Indonesia kickstarts policy plan for JETP-fund driven energy transition

22 Nov 2023

Bilateral Cooperation
Energy Transition

The Indonesian government, on Tuesday, November 21, 2023, finally launched its Comprehensive Investment Policy Plan (CIPP) in its effort to realize the US$20 billion (or roughly Rp 311.4 trillion) financing pledge from G20 countries announced during the trade bloc’s summit in Bali in December of last year. 


The financing pledge, known as the Just Energy Transition Partnership (JETP), aims to accelerate the decarbonization of the world’s power sector. The pledge for Indonesia is the largest of its kind, with similar pledges given to South Africa in 2021 in the amount of $8.5 billion, Senegal with $2.5 billion, and Vietnam with $15.5 billion. 


The CIPP itself envisions the decarbonization of Indonesia’s on-grid electricity sector by 250 million tons of carbon dioxide equivalent, with a target of 44% renewable share in the energy mix by 2030 from around 12% as of 2022. Indonesia’s energy roadmap aims to achieve net-zero emission by 2060, while the roadmap set in JETP aims for a total net-zero emission by 2050.  


“This CIPP document provides a strategic roadmap for an ambitious energy transition in Indonesia by considering challenges covering technical, financial, and, of course, social justice,” said Ad interim coordinating minister for maritime affairs and investment Erick Thohir at the launching of the document at the Ministry of Energy and Mineral Resources in Jakarta, as quoted from Antara. 


The CIPP laid out some 1,000 projects spread out within five agree-upon Investment Focus Areas (IFAs) with a funding requirement of $97.3 billion. Out these projects, 400 are prioritized for the JETP program with a funding requirement of $67.4 billion, or more than triple the pledge announced at the G20 Summit in Bali. One of these projects is the early retirement of the Cirebon-1 coal-fired power plant, valued at $837 million. 


The funding would come from public funds of the International Partners Group (IPG) led by the United States and Japan, and includes Denmark, the UK, Italy, Germany, Canada, Norway, France and the EU. International banks from the Glasgow Financial Alliance for Net Zero (GFANZ) Working Group are also included in the financing pledge. 


As for the five IFAs, they are: 

- IFA 1: The development of 14,000 kilometers of electricity transmission and distribution networks valued at $19.7 billion by 2030. 

- IFA 2: The early retirement and managed phase-out of coal fired power plants and coal flexibility retrofitting with a funding requirement of $2.4 billion by 2030. 

- IFA 3: The acceleration of 16.1 gigawatts of dispatchable renewable energy by 2030 valued at $49.2 billion. 

- IFA 4: The acceleration of 40.4 gigawatts of variable renewable energy by 2030 valued at $25.7 billion. 

- IFA 5: The development of an energy supply chain.