Wealthiest nations offer Indonesia $20 billion to wean it off coal

Rich nations led by the US and Japan have pledged to give Indonesia a $20 billion-package to help the coal-dependent country shift […]
Presidents Joe Biden and Joko Widodo. Credit: Indonesia’s Bureau of Press, Media, and Information of Presidential Secretariat | Laily Rachev

Rich nations led by the US and Japan have pledged to give Indonesia a $20 billion-package to help the coal-dependent country shift to renewable energy and reach carbon neutrality by 2050.

The deal put forward by the Just Energy Transition Partnership (JETP), which includes the US, Japan, Canada, the UK, and several European countries, including the EU and Norway, has been more than a year in the making.

Launched at the sidelines of the G20 summit in Indonesia, which is being held in parallel to the COP27 UN Climate Summit in Egypt, the package includes $10 billion in public funding and a further $10 billion from the private sector, The White House said on Tuesday.

“Today, G20 leaders highlighted the importance of investing together and investing stronger to fill the enormous need for better infrastructure in low- and middle-income countries around the world, and we welcome all who share this vision to join our efforts,” US President Joe Biden said in the statement.

As part of the agreement, Indonesia committed to cap power sector emissions at 290 megatons of CO₂ annually by 2030, and to generate about a third of its power from renewable sources by 2030. 

Another $580bn needed

Indonesia, South-east Asia’s largest economy and home to the world’s third-largest rainforest, is one of the biggest carbon emitters globally.

It is estimated the nation needs $600 billion to phase out coal-based power sources in favour of a grid powered by renewables, which are crucial to Indonesia’s goal of reaching net-zero carbon emissions by 2060..

The government of Joko Widodo, who is in his second and final presidential term, has at times questioned climate deals, including an agreement inked last year to end deforestation by 2030. 

Officials welcomed the pact despite the worries.

“[The deal shows] we can create a more sustainable world for our grandchildren, our citizens, and the future generation,” Indonesia’s coordinating minister of maritime and investment affairs Luhut Binsar Pandjaitan said.

US climate envoy, John Kerry, the US climate envoy, said the accord was “groundbreaking”.

“We’ve built a platform for co-operation that can truly transform Indonesia’s power sector from coal to renewables and support significant economic growth,” Kerry said.

The pact with Indonesia is the JETP’s second of its kind. The first was an $8.5 billion deal inked with South Africa at the COP26 last year. Talks are under way with Vietnam, India and Senegal to reach similar agreements.

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