NUSA DUA, Indonesia – Indonesia is still waiting for cheaper financing to hasten early retirement of coal-fired power plants under a pact with the rich nations of the G7 grouping, senior government officials said on Monday, in the transition to cleaner electricity.
The Southeast Asian nation of more than 275 million had been promised $20 billion in funds as part of the G7’s Just Energy Transition Partnership (JETP), unveiled in 2022, but very little money has been disbursed.
Luhut Pandjaitan, a senior minister overseeing mining, said the current financing mechanism did not include any grants, and did not fix existing issues such as high costs of retirement.
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“If you push us to retire our coal plants early, how do we finance it? The interest on the finance needs to be attractive,” Luhut told the Coaltrans Asia conference.
“If they give a commercial (rate of) interest, what’s the point?”
Transmission and generation infrastructure
Indonesia, which has sought interest rates cheaper than those offered by markets, requires $94.6 billion by 2030 to develop clean power transmission and generation infrastructure to phase down coal power.
Grant funding identified in the JETP document amounted to just $153.8 million of the total pledged.
The lack of progress on the plan, described as the “single largest climate finance transaction” by a U.S. treasury official when first announced, has stalled efforts by the world’s seventh-largest producer of coal-fired power to cut emissions.
Indonesia is now trying to shut its 660-MW Cirebon-1 power plant in West Java, but Septian Hario Seto, a deputy minister for investment affairs, said the final deal had yet to be delivered.
“Too many promises, nothing delivered,” Seto told Reuters on the conference sidelines.
The government is considering shutting down 13 coal-fired power plants owned by state utility Perusahaan Listrik Negara (PLN), but has not set a timetable, citing energy security and affordability concerns.
Luhut urged other nations not to lecture Indonesia on decarbonisation, citing a presentation in which he advised U.S. Treasury Secretary Janet Yellen that Indonesia’s emissions per head were far lower than those of the United States.
At 2.3 metric tons, Indonesia’s emission of carbon dioxide is far outstripped by the equivalent U.S. figure of 14.7 tons per capita and below the global average of 4.5 tons.
