Western nations not ready to finance Indonesian coal plant retirements
Sign up now: Get ST's newsletters delivered to your inbox
The phase out of coal use will still require concessionary funds from developed countries, said a government official.
PHOTO: AFP
Follow topic:
NUSA DUA, Indonesia – Western countries are not ready to finance the early retirement of Indonesian coal-fired power plants under the Just Energy Transition Partnership (JETP), a government official said on Monday, based on talks with the partnership countries.
Last November, Indonesia became the second country to join the JETP.
“During the discussion, it was very clear that they are not eager to provide financing for early retirement,” Mr Septian Hario Seto, Indonesia’s deputy of investment and mining coordination at the Coordinating Ministry for Maritime and Investment Affairs, told Reuters on the sidelines of industry conference Coaltrans.
“Our demands are very clear – early retirement of coal-fired power plants and building a smart grid,” he added.
However, “they are more interested in renewable commercial projects”, Mr Septian said. For Indonesia, the challenge is excess electricity supply, he said.
The “priority should be coal retirement or increasing demand since we have an excess (of electricity)”, he said. “If we continue adding renewable (projects), it will impact our budget.”
The phasing out of coal use will still require concessionary funds from developed countries, Mr Septian said.
Under the JETP, Indonesia is committed to cap and peak the power sector’s carbon emissions at 290 million tonnes by 2030. The 2030 peak would be at a level 25 per cent lower than a previously forecast peak in 2037.
The plan will eliminate 300 million tonnes of greenhouse gas emissions through 2030 and reduce well over 2 billion tonnes through 2060.
The financing schemes for JETP are a blend of equity investments, grants and concessional loans, which people familiar with the plan say account for the largest part of the pledge.
A plan to retire a 660-megawatt coal-fired power plant in Indonesia’s West Java through the Asian Development Bank is set to be financed at up to US$300 million.
South Africa was the first country to reach a deal under JETP, securing a US$8.5 billion financing pledge in 2021, while Vietnam secured US$15.5 billion in a deal struck in late 2022. REUTERS
