Indonesia announced an investment initiative to mobilize US$20 billion pledged by a global lending group led by the United States and Japan on November 21. The initiative aims to accelerate the decarbonization process in the power sector, and the Indonesian government is pushing for the funds to be disbursed soon.
Under the Just Energy Transition Partnership (JETP), Indonesia aims to reduce carbon dioxide emissions from the grid electricity sector by 250 million metric tons by 2030, compared to projected business-as-usual emissions of more than 350 million metric tons. This is the largest initiative in the region so far.
The official announcement of the investment plan, known as the Comprehensive Investment and Policy Plan (CIPP), follows a period of public consultation that began after the draft was released in early November.
Indonesia, one of the world's largest contributors to greenhouse gas emissions, plans to increase the share of renewable energy in its electricity generation from about 12 percent in 2022 to 44 percent by 2030.
At the launch of this initiative, Indonesia's Coordinating Minister for Economic Affairs, Erick Thohir, said that Indonesia needs to move fast because 2030 is less than 7 years away. Therefore, the partnership needs to be expanded and accelerated to work on priority projects, including the immediate implementation of financing commitments.
The Comprehensive Investment and Policy Plan (CIPP) estimates that an investment of about US$97.3 billion is needed to achieve the goal. This includes US$66.9 billion to launch 400 projects expected to start by 2030.
Michael Kleine, U.S. Charge d'Affaires in Jakarta, expressed hope that the JETP funding could serve as a catalyst for investment in the energy transition and attract more funding.
However, some environmental activists expressed concern about the high proportion of commercial loans in the mix. Half of the pledged funds will come from the private sector, which could include market-rate commercial loans, equity investments, or other debt instruments.