Indonesia announced an investment initiative on November 21 to mobilize $20 billion pledged by a world lending group led by the United States and Japan. The initiative goals to speed up the decarbonization process within the energy sector, and the Indonesian government insists that the funds will likely be disbursed soon.
Under the Just Energy Transition Partnership (JETP), Indonesia goals to scale back carbon dioxide emissions from the grid electricity sector by 250 million tonnes by 2030, in comparison with projected business-as-usual emissions of over 350 million tonnes. This is the most important initiative within the region to this point.
The official announcement of the investment plan, called the Comprehensive Investment and Policy Plan (CIPP), follows a period of public consultation that began after the draft was published in early November.
Indonesia, considered one of the world’s largest producers of greenhouse gases, plans to extend the share of renewable energy in electricity generation from about 12 percent in 2022 to 44 percent by 2030.
Launching the initiative, Indonesia’s Coordinating Minister for Economic Affairs Erick Thohir said Indonesia must act quickly as 2030 is lower than seven years away. The partnership due to this fact must be expanded and accelerated to work on priority projects, including the immediate implementation of economic commitments.
The Comprehensive Investment and Policy Plan (CIPP) estimates that an investment of roughly $97.3 billion is required to attain this goal. This includes $66.9 billion to launch 400 projects scheduled to start by 2030.
Michael Kleine, U.S. Charge d’Affaires in Jakarta, expressed hope that JETP financing could function a catalyst for investment within the energy transition and attract more funding.
However, some environmental activists have expressed concern in regards to the high share of economic loans on this basket. Half of the committed funds will come from the private sector, which can include industrial loans at market rates, equity investments or other debt instruments.
