November 3, 2023
JAKARTA – The Just Energy Transition Partnership (JETP) Secretariat, tasked with implementing a US$20 billion global effort to reduce carbon emissions in Indonesia, has made its investment plan available for public review.
The draft released on Wednesday excludes captive power plants that supply off-grid systems operated by industrial estates around the country, most of which are coal-fired.
Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), said the decision bought the government and the International Partners Group (IPG) time to map out plans for the captive coal-fueled power plants without hampering JETP’s progress.
“The government and IPG agreed to examine how many captive coal plants are going to be built and how to reduce their emissions,” he told The Jakarta Post on Wednesday.
“For the time being, off-grid power systems are excluded from the Comprehensive Investment and Policy Plan [CIPP]. In six months, [stakeholders] hope that the analysis will be concluded. After all, the CIPP is a living document, it will be updated as it progresses,” he added.
In the CIPP, Jakarta also announced it would not let its carbon emissions from the on-grid power sector exceed 250 million tonnes and that a downtrend in that figure would begin by 2030.
Initially, Indonesia and the IPG, led by the United States and Japan, had agreed to a 2030 peak emissions target of 290 million tonnes from the overall power sector.
The scope of off-grid power had not been taken into consideration at the time, while the CIPP draft states that “it was also agreed that the JETP Secretariat will carry out a more detailed study and roadmap on decarbonizing Indonesia’s off-grid captive power systems.”
Indonesia also pledges to increase the share of renewable energy in nationwide power generation to 44 percent by 2030 under the investment plan presented on Wednesday. Previously, that target was 34 percent.
The proposed plan identifies more than 400 JETP priority projects that would require at least $67.4 billion of investment.
The plan foresees that coal-based power-generating capacity will be reduced by 1.7 GW by 2040 through early retirement of plants.
A statement released on Wednesday said the office was gathering public input on the draft. Feedback obtained by Nov. 14 would be considered in the formulation of the final investment plan.
Indonesia’s JETP Secretariat head Edo Mahendra said the CIPP, which underpins the landmark climate financing deal signed at the Group of 20 Summit in Bali last year, would be updated on an annual basis to reflect the latest global economic situation and domestic development priorities.
“Energy transition is a matter of public interest. JETP is one of the initiatives within Indonesia’s broader energy transition efforts. Therefore, we would like the public to have access to the draft before it is finalized in the hopes that we may receive as much input as possible,” Edo said in the same statement.
The document outlines five JETP investment focus areas for the CIPP, including 14,000 kilometers of transmission lines and grid deployment, early coal-fired power plant retirement and the acceleration of dispatchable and intermittent renewable energy sources.
Each focus area is expected to cost billions of dollars by 2030.
Indonesia’s CIPP for the international partnership was made public to lay out a path for the Southeast Asian country to secure $20 billion in funding under the program.
“Afterward, we will consider the input to be integrated into the CIPP, which we will launch on Nov. 21,” JETP Secretariat deputy chair Paul Butarbutar told the Post on Wednesday when asked about the Secretariat’s agenda following the public evaluation period.
Putra Adhiguna, an energy analyst at the Institute of Energy Economics and Financial Analysis (IEEFA), said the large number of captive coal power plants under construction and in the pipeline would be a difficult issue to resolve between the government and other stakeholders, especially as Indonesia aimed to build industrial centers that would require large and stable power supply.
“There are several options to replace coal, but each with specific challenges in terms of techno-economics, impacts and timelines,” he said, also on Wednesday. “The effort to push JETP forward should be appreciated, but the next steps are critical.”
Indonesia had 18.8 gigawatts of coal power capacity under construction at the end of 2022, according to a 2023 report by Global Energy Monitor (GEM), which uses publicly available data on company plans.
That is nearly half of Indonesia’s current coal power capacity, which stands at 40.6 GW.
Sixty-nine percent of the planned additional capacity is to come from captive power plants, many of which supply energy-intensive industries including aluminum smelters and nickel and cobalt processing facilities, which the government says are the basis for building electric vehicles and battery supply chains.