through public and private institutions, including the state-run Japan Bank for International Cooperation (JBIC).
Indonesia, the Asian Development Bank (ADB) and private power producers announced on Monday a plan to refinance and prematurely retire a 660-megawatt coal-fired power plant in West Java province, the first such agreement under ADB’s new carbon emission reduction financing program. .
U.S. Treasury and State Department officials said half of the $20 billion would come from the private sector, with seven global banks participating: Bank of America ( BA.N ) Citigroup Deutsche Bank ( DBKGn.DE ), HSBC ( HSBA.L ), Standard Chartered ( STAN.L ), Macquarie (MQG.AX) and MUFG.
US officials said public financing would include concessional loans and equity and some grants.
The United States will establish a secretariat to run the initiative with Indonesia to map out a 90-day plan and allow Indonesia to improve its policies, such as streamlining permitting and establishing a competitive procurement process to achieve the goals.
South Africa said this month that the amount of funding it needs to phase out its coal is more than it has mobilized through its JETP mechanism.
A State Department official said it had learned some lessons and engaged local partners from the beginning to “move as quickly as possible.”
Reporting by David Lauder in Nusa Dua and Valerie Volkovici in Sharm el-Sheikh; Edited by Robert Birsel and Janet Lawrence
Our criteria: Thomson Reuters Trust Principles.