US, Japan to offer Indonesia $15b energy transition funding

The United States, Japan and other countries are finalising a climate finance deal of at least $15 billion to help Indonesia retire coal power plants earlier, Bloomberg news reported, citing people familiar with the matter.

The “just energy transition partnerships” or JETP deal could be announced as soon as Tuesday during a leaders’ summit of the Group of 20 major economies, which Indonesia will host in Bali, according to the Bloomberg report. Indonesia’s Finance Minister Sri Mulyani Indrawati told a seminar on Friday an announcement on funding commitment is expected next week, but declined to offer details.

“I do hope the size is going to be big enough to create confidence in terms of delivering the transition of the energy,” she said. Indonesia’s energy ministry spokesperson declined to comment. The Group of 7 countries has proposed establishing a JETP deal for Indonesia by the end of 2022, with the United States and Japan taking the lead, and with the support of Germany as the G7 president.

Last month, state power firm Perusahaan Listrik Negara (PLN) said it was in negotiation with US and European investors to help finance early shut down of 6.7 gigawatt of coal power capacity.

Indonesia has also been working with the Asian Development Bank (ADB) to speed up the closure of coalfired power plants under a programme launched at last year’s UN climate change conference, called the Energy Transition Mechanism.