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Coal phase-out scheme draws minimal JETP funding
Indonesia’s JETP is stuck in a catch-22 when it comes to early coal retirement: while this is necessary for the country’s transition to renewables on the one hand, financiers are finding their hands tied by external pressure.
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Smoke and steam billow on July 11, 2020 from the coal-fired power plant owned by Indonesia Power, located next to the site of the Java 9 and 10 coal-fired steam power plant project in Suralaya, Banten. (Reuters/WILLY KURNIAWAN)
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ndonesia’s early coal retirement program has received paltry funding in the Just Energy Transition Partnership (JETP), which experts say indicates how hard it is to persuade donors and financial heavyweights to back the program.
According to the draft investment plan, only around US$1.5 billion of the $21.5 billion total pledged for Indonesia’s JETP is designated for the early retirement and managed phaseout of coal-fired power plants in the country.
That figure could rise to around $4.1 billion if Indonesia could use other funds, currently have no defined project or program to be allocated for.
Andri Prasetiyo, a researcher at Senik Centre Asia, told The Jakarta Post on Thursday that the small portion of funds allocated for early coal retirement was inseparable from donors’ judgment that the program was commercially unviable.
The miniscule amount of grants for the JETP had also proved challenging for Indonesia, as he understood this was why the government had opted to delay its plan to retire the country’s coal plants early.
Of the total $21.5 billion pledge, only $300 million were grants, including those designated for technical assistance.
Meanwhile, commercial loans comprised the lion’s share of $10 billion in pledges from private financial institutions, coordinated through the Glasgow Financial Alliance for Net Zero (GFANZ).
