More funding into Indonesia’s energy transition but experts fear lack of commitment will undermine efforts to decarbonise the country.
British International Investment (BII), the UK’s development finance institution and impact investor, announced a $15 million (Rp 224 billion ) commitment in Southeast Asia, including Indonesia, to provide investment capital in support of the Just Energy Transition Partnership (JETP), as civil society groups questioned the harmony of this partnership.
The investment marks the start of realising BII’s ambitions to invest up to 500 million pounds sterling (Rp9.2 trillion) in climate finance in the Indo-Pacific region. British Ambassador to Indonesia and Timor Leste, Owen Jenkins, said that the BII investment represented the UK government’s support for JETP, launched at the G20 summit last year.
The funding is further expected to contribute to global climate mitigation goals and the Paris Agreement through clean energy financing solutions. It is also expected to increase reliable, affordable electricity supply for businesses and consumers. It will also enable access to clean energy solutions in under-served areas.
“I am delighted to see British International Investment’s extended offering to the Indo-Pacific region as this investment will also support Indonesia to accelerate its transition away from coal as part of the country’s commitment to its 2060 net zero targets,” Jenkins said in a release received by Ekuatorial on May 22, 2023.
He said that the commitment to the JETP of the G20 countries will not only help Indonesia pursue an accelerated and just energy transition, away from fossil fuels and towards renewable sources but will also support economic growth, new skilled jobs, reduced pollution, and a resilient, prosperous future for Indonesians
If the JETP funding is not maximized for decarbonization, it would only show that JETP is only filled with false solutions.
Fanny Tri Jambore Christanto, Mining and Energy Campain Manager, WALHI
The BII investment hopes to attract more capital to support Indonesia in achieving its 2060 net zero emissions target. It will also open up opportunities for climate funding and support the growth of a resilient green economy in the region.
This commitment will be implemented through SUSI Asia Energy Transition Fund (SAETF), a Southeast Asia-focused energy transition infrastructure fund managed by Swiss-based firm SUSI Partners, which invests globally across the energy transition infrastructure spectrum.
Hazy details in energy transition implementation
Funding for an energy transition that flows into Indonesia is hoped to strengthen its commitment to the early retirement of coal-fired power plants and a firm prohibition on the building of new plants without exception. Social and ecological justice should also be considered by JETP as a funding scheme that upholds fairness.
Fanny Tri Jambore Christanto (Rere), campaign manager for mining and energy issues from Indonesia Forum for Environment (WALHI), believes that there are still many problems in the implementation of JETP funding in Indonesia.
Firstly, the Comprehensive Investment Plan (CIP) that would outline the decarbonisation process remains unclear.
Secondly, the disharmony in decarbonisation efforts can be seen in the existence of plans to build coal-fired power plants in Indonesia. This is despite JETP aims to retire all such plants early. This discordance is expected to hinder Indonesia’s decarbonisation targets.
“If the JETP funding is not maximized for decarbonization, it would only show that JETP is only filled with false solutions,” Rere told Ekuatorial, on May 24, 2023.
She added that JETP also failed to consider the fate of communities and the environments impacted by the activities of the coal-fired power plants. A fair energy transition project, she said, should also be fair regarding social and ecological restoration. It should not only be a viable replacement for the coal industry.
Didit Wicaksono, Greenpeace Indonesian Campaigner for Climate and Energy, added that the lack of firmness in the government’s commitment in the energy transition is also reflected by Presidential Regulation Number 112 of 2022 which prohibits the building of new coal-fired power plants except for those part of national strategic projects.
He said that efforts to retire all coal-fired power plants early must also be accompanied by a commitment not to build any future power plants without exception so that the country could reach its 2030 emission reduction target.
“It is really critical that funding that comes into this region, through JETP or other energy transition funding, be really used for energy transition, not to push false solutions that continue to provide room for the coal industry,” Wicaksono said.
He also expressed hope that the CIP currently being discussed by the JETP Secretariat really positions justice for people and the environment as a priority and an absolute prerequisite. These principles should be followed by JETP, including renewable energy implementation.
Ekuatorial has attempted to reach the JETP Secretariat in Indonesia to confirm the BII in Southeast Asia but until this article was published, no response had been received.
As a footnote, following the JETP agreement, the Indonesian government formed the JETP working team secretariat in Jakarta on February 16, 2023. This secretariat acts as a center of information for the planning, coordination, monitoring, and evaluation of the JETP funding execution.
MInister of Energy and Mineral Resources Arifin Tasrif said that the outputs for the upcoming six months to be delivered by the JETP secretariat are to complete a roadmap for the early retirement of coal-fired power plants, the mobilization of investment, and support the funding mechanism as contained in the CIP.
The CIP is targeted to be completed by August 16, 2023. It will include funding mechanisms, regulatory adjustments, technology, early retirement programs for coal-fired power plants, and sustainable energy transition plans.
