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JETP secretariat suggests using carbon credits to fund coal phaseout
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Smoke and steam billow from a coal-fired power plant owned by Indonesia Power in Suralaya, Banten province, on July 10, 2020. (Reuters/Willy Kurniawan)
T
he Just Energy Transition Partnership (JETP) has suggested that emissions reductions from the early retirement of coal-fired power plants be marketed as carbon credits, and that funds be provided to facilitate the program.
JETP secretary Paul Butarbutar noted that grants, concessional loans and public funding, including through the purchase of carbon credits, were all part of the JETP funding prepared by Indonesia's partner countries.
Tenggara Strategic, a think tank connected to The Jakarta Post, noted that a key aspect of PLN’s strategy to decrease carbon emissions was the early retirement of coal-fired power plants, which, according to PLN estimates, required US$4.2 billion in funding.
Last year, the country received pledges totaling US$20 billion from several developed countries and global private lenders through the JETP.
The Asian Development Bank’s (ADB) energy transition mechanism (ETM) is a similar scheme to phase out coal power.
“The 5 gigawatts [of coal power generation capacity included in the phaseout], generate 6,132 GWh per year, so if the discontinued coal fired power plants produce 1,000 tons of CO2 per GWh, there will be a decrease of 61.3 million tones over the next 10 years. To prevent emissions, we can sell them as carbon credits through a business-to-business or government-to-government mechanism,” Paul said on Monday.
Paul added that the government needed to provide guarantees to the market regarding the reduction in emissions from coal-fired power plants’ early retirement. This provision means the government has to ensure the coal-fired power plants are shut down for good, without a chance of resuming operations.
