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RI’s $20b climate deal requires eye on debt: Experts
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A recently announced international climate financing deal will kick-start Indonesia’s efforts to wean itself off coal-fired power plants, though the country must manage its debts and the program prudently, experts have said.
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recently announced international climate financing deal will kick-start Indonesia’s efforts to wean itself off coal-fired power plants, though the country must manage its debts and the program prudently, experts have said.
A coalition of rich nations will mobilize US$20 billion in grants and concessional loans over a three- to five-year period to help Indonesia shut down coal power plants and bring forward the sector's peak emissions date by seven years to 2030.
The financing commitment, known as the Just Energy Transition Partnership (JETP), chips away at the estimated $600 billion Indonesia will need to phase out coal power in favor of renewables.
Putra Adhiguna, an energy economist with the Institute for Energy Economics and Financial Analysis (IEEFA), said the country needed to ensure the funds were utilized prudently for early coal plant retirement and new investments in renewables.
The country would also have to consider its existing debt burden, particularly given the number of past infrastructure investment projects with “less-than-stellar outcomes”.
“Expansion of Indonesia’s energy sector to meet future demand will require funding. Thus, the availability of concessional lending should be appreciated, but we need to know the details and terms of the funding,” he told The Jakarta Post on Wednesday.
Putra added that information on the share of concessional loans, grants and commercial loans in the total $20 billion package had not yet been disclosed to the public.
