Indonesia is still awaiting more affordable financing to accelerate the early retirement of its coal-fired power plants under an agreement with the G7, a group of wealthy nations, according to senior government officials on Monday. The pact is part of the transition towards cleaner energy in the Southeast Asian country, which has a population of over 275 million. As part of the G7’s Just Energy Transition Partnership (JETP), unveiled in 2022, Indonesia was promised $20 billion in funding. However, only a small portion of this money has been disbursed.
Luhut Pandjaitan, a senior minister overseeing mining, noted that the current financing mechanism does not include any grants and fails to address key issues such as the high costs associated with retiring coal plants. “If you push us to retire our coal plants early, how do we finance it? The interest on the finance needs to be attractive,” Luhut stated at the Coaltrans Asia conference. “If they offer a commercial rate of interest, what’s the point?”
Indonesia, which has been seeking interest rates lower than those available on the open market, needs $94.6 billion by 2030 to develop infrastructure for clean power generation and transmission to phase down coal. Grant funding in the JETP is currently set at only $153.8 million of the total promised. The slow progress on the plan, once called the “single largest climate finance transaction” by a U.S. Treasury official, has hampered the efforts of the world’s seventh-largest producer of coal-fired power to reduce emissions.
Indonesia is now attempting to close its 660-MW Cirebon-1 power plant in West Java, but, according to Septian Hario Seto, a deputy minister for investment affairs, a final agreement has not yet been reached. “Too many promises, nothing delivered,” Seto told Reuters on the sidelines of the conference.
The government is also considering shutting down 13 coal-fired power plants owned by state utility Perusahaan Listrik Negara (PLN), but has not set a timetable, citing concerns over energy security and affordability.
Luhut urged other nations to avoid lecturing Indonesia on decarbonization, referencing a presentation where he informed U.S. Treasury Secretary Janet Yellen that Indonesia’s emissions per capita are much lower than those of the United States. At 2.3 metric tons per capita, Indonesia’s carbon dioxide emissions are far below the U.S. average of 14.7 tons per capita and also below the global average of 4.5 tons.
