Indonesia considers green financing eligibility for coal power plants that supply EV battery makers
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Indonesia is one of the world’s top carbon emitters and is also the biggest exporter of coal globally.
PHOTO: AFP
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JAKARTA - Indonesia’s financial regulator (OJK) is considering making coal-fired power plants that supply electricity to electric vehicle (EV) battery manufacturers eligible for green financing,
Mr Mahendra Siregar told reporters that Indonesia’s “green taxonomy”, a framework defining what investment is considered environmentally friendly, is currently being revised to include funding for early retirement of coal power plants, to match the taxonomy agreed upon by Asean.
Under the same review, OJK would consider expanding the green label to loans for coal-fired power plants used by industries that make products considered sustainable, such as batteries for EVs, he said.
“In the end, we need to see the whole result, the end product of the whole supply chain,” Mr Mahendra said, explaining why such funding could be considered environmentally sound.
If adopted, this would relegate Indonesia to the bottom of the pack of global green or sustainable finance taxonomies, said the Institute for Energy Economics and Financial Analysis (Ieefa) think-tank in a statement.
“It is extremely concerning that now, new coal-powered generation could be seen as protecting or improving the environment. This simply goes against scientific evidence,” analysts at Ieefa said.
While many global banks have stopped funding coal assets, most Indonesian lenders have continued to finance projects related to the fossil fuel.
Indonesia is one of the world’s top carbon emitters and is also the biggest exporter of coal globally. But it has pledged to reach net-zero emissions by 2060, in part by replacing dirty sources in electricity generation with renewables.
In 2022, Indonesia secured a commitment from nations led by the United States and Japan to mobilise US$20 billion (S$27 billion) in funding to speed up its transition to cleaner energy under the Just Energy Transition Partnership (JETP) scheme.
The publication of Indonesia’s investment plan for the funds, initially due in August, has been pushed back to later in 2023, to factor in coal power plants being built privately by manufacturers for their own industrial use, said a member of the JETP Indonesia working group. REUTERS
