Announced at the G20 summit in Bali in November 2022, the landmark Just Energy Transition Partnership (JETP) agreement is set to allot some US$20 billion to catalyse Indonesia’s goal of doubling its renewable energy sources in the next three to five years.
However, with the policy lacking provisions to ban coal outright, think tank Ember believes the JETP may not suffice in aligning Indonesia with the global 1.5°C climate target to curb dangerous global warming.
Indonesia’s JETP requires the country to cap its power sector emissions at 290 million tonnes in 2030, but with 60 per cent of its energy resources tied to coal, the transition to make space for renewables may be more difficult than it appears, according to electricity analyst Dr Achmed Shahram Edianto.
Furthermore, although the JETP emphasises freezing the existing pipeline of planned on-grid coal-fired power plants, Ember has flagged that the agreement does not require Indonesia to stop coal plants already under construction, allowing coal power to continue to grow in the next few years.
To date, Indonesia has a total of 5 gigawatts (GW) of captive coal power in operation, with 4GW under construction, according to the Global Energy Monitor. These coal plants do not appear to be included in the 290Mt emissions cap and have no specific restriction in the JETP agreement, highlighted Ember’s paper.
In 2022, President Joko Widodo greenlit regulation that permitted the construction of captive coal plants that catered solely to Indonesia’s Special Economic Zones (SEZ) and industrial estates. These facilities supply power directly to the country’s industries and do not feed into the consumer grid.
It is also noteworthy that Indonesia’s JETP emissions cap is aligned only with the government’s target to achieve net zero emissions for all sectors by 2060, and not the global 1.5°C pathway.
To put the country on track for 1.5°C, coal generation needs to decrease substantially by 2030, by closing some operating coal plants and significantly reducing coal power generation, noted Achmed.
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JETP is not a silver bullet for any country to entirely decarbonise their energy sector, nor to achieve their climate target. JETP is part of the big puzzle of the energy transition process.
Dr Achmed Shahram Edianto, Asia electricity analyst, Ember
Analysis by the University of Maryland and the Institute for Essential Services Reform shows that Indonesia needs to retire around 9.2GW of its coal fleet by 2030 to realign itself with the 1.5°C climate goal.
“JETP is not a silver bullet for any country to entirely decarbonise their energy sector, nor to achieve their climate target,” Ember’s Achmed told Eco-Business. He continued that the JETP is only part and parcel of the larger energy transition process, highlighting its role as a “proof of commitment” from the international community to promote “coal-to-clean” cooperation across the region.
“Developing countries expect JETP to help them accelerate the just transition process. Alongside this expectation, they also need support to align their national targets with the global target to limit temperature rise to 1.5°C,” he added.
After South Africa, Indonesia is only the second country to launch its own JETP in cooperation with the International Partners Group (IPG), co-led by Japan and the United States of America, as well as by Canada, France, Germany, the United Kingdom and the European Union.
The JETP will mobilise some US$20 billion in the next three to five years to accelerate Indonesia’s pivot to clean energy and raise the percentage of renewables in the energy mix to 34 per cent. The countries party to IPG are set to contribute US$10 billion to the JETP, while the other US$10 billion will be facilitated by the Glasgow Financial Alliance for Net Zero (GFANZ) working group.
Ahead of COP27, Indonesia had pledged to cut its carbon emissions by up to 43 per cent by 2030 with international support. However, with the country’s continued stake in the coal industry, the transition to clean energy may face additional challenges. Indonesia is the world’s largest exporter of thermal coal, earning at least US$3 billion a month from the extractive industry by delivering coal to China, India, Japan and South Korea, among others.
Despite this, Achmed, believes that Indonesia’s high stake in coal is precisely why it was offered the JETP agreement.
“[The JETP] emphasises the importance of fairness in the transition process. In the case of Indonesia, the emphasis of a fair transition is on a wide range of aspects, including, but not limited to economic impact and jobs in both the upstream and downstream coal sectors,” he said. “JETP is expected to also address the process to phase out coal mining and its impact on recipient countries.”
The International Renewable Energy Agency estimates that in order for Indonesia to raise its renewable energy ratio from just 14 per cent, it will have to fund some US$332 billion in energy transition technologies and US$80 billion in grid infrastructure development by 2030.
Indonesia was among the top 10 world polluters in 2019, emitting some 615 million tonnes of CO2, according to the World Meteorological Organisation. Its greenhouse gases have largely been attributed to the archipelagic nation’s heavy reliance on fossil fuels, as well as fires and deforestation linked to the country’s oil palm industry.
To keep in step with the Paris Agreement, the United Nations Economic and Social Commission for Asia and the Pacific has urged that phasing out coal by 2040 is “the single most important step” that governments need to pledge.
Indonesia could put forward the target to fully phase out coal-fired power plants by 2040, aligned with 1.5°C, if sufficient financial support from international communities were available, noted Ember.
“With JETP now on the table, the country should put its climate-aligned commitment into measurable actions, showing that Indonesia’s energy transition could move faster and align with the global climate target of 1.5°C,” stated the study.
