Indonesia Launches Ambitious Energy Transition Program with International Partners

Jakarta, INTI – Indonesia has embarked on its most ambitious energy transition program to date in collaboration with international partners to combat climate change effectively.

Named the Just Energy Transition Partnership (JETP), this program will witness an initial mobilization of US$20 billion over the next three to five years towards Indonesia's adoption of renewable energy sources.

The JETP was launched by Indonesia and its international allies, including the US, the EU, Japan, and Canada, at the Partnership for Global Infrastructure and Investment event during the G20 Summit in November 2022.

This initiative aims to divert substantial funds to help Indonesia shift away from fossil fuels. It promises to inject new momentum into Indonesia's burgeoning green economy, aligning with the nation's increasing focus on addressing climate concerns.

The JETP Model for Climate Action

The JETP introduces a novel model for international cooperation on country-specific climate change mitigation efforts. This model integrates both public and private investments to facilitate climate financing for developing nations, primarily for transitioning energy production away from fossil fuels. Additionally, the JETP model aims to foster the green economy and address the economic and social needs of communities vulnerable to energy transitions.

Following its inception in 2021 at the COP26 Summit with South Africa, the JETP has now extended its support to Indonesia, becoming the second country to benefit from this initiative. Vietnam and India are poised to follow suit as recipients of the JETP.

In practical terms, Indonesia's JETP will encompass a blend of concessional loans, market-based loans, grants, guarantees, and private investments from both public and private entities. Together, these financial mechanisms will facilitate Indonesia's transition away from coal energy, investing in renewable energy infrastructure, and aiding affected communities in adapting to the transition.

Accelerating Climate Goals under the JETP

The JETP forms a crucial part of Indonesia's commitments to limit global warming to 1.5 °C. To achieve this objective, specific targets have been set for Indonesia under the JETP to reduce emissions and ultimately attain carbon neutrality. These targets often accelerate the timelines of previous climate goals.

Some key objectives under the JETP include:

• Reaching peak power sector emissions by 2030, approximately seven years ahead of the previous schedule.
• Capping power sector emissions at 290 megatons of CO2 in 2030, down from the baseline of 357 megatons of CO2.
• Achieving net-zero emissions in the power sector by 2050, advancing this target by a decade.
• Ensuring at least 34 percent of all power generation comprises renewable energy by 2030, nearly doubling the deployment compared to previous plans.
• Accelerating the adoption of energy efficiency and electrification technologies and reforms.
• Fostering the development of a competitive local industry in renewable energy and energy efficiency, including investment in local technological capacity and knowledge.

Increased Climate Urgency in Indonesia

In recent years, Indonesia has escalated its efforts to transition to renewable energy and address climate change due to its vulnerability to climate change effects as an archipelagic nation. However, being a developing country reliant on fossil fuels poses challenges.

Despite Indonesia's commitments to various climate goals, the country has struggled to meet them in practice. For instance, while Indonesia aimed for renewables to constitute 23 percent of its energy mix by 2025, it currently stands at just 12 percent. Additionally, as the world's largest coal exporter, coal accounts for about 60 percent of Indonesia's electricity generation.

The JETP represents a significant step towards meeting Indonesia's climate needs. It not only aids in transitioning Indonesia's energy mix but also enhances the business environment for the green economy by bolstering infrastructure for renewables and improving financing mechanisms for sustainable projects.

As Indonesia embraces climate action, its emerging green economy is set to accelerate. The JETP, coupled with reforms to encourage renewable energy, is likely to spur further advancements in Indonesia's green economy throughout 2023.