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Indonesia’s green taxonomy may clash with EU climate funding
Indonesia’s green finance taxonomy, which currently labels certain coal-fired power plants “green”, may make it challenging to access financing aimed to help shut down coal plants earlier.
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Smoke and steam billows from the coal-fired power plant owned by Indonesia Power in Suralaya, Banten, in July 2020. (Reuters/WILLY KURNIAWAN)
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ndonesia’s green finance taxonomy, which currently labels certain coal-fired power plants “green”, may make it challenging to access financing aimed at helping shut down coal plants earlier.
Gan Gan Dirgantara, head of environmental social and technical evaluation at state-owned infrastructure financing company PT Sarana Multi Infrastruktur (PT SMI), said there were many types of climate finance taxonomies, some of which did not label early retirement programs for coal-fired power plants as green, including that of the European Union.
“European banks have to follow the EU taxonomy [...], so the interoperability of the taxonomy must be made congruent,” he told reporters in Bogor, West Java, on Wednesday.
“International investors are willing to [fund Indonesia’s energy transition projects], but it depends on how we’re channeling the funds. There are challenges that need to be addressed.”
Read also: Green taxonomy revision causes ‘uncertainty’ for energy transition: Critics
He went on to say that ASEAN countries had acknowledged that the early retirement programs could be considered green, though there were technical strengthening criteria (TSC) and other essential criteria that needed to be met.
“It’s fine if [we’re looking to seek] funding from financial institutions in ASEAN countries, but we are hoping to get funding from developed countries, too,” he said.
