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Fitch sees hurdles to implementing JETP in Indonesia
A report from Sustainable Fitch highlights several issues with implementing the JETP in helping Indonesia wean off coal in its energy transition.
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Smoke rises on Sept. 21, 2021 from chimneys at the Suralaya coal power plant in Cilegon, Banten. (AFP/Bay Ismoyo)
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ndonesia faces obstacles to implementing the Just Energy Transition Partnership (JETP), according to Fitch Solutions’ unit Sustainable Fitch, and these might in turn affect the program’s effectiveness in helping the country move away from fossil fuels.
The main issue is with the coal phaseout as outlined in the deal to advance Indonesia’s shift to clean energy, particularly without adding to the country’s economic burdens.
“There may be difficulties in enacting a fair deal for Indonesia that advances the country’s green efforts while not damaging its economy and increasing its debt burden,” said Cheok.
In a report published on Monday, Sustainable Fitch said there had been a lack of consensus on the phasing out of coal among the developed countries involved in the JETP, whereas Indonesia’s energy transition hinged largely on reducing the fossil fuel.
For instance, Japan has been pushing for expensive co-firing technologies, such as using ammonia and hydrogen alongside coal at power plants, as part of its effort to reduce coal. But this approach is not congruent with the standards of European countries backing the scheme.
“This may hinder cooperation and the effectiveness of Indonesia’s JETP and other emerging market climate financing initiatives,” Melissa Cheok, an analyst at Sustainable Fitch, said in the report.
She also noted there was a concern that the problem could spill over to affect other recently signed JETPs, such as those in Vietnam and India.
