- Peak emissions will be brought forward to 2030 with the Market
- Indonesia sets a net-zero target in the power sector
- Program based on COP26 South Africa plan
NUSA DUA, Indonesia/SHARM EL-SHEIKH, Egypt, Nov 15 (Reuters) – A coalition of countries will mobilize $20 billion in public and private finance to help Indonesia close coal-fired power plants and the sector’s emissions peak to bring forward seven years to 2030, said the United States, Japan and partners on Tuesday.
The Indonesia Just Energy Transition Partnership (JETP), more than a year in the making, is likely to be “the largest single climate finance transaction or partnership ever”, a US Treasury official told reporters.
Indonesia’s JETP builds on last year’s $8.5 billion initiative to help South Africa decarbonise its power sector more quickly launched by the United States, Britain and the European Union at the COP26 climate summit in Glasgow.
To access the program’s $20 billion worth of grants and concessional loans over three to five years, Indonesia has committed to capping power sector emissions at 290 million tons by 2030, peaking in that year. About half of the funds have each been committed by the public and private sectors.
Indonesia has also set a target of achieving net-zero emissions in its power sector by 2050, ten years ahead of its current target in its national climate plan, and doubling the pace of renewable energy deployment so that 34 It involves at least %. all power generation by 2030.
“We have built a platform of cooperation that can transform Indonesia’s power sector from coal to renewable energy and support significant economic growth,” said US Special Envoy on Climate Change John Kerry.
An earlier peak
The Treasury official said peak power emissions for Indonesia in 2030 under the plan would be at a level 25% lower than the current estimated peak in 2037. Indonesia’s annual emissions reduction over those years would be greater than the sector’s annual emissions power in Britain, said the official. .
The plan will eliminate 300 million tons of greenhouse gas emissions by 2030 and reduce well over 2 billion tons by 2060, the partners said in their statement.
“Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development,” President Joko Widodo said in a statement. “This partnership will generate valuable lessons for the global community.”
USA, JAPAN LEAD
The United States and Japan are leading the effort with Indonesia on behalf of the other G7 democracies of Britain, Canada, France, Germany, Italy, as well as their partners in Norway, Denmark and the European Union.
Multilateral development banks and the Climate Investment Funds will contribute about a third of the $10 billion in public funding for Indonesia’s JETP, CIF head Mafalda Duarte told reporters. CIF has allocated about $500 million to help Indonesia’s energy transition.
“It is recognized that this is the first movement, the first package of support, and that more will be needed,” Duarte said when asked about the adequacy of the JETP funding.
On Monday, Japan announced it would help Indonesia transition from coal power through public and private institutions, including the state-affiliated Japan Bank for International Cooperation (JBIC).
Indonesia, the Asian Development Bank (ADB) and a private power producer announced plans on Monday to refinance and prematurely retire a 660-megawatt coal-fired power plant in West Java province, the first such deal under the ADB’s new financing program for reducing carbon emissions. .
U.S. Treasury and State officials said half of the $20 billion would come from the private sector, with seven global banks participating: Bank of America ( BA.N ) Citigroup Deutsche Bank ( DBKGn.DE ), HSBC ( HSBA.L ), Standard Chartered (STAN.L), Macquarie (MQG.AX) and MUFG.
US officials said public finance would include concessional and equity lending, as well as some grants.
The United States will work with Indonesia to outline a 90-day plan to establish a secretariat to run the initiative and for Indonesia to reform its policies, such as streamlining licensing and establishing a competitive procurement process to achieve the goals.
South Africa said this month that the scale of funding it needed to phase out its coal was far greater than the funding put in place through its JETP mechanism.
The State Department official said he had learned some lessons and had engaged local partners from the start to “move as quickly as possible”.
Reporting by David Lawder in Nusa Dua and Valerie Volcovici in Sharm el-Sheikh; Edited by Robert Birsel and Janet Lawrence
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