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Indonesia creates funding platform to finance coal retirement, renewable energy projects
Indonesia is estimated to require a total of US$4.3 billion to retire 9.2 GW of coal plants by 2030.
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Finance Minister Sri Mulyani Indrawati speaks during the sustainable finance seminar session of the Group of 20 Finance Ministers and Central Bank Governors (FMCBG) meeting on July 13 in Nusa Dua, Bali. (Finance Ministry/Finance Ministry)
Indonesia has created a funding platform for its renewable energy projects, including a pioneering program to retire coal-fired power plants, and appointed state-owned financing firm PT Sarana Multi Infrastruktur (SMI) to manage the funds.
SMI will be responsible for managing the funding and financing framework, called the energy transition mechanism (ETM), to achieve Indonesia’s nationally determined contribution (NDC) and net-zero emission targets by 2030 and 2060, respectively.
“The country platform can accommodate a holistic approach needed to implement ETM [in Indonesia],” Febrio Nathan Kacaribu, the head of the Finance Ministry's Fiscal Policy Agency (BKF), said during the launch of the ETM country platform on Thursday.
The launch was part of the third Group of 20 Finance Ministers and Central Bank Governors (FMCBG) meeting held in Nusa Dua, Bali.
SMI president director Edwin Syahruzad explained that the ETM’s main priority would be retiring non-renewable power plants or phasing out coal.
“Efforts to reduce dependence on non-renewable energy sources require funding. SMI has been chosen to carry out the transition and now we are starting to prepare [...] which projects will be targeted for energy transition,” he said during a press briefing in Nusa Dua.
The funding platform manager would be responsible to develop derisking financial instruments, a development grant facility (DGF), as well as low-cost financing to help make challenging projects more financially viable, according to Masyita Crystallin, a special advisor to the finance minister.
