RI frustrated with developed countries' energy transition financing
President Joko "Jokowi" Widodo and his trusted aid Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan both expressed their frustration against developed countries over energy transition financing during the climate summit in Dubai, while state-owned electricity company PT PLN bagged four, but not really new, agreements to bring home.
President Jokowi did not reveal anything new in the 28th United Nations Climate Change Conference (COP28) in Dubai, the United Arab Emirates (UAE), only reiterating Indonesia's commitment to energy transition and the country's achievement in environmental conservation, including effective mangrove forest management, land rehabilitation and the lowest deforestation rates in the past two decades. He demanded developed countries to fulfil their climate finance commitments to aid developing nations in accelerating their energy transition.1
Echoing the president's call, Luhut, through his video message from Singapore where he was receiving intensive treatment for his sickness, criticized the developed countries' prevailing climate financing model for disproportionately burdening developing nations, including Indonesia. Luhut called on developed nations to devise more effective strategies for deploying technology and capital to facilitate the energy transition in developing countries.2
He highlighted his points during a discussion on Indonesia's Just Energy Transition Partnership (JETP), noting that despite the launch of the Comprehensive Investment Plan and Policy (CIPP) for JETP marking a significant step toward tackling the climate crisis beyond business-as-usual scenarios, the prevailing funding mechanisms continue to mirror traditional, business-as-usual approaches.
This is not the first time Luhut has expressed his grievances over developed countries' funding for the energy transition in Indonesia. Last May, when he met United States climate envoy John Kerry in Washington, he expressed his disappointment with the US over noncommitment over JETP funding, which he described as "empty talk".
In the JETP, developed countries, led by the US and Japan, have promised to provide US$20 billion in public and private funding to help Indonesia accelerate its energy transition. Much of the public funding, however, are old commitments, while the private funding, which comprises half of the JETP funding, would carry commercial rates.
As part of its commitment to a sustainable energy future, Indonesia is committed to reducing its reliance on coal and enhancing the development of renewable energy sources such as solar, hydro power, wind, geothermal and tidal energy. But developed countries are reluctant to fund early retirement of Indonesia's coal-fired powered plants (CFPPs).
One of the four agreements signed by PLN in Dubai is for the early retirement of the 660 Megawatt Cirebon 1 CFPP by December 2035, seven years ahead of its retirement schedule. There is nothing really new in the agreement, including the parties involved in the financing – PLN, the Asia Development Bank (ADB), the Indonesia Investment Authority (INA) and PT Cirebon Electric Power (CEP).3
The early retirement of the Cirebon 1 CFPP is actually part of the ADB-led Energy Transition Mechanism (ETM), an earlier mechanism than JETP for energy transition. The ADB has committed to arranging international funding of $2.4 billion to finance early retirement of CFPPs under the ETM mechanism. And this amount for the ETM commitment is now put under JETP, which shows there is no new money from JETP for the early retirement of CFPPs.
In addition to Cirebon 1, PLN also signed three more agreements to accelerate its energy transition from fossils to renewables. The second agreement is between PLN and the US-based National Renewable Energy Laboratory (NREL), that focuses on PLN's Accelerated Renewable Energy Development (ARED) project. Specifically, PLN and NREL will develop a control center integrating the grid systems of Sulawesi, Kalimantan and Sumatra to distribute the substantial renewable energy potential of these regions efficiently.7 Through ARED, PLN aims to reduce emissions by up to 127 million tonnes of carbon dioxide (CO2) by 2030 and increase renewable energy capacity to 480 gigawatts by 2060.
Third, PLN has partnered with PT Sarana Multi Infrastruktur (PT SMI) and Kreditanstalt für Wiederaufbau (KfW) to establish facilities for two pumped storage hydroelectric power plants: one in Grindilu River in East Java with capacity of 1,000 MW and the other a 500 MW project in Sumatra. Fourth, PLN entered into an agreement with the Global Energy Alliance for People and Planet (GEAPP) to expedite the shift from fossil fuel energy to renewable energy.
Additionally, PLN has agreed with UAE-based energy company Masdar to expand their partnership in the Cirata Floating Solar Power Plant, with plans to increase its capacity by an additional 500 Megawatt peak (MWp), adding to its current capacity of 192 MWp. They also agreed to explore international energy market development.8
PREV NEXT