Indonesia reaches £17bn climate partnership with world’s wealthiest nations
A group of the world’s wealthiest nations has entered into a $20bn (£16.82bn) energy partnership with Indonesia, which is hosting the G20 summit this week, to help reduce the country’s reliance on coal and accelerate the ramp up of renewables.
President Joko Widodo of Indonesia and leaders of the International Partners Group (IPG) unveiled the Just Energy Transition Partnership (JETP) as countries scramble to keep the goals of the Paris Agreement in reach, such as limiting temperature rises to well below two degrees from pre-industrial levels.
The IPG is co-led by the US and Japan, and includes Canada, Denmark, France, Germany, Italy, Norway, and the UK among its members.
Indonesia will aim to peak total power sector emissions by 2030, shifting its projected emissions peak forward, while capping power sector emissions at 290 megatons of CO2 by the end of decade – down from current projections of 357 megatons over the same period.
Over the next six months, the Parties will work together to develop a concrete plan for investments, financing, and technical assistance to support these ambitious goals.
It will also establish a goal to reach net zero emissions in the power sector by 2050, bringing forward Indonesia’s net zero power sector emissions target by ten years.
Indonesia will also boost the deployment of renewable energy, so that renewable energy generation comprises at least 34 percent of all power generation by 2030.
This would roughly double the total renewables deployment over the course of this decade compared to current plans.
Funding key for Indonesia’s climate goals
To achieve these targets, the long-term partnership intends to mobilise an initial $20bn in public and private financing over a three-to-five-year period.
The funding will include a mix of grants, concessional loans, market-rate loans, guarantees, and private investments.
Contributions to the JETP include $10bn in public sector pledges, and a commitment to mobilise $10bn in private investment, coordinated by the Glasgow Financial Alliance for Net Zero.
The alliance features Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, MUFG, and Standard Chartered.
This follows a similar deal with South Africa last year, with JETPs providing blueprint for the decarbonisation of coal-reliant countries, with comparable future agreements being discussed for India and Vietnam.
Commenting on the deal, Sushil Purohit, president at Wärtsilä Energy said:“Indonesia’s Just Energy Transition Partnership is one of the most important climate deals of the year so far.
He explained: “For the 50m people on 4,000 islands in Indonesia who remain without permanent access to reliable power, this deal has the potential to ensure the benefits of clean energy are enjoyed collectively. Removing coal will not only reduce emissions but provide reliable energy while also alleviating the risk of curtailment as renewable energy is scaled up.