A new multi-stakeholder partnership to accelerate the country’s just and sustainable transition to a low-carbon economy is taking shape.
Bali, 15 November 2022 – This week’s announcement of the USD 20 billion Indonesia Just Energy Transition Partnership (JETP) and launch of Indonesia’s Energy Transition Mechanism (ETM) Country Platform are two landmark initiatives that will provide significant new climate finance and technical support to accelerate Indonesia’s renewable energy transition efforts.
At the grand launching of the ETM Country Platform on November 14, 2022, Climate Policy Initiative (CPI) was named as a knowledge and technical partner that will support the ETM platform manager, PT Sarana Multi Infrastruktur (Persero) (“PT SMI”—Indonesia’s state-owned infrastructure financing fund). CPI’s role will include conducting policy analysis, stakeholder convening, and making overall recommendations to ensure comprehensive and effective support for Indonesia’s clean energy transition. “The collaboration between PT SMI and all of our strategic partners is essential to fulfill every aspect of the transition required to achieve a truly just and affordable energy transition for the people of Indonesia,” said Edwin Syahruzad, President Director of PT SMI.
Combining extensive experience and expertise in supporting governments, businesses, and financial institutions worldwide (including in India, Brazil, and African countries) to improve climate finance effectiveness and ensure a just energy transition, CPI is honored to support PT SMI in these efforts and affirms its commitment to enhancing the development of clean energy transition policy and finance in Indonesia.
With the JETP announcement, Indonesia becomes the second country, after South Africa, to receive a multinational climate finance deal from the International Partners Group (IPG) with the US, Japan, UK, France, Germany, and the EU as its core members. Following the recently increased emission reduction targets in Indonesia’s enhanced NDC 2022, this single largest climate finance partnership to date is a much-needed boost to the country’s capacity to accelerate the process of coal phase-out and renewable energy investment.
“As a country, we are strongly committed to transition away from coal to cleaner forms of energy. Any potential solution must reflect our country-specific considerations like electricity over-supply, young fleet of coal plants, and just transition of our people,” Indonesian Minister of Finance, Sri Mulyani Indrawati, has publicly shared. To access the USD 20 billion worth of grants and concessional loans over a 3-to-5 year period, Indonesia has committed to capping power sector emissions at 290 million tons and deploying at least 34% renewable energy mix for power generation by 2030.
“While the JETP package deal entails a significant financial contribution to Indonesia’s climate goals, the main challenge and opportunity lie in overall energy sector reform, including detailed investment plans that the government must further develop to maximize additional capital mobilization as well as positive socioeconomic impacts from this funding. Leveraging our recent and ongoing technical work on energy transition finance to the Ministry of Finance and other government institutions, we are both committed and prepared to continue our support and help ensure that energy transition in Indonesia can be truly just and sustainable,” reflected Tiza Mafira, Director of CPI Indonesia.
The JETP package was announced a day after the announcement of Climate Investment Funds’ Accelerating Coal Transition Investment Program (CIF ACT). Under the CIF ACT, Indonesia will have access to USD 500 million in concessional, risk-bearing capital to speed up retirement of up to 2 gigawatts of coal-fired power in 5 to 10 years and to drive the achievement of climate, energy, and development goals. In addition, Indonesia’s state-owned utility PLN has announced the early retirement of independent power producer PLTU Cirebon-1, using the ETM scheme supported by ADB.
In addition to being announced as an ETM Country Platform partner, CPI is developing a framework for financing a just energy transition in rural Indonesia’s eastern regions and recently launched a Rooftop Solar Investment Accelerator Facility at BNEF Summit Bali to help drive up renewable energy growth and investment in Indonesia.
For media inquiries: